individual and aggregate labor supply with coordinated working times i analyze two extensions to the standard model of life cycle labor supply that feature operative choices along both the intensive and extensive margin one assumes that individuals face continuous wage hours schedules while the other assumes that all work must be coordinated across individuals though similar qualitatively the two models have very different implications for aggregate labor supply responses to tax policy in the first model curvature in the individual utility from leisure function plays relatively little role but in the second model it is of first order importance the second model also has important implications for what data are best able to provide evidence on the extent of curvature in the utility from leisure function

could tariffs be pro cyclical abstract conventional wisdom says that tariffs are counter cyclical we analyze the relationship between business cycles and applied mfn tariffs using a disaggregated product level panel dataset covering 72 countries between 2000 and 2011 strikingly and counter to conventional wisdom we find that tariffs are pro cyclical further investigation reveals that this pro cyclicality is driven by the tariff setting behavior of developing countries tariffs are acyclical in developed countries we present evidence that pro cyclical market power drives the pro cyclicality of tariffs in developing countries providing further evidence of the importance of terms of trade motivations in explaining trade policy

the u s and u k great depressions through the lens of neoclassical growth theory neoclassical growth theory is increasingly being used to study great depressions see e g mario j crucini and james kahn 1996 cole and ohanian 1999 2001a b 2002 michael bordo et al 2000 see also the january 2002 issue of the review of economic dynamics this paper extends our recent work that focuses on why the u s and u k great depressions lasted so long one of the key messages from our work is that the standard neoclassical growth model fails to account for the long duration of these depressions this paper extends our work by diagnosing the specific failures of the model we do this by measuring the deviations in the model s first order conditions we then use these deviations to identify particular factors that might account for these long durations we find very large deviations in the model s household labor efficiency condition in both countries and in the firm s labor efficiency condition in the united states these deviations provide new support for our recent conclusions that distorting labor market policies are key factors behind the long durations of both depressions cole and ohanian 2001a b

productivity and unemployment over the business cycle abstract the low correlation between cyclical unemployment and productivity over the post war period hides a large sign switch in the mid 1980s from significantly negative the correlation became significantly positive using a search model of unemployment with nominal rigidities and variable labor effort i show that technology shocks can generate a positive unemployment productivity correlation whereas non technology shocks i e aggregate demand shocks tend to do the opposite in this context i identify two events that can quantitatively explain the increase in the correlation i a sharp drop in the volatility of non technology shocks in the mid 1980s and ii a decline in the response of productivity to non technology shocks which from procyclical became acyclical in the last 25 years

distribution of research gains in multistage production systems further results the marketing sector in muth s single stage model is disaggregated in to two sequential stages processing and distribution comparative statics are used to derive necessary and sufficient conditions for farmers to gain from downstream research the farm benefits are shown to depend crucially on the stage in marketing to which research is directed

2018 klein lecture individual and aggregate labor supply in heterogeneous agent economies with intensive and extensive margins we study business cycle fluctuations in heterogeneous agent general equilibrium models featuring intensive and extensive margins of labor supply a nonlinear mapping from time devoted to work to labor services generates operative extensive and intensive margins our model captures the salient features of the empirical distribution of hours worked including how individuals transit within this distribution we study how various specifications influence labor supply responses to aggregate technology shocks and find that abstracting from intensive margin adjustment can have large effects on the volatility of aggregate hours even if fluctuations along the intensive margin are small

the elasticity of substitution between time and market goods evidence from the great recession we document a change in household shopping behavior during the great recession households purchased more on sale larger sizes and generic products and increased coupon usage and shopping at discount stores we estimate a decline in returns to shopping during the recession therefore the increase in shopping behavior implies a significant decrease in households opportunity cost of time using the estimated cost of time and time use data we estimate a high elasticity of substitution between market expenditure and time spent on nonmarket work we find that households smooth a sizable fraction of consumption by varying their time allocation during recessions

heterogeneity and aggregation implications for labor market fluctuations comment abstract chang and kim 2007 develop an incomplete asset markets model incorporating discrete labor supply and idiosyncratic labor productivity their results resolve long standing puzzles for bus

controlling stochastic pollution events through liability rules some evidence from ocs leasing under the ocs lands act firms are strictly liable for damages from oil spills to the extent that this liability rule causes firms to internalize environmental risks incentives for damage avoidance behavior are provided using data from the 1979 georges bank lease sale we use a robust estimation technique to test the hypothesis that potential environmental costs are reflected in bids for ocs leases the results indicate a substantial response to environmental risks recognizing reduced rents we estimate that total high bids have declined by 20 because of firms perceptions of environmental risks the results suggest that liability rules have considerable potential in controlling stochastic pollution events

