David R. Bowman

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Is individual labor income more risky in recessions? This is a difficult question to answer because existing panel data sets are so short. To address this problem, we develop a generalized method of moments estimator that conditions on the macroeconomic history that each member of the panel has experienced. Variation in the cross-sectional variance between(More)
This paper presents a new way to assess robustness of claims from identi ed VAR work. All possible identi cations are checked for the one that is worst for the claim, subject to the restriction that the VAR produce reasonable impulse responses to shocks. The statistic on which the claim is based need not be identi ed; thus, one can assess claims in large(More)
A number of existing studies have concluded that risk sharing allocations supported by competitive, incomplete markets equilibria are quantitatively close to rst-best. Equilibrium asset prices in these models have been di cult to distinguish from those associated with a complete markets model, the counterfactual features of which have been widely(More)
We propose a model of consumption and saving based on Kahneman and Tversky's Prospect Theory that implies a fundamental asymmetry in consumption behavior inconsistent with other models of consumption. When there is sufficient income uncertainty, a person resists lowering consumption in response to bad news about future income. This resistance is greater(More)
We de…ne and study transparency, credibility, and reputation in a model where the central bank’s characteristics are unobservable to the private sector and inferred from the policy outcome. A low-credibility bank optimally conducts a more expansionary policy than a high-credibility bank, in the sense that it induces higher in‡ation, but a less expansionary(More)
This paper investigates how oil price shocks affect the trade balance and terms of trade in a two country DSGE model. Given that oil shocks may exert very different wealth effects on oil importers and exporters, the response of the external sector depends critically on the structure of financial risk-sharing. With incomplete markets, higher oil prices can(More)
This paper presents a model with imperfect information and price stickiness. In the model, both imperfect information and nominal price rigidity allow nominal shocks to act as business cycle impulses, but only sticky prices propagate the real effects of nominal shocks over time. The model indicates that high rates of inflation lead to less nominal price(More)
  • Ceyhun Bora Durdu, Boragan Aruoba, +12 authors Mark Wright
  • 2006
This paper analyzes the macroeconomic implications of real-indexed bonds, indexed to the terms of trade or GDP, using a general equilibrium model of a small open economy with financial frictions. Although indexed bonds provide a hedge to income fluctuations and can thereby mitigate the effects of financial frictions, they introduce interest rate(More)
The considerable amount of research in recent years on New Keynesian, open-economy models -models with nominal price rigidities and intertemporally maximizing agents -has yielded fresh insights for what Alan Blinder has called the “dark art” of making monetary policy. The literature has made its greatest contributions in understanding the transmission of(More)