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This paper explores the interface between personality psychology and economics. We examine the predictive power of personality and the stability of personality traits over the life cycle. We develop simple analytical frameworks for interpreting the evidence in personality psychology and suggest promising avenues for future research. Lex Borghans is a(More)
Recently there has been a significant decline in the degree to which firms “pass through” changes in costs to prices, a decline that is frequently characterized as a reduction in the “pricing power” of firms. The decline appears to be associated with the decline in inflation in many countries. The decline has important implications for monetary policy(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)
This paper computes welfare maximizing Taylor-style interest rate rules, in a business cycle model of a small open economy. The model assumes staggered price setting and shocks to domestic productivity, to the world interest rate, to world inflation, and to the uncovered interest rate parity condition. Optimized policy rules have a pronounced anti-inflation(More)
This paper considers how the role of inflation as a leading business-cycle indicator affects the pricing of nominal bonds. We examine a representative agent asset pricing model with recursive utility preferences and exogenous consumption growth and inflation. We solve for yields under various assumptions on the evolution of investor beliefs. If inflation is(More)
Recessions appear to be times when the marginal rate of substitution between goods and workers’ time falls below the marginal product of labor. If so, the allocation of workers’ time is inefficient. I develop a model of households and production that reconciles cyclical movements in the marginal value of time and the marginal product. The model embodies the(More)
This paper estimates the effects of technology shocks in structural VAR models of the United States, Japan and West Germany, imposing restrictions on the sign of impulse responses. These restrictions are motivated with explicit priors on the parameters of a dynamic stochastic general equilibrium (DSGE) model encompassing both real and nominal frictions. In(More)