micro and macro elasticities in a life cycle model with taxes we build a life cycle model of labor supply that incorporates changes along both the intensive and extensive margin and use it to assess the consequences of changes in tax and transfer policies on equilibrium hours of work we find that changes in taxes have large aggregate effects on hours of work moreover we find that there is no inconsistency between this result and the empirical finding of small labor elasticities for prime age workers in our model micro and macro elasticities are effectively unrelated our model is also consistent with other cross country patterns

bounds on elasticities with optimization frictions a synthesis of micro and macro evidence on labor supply how can price elasticities be identified when agents face optimization frictions such as adjustment costs or inattention i derive bounds on structural price elasticities that are a function of the observed effect of a price change on demand the size of the price change and the degree of frictions the degree of frictions is measured by the utility losses agents tolerate to deviate from the frictionless optimum the bounds imply that frictions affect intensive margin elasticities much more than extensive margin elasticities i apply these bounds to the literature on labor supply the utility costs of ignoring the tax changes used to identify intensive margin labor supply elasticities are typically less than 1 of earnings as a result small frictions can explain the differences between micro and macro elasticities extensive and intensive margin elasticities and other disparate findings pooling estimates from existing studies i estimate a hicksian labor supply elasticity of 0 33 on the intensive margin and 0 25 on the extensive margin after accounting for frictions

an empirical model of labor supply in a life cycle setting this paper formulates and estimates a structural intertemporal model of labor supply using theoretical characterizations derived from an economic model of lifetime behavior a two step empirical analysis yields estimates of intertemporal and uncompensated substitution effects which provide the information needed to predict the response of hours of work to life cycle wage growth and shifts in the lifetime wage path

distortions in the neoclassical growth model a cross country analysis abstract this paper investigates the properties of distortions that manifest themselves as wedges in the equilibrium conditions of the neoclassical growth model across a sample of 22 oecd countries for the 1970 2011 period the quantitative relevance of each wedge and its robustness in generating fluctuations in macroeconomic aggregates is assessed the efficiency wedge proves to be determinant in enabling models to replicate movements in output and investment while the labor wedge is important to predict fluctuations in hours worked modeling distortions to the savings decision holds little quantitative or qualitative relevance also investment seems to be the hardest aggregate to replicate as prediction errors concerning output and hours worked are typically one order of magnitude smaller these conclusions are statistically significant across the countries in the sample and are not limited to output drops finally the geographical distance between countries and their degree of openness to trade are shown to contain information with regard to the wedges stressing the importance of international mechanisms of transmission between distortions to the equilibrium conditions of the neoclassical growth model

global energy subsidies an analytical taxonomy governments around the world have pledged to eliminate or sharply reduce subsidies to energy firms in order to increase economic efficiency and reduce environmental externalities yet definitions of subsidies vary widely and as a result estimates of their global magnitude vary by orders of magnitude i review why energy subsidies are so difficult to define and measure i show why some non standard measures are very poor proxies for subsidy costs and in fact may vary inversely with them in particular recent attempts to treat unpriced externalities as subsidies yield especially misleading results in general energy subsidies as conventionally understood do exist but only comprise a small portion of some very large recently reported estimates the bulk of which are indirect measures that may have little connection with actual costs to governments or allocational inefficiencies

micro and macro labor supply elasticities a reassessment of conventional wisdom the response of aggregate labor supply to various changes in the economic environ ment is central to many economic issues especially the optimal design of tax policies conventional wisdom based on studies in the 1980s and 1990s has long held that the analysis of micro data leads one to conclude that aggregate labor supply elasticities are quite small in this paper we argue that this conventional wisdom does not hold up to empirically reasonable and relevant extensions of simple life cycle models that served as the basis for these conclusions in particular we show that several pieces of conventional wisdom fail in the presence of human capital accumulation or labor supply decisions that allow for adjustment along both the extensive and intensive margin we conclude that previous estimates of small labor supply elasticities based on micro data are fully consistent with large aggregate labor supply elasticities jel d91 e24 j22

regulation moral hazard and insurance of environmental risks abstract a large class of major environmental risks are subject to severe moral hazard problems the purpose of this paper is to study the potential conflicts between cost minimization and safety care the intuition is that regulatory efforts or sheer competition inducing a greater focus on cost minimization may tilt the agents trade off towards taking too much risk here we study the problem in the context o regulation of a natural monopoly and see how high powered incentives may conflict with safety care we address the issue of moral hazard in environmental risk with adverse selection limited liability risk aversion and multiprincipals

a business cycle model with variable capacity utilization and demand disturbances abstract we develop a dynamic general equilibrium model with demand preference shocks estimated using hall s j labour economics 15 1997 223 residual that replicates u s business cycