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The neoclassical growth model is used to identify the short run effects of two technology shocks. Neutral shocks affect the production of all goods homogeneously, and investment-specific shocks affect only investment goods. The paper finds that previous estimates, based on considering only neutral technical change, substantially understate the effects of(More)
This paper studies the impact of the preferential tax treatment of housing capital in a model economy that includes the main housing tax provisions currently in place in the U.S. and a minimum downpayment requirement upon purchasing non-divisible houses. Distortions arise because the tax code makes the return on housing capital larger than that on business(More)
We use a very standard life-cycle growth model, in which individuals have a labor-leisure choice in each period of their lives, to prove that an optimizing government will almost always find it optimal to tax or subsidize interest income. The intuition for our result is straightforward. In a life-cycle model the individual's optimal consumption-work plan is(More)
Preliminary Abstract Personal bankruptcies in the United States have increased dramatically, rising from 1.4 per thousand working age population in 1970 to 8.5 in 2002. We use a heterogeneous agent life-cycle model with competitive financial intermediaries who can observe households' earnings, age and current asset holdings to evaluate several commonly(More)
  • Bennett T. McCallum, Miguel Casares, +5 authors Athanasios Orphanides
  • 2000
R ecent years have witnessed an upsurge of interest among monetary policy analysts in the topic of simple and explicit rules for monetary policy. In this recent work it is presumed that such rules would not be followed literally and slavishly by central banks, but that they could be consulted for indicative purposes—perhaps by providing a starting point for(More)
T he literature concerned with dynamic fiscal policy has evolved in two main directions over the last 20 years or so. On the one hand, there is a large literature on optimal taxation. In the context of a standard neoclassical growth model with infinitely-lived individuals, Chamley (1986) and Judd (1985) establish that an optimal income-tax policy entails(More)
This paper studies the nature and impact of credit constraints in the market for human capital. We derive endogenous constraints from the design of government student loan programs and from the limited repayment incentives in private lending markets. These constraints imply cross-sectional patterns for schooling, ability, and family income that are(More)
This paper proposes and implements a new method of measuring the degree of consumption smoothing using data from the Consumer Expenditure Survey. The structure of this Survey is such that estimators previously used in the literature are inconsistent, simply because income is measured annually and consumption is measured quarterly. We impose an AR(1)(More)
  • Facundo Albornoz, Héctor F. Calvo Pardo, +11 authors Zhihong Yu
  • 2009
Firms need to incur substantial sunk costs to break in foreign markets, yet many give up exporting shortly after their rst experience, which typically involves very small sales. Conversely, other new exporters shoot up their foreign sales and expand to new destinations. We investigate a simple theoretical mechanism that can rationalize these patterns. A rm(More)
In this paper, we document some features of the distribution of income, consumption and wealth in Canada using survey data from many different sources. We find that wage and income inequality have increased substantially over the last 30 years, but that much of this rise was offset by the tax and transfer system. As a result, the rise in consumption(More)