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The purpose of this paper is to test for the presence of habit formation in consumption decisions using household panel data. We use the test proposed by Meghir and Weber (1996) and estimate the within-period marginal rate of substitution between commodities, which is robust to the presence of liquidity constraints. To that end, we use a Spanish panel data(More)
This paper investigates the evolution of wealth distribution in a one sector growth model along its transition path. A key feature of the model is that a household´s consumption cannot fall below a positive level each period. This requirement introduces a positive association between the intertemporal elasticity of substitution and household wealth.(More)
In this paper I construct a two-sector, input-output growth model to quantify the role of the structural transformation between manufacturing and services in reducing the U.S. GDP volatility. For a sector with a given gross output TFP volatility, value added TFP volatility is an increasing function of the share of intermediate goods in gross output. In the(More)
Sharing risks is one of the essential economic roles of families. The importance of this role increases in the amount of uncertainty that agents face and the degree of financial market incompleteness. We develop a theory of joint household search in frictional labor markets under incomplete financial markets. Couples households can insure themselves by(More)
This paper reconciles two, apparently, contradictory facts about the Spanish economy: real GDP per working age person has grown at 2.4 percent during the period 1996-2007, on average, whereas Total Factor Productivity has been stagnant during that period. Here we argue that the Spanish economy has grown, in spite of stagnant TFP, because investment in(More)
In this paper we use a large overlapping generations model with individuals that differ across age and productivity to assess the effect of privatizing a pay-as-you-go social security system in two model economies. The first one is the standard model pioneered by Auerbach and Kotlikoff (1987) characterized by the perfect substitutability in production of(More)
In this paper we propose a theory of investment and energy use to study the response of macroeconomic aggregates to energy price shocks. In our theory this response depends on the interaction between the energy efficiency built in capital goods (which is irreversible throughout their lifetime) and the growth rate of Investment Specific Technological Change(More)
What causes financial crises? I show that shocks to the volatility of total factor productivity (TFP) can generate endogenous variations in loan-to-value (LTV) ratios and trigger credit crunches, without appealing to financial shocks. Using a panel of countries, I find that financial crises coincide with the reversal of a long period of low volatility of(More)
Empirical evidence shows that vertically integrated producers are more productive, bigger and are matched to better suppliers (with high productivity and size). I present a dynamic stochastic model of an industry with heterogeneous …rms interacting as buyers and sellers, and market frictions that induce a holdup problem to the manufacturers to account for(More)