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We show how to implement a competitive search equilibrium in a fully-specified DSGE environment. Competitive search, an equilibrium concept well-understood in labor market theory, offers an alternative to the commonly-used Nash bargaining in search-based macro models. Our simulation-based results show that business cycle fluctuations under competitive(More)
This paper characterizes optimal unemployment insurance (UI) over the business cycle using a model of equilibrium unemployment in which jobs are rationed in recession. It offers a simple optimal UI formula that can be applied to a broad class of equilibrium unemployment models. In addition to the usual statistics (risk aversion and micro-elasticity of(More)
I characterize cyclical fluctuations in the cross-sectional dispersion of firm-level productivity. Using the micro-estimated dispersion, or " risk, " stochastic process as an input to a baseline DSGE financial accelerator model, I assess how well the model reproduces cyclical movements in both real and financial conditions of the economy. In the model, risk(More)
Previously circulated under the title " Business Cycles and Firm Dynamics " and …rst presented in the summer of 2004. For helpful comments, we thank Robert Shimer, two anonymous referees, and participants in many conferences and seminars. We are grateful to and Banque de France for …nancial support through the Chaire Banque de France at the Paris School of(More)
Costly nominal wage adjustment has received renewed attention in the design of optimal policy. In this paper, we embed costly nominal wage adjustment into the modern theory of frictional labor markets to study optimal fiscal and monetary policy. The main result is that the optimal rate of price inflation is quite volatile despite the presence of nominal(More)
NOTE: International Finance Discussion Papers are preliminary materials circulated to stimulate discussion and critical comment. References in publications to International Finance Discussion Papers (other than an acknowledgment that the writer has had access to unpublished material) Abstract We reexamine the optimality of tax smoothing from the point of(More)
We consider a very general class of public …nance problems that encompasses Ram-sey models of optimal taxation as well as economies with limited commitment, private information, and political economy frictions. We identify a su¢ cient condition to rule out permanent intertemporal distortions at the optimum: If there exists an admissible allocation that(More)
This paper explores the baby boom's impact on U.S. house prices and interest rates in the postwar 20 th century and beyond. Using a simple Lucas asset pricing model, I quantitatively account for the increase in real house prices, the path of real interest rates, and the timing of low-frequency fluctuations in real house prices. The model predicts that the(More)
We study Ramsey-optimal fiscal policy in an economy in which product varieties are the result of forward-looking investment decisions by firms. There are two main results. First, depending on the particular form of variety aggregation in preferences, firms' dividend payments may be either subsidized or taxed in the long run. This policy balances monopoly(More)
BACKGROUND Non-invasive brain stimulation (NIBS) is a promising tool for facilitating motor function. NIBS therapy in conjunction with training using postural feedback may facilitate physical rehabilitation following posture disorders (e.g., Pusher Syndrome). OBJECTIVES The objectives of this study were, 1) to develop a low-cost point-of-care-testing(More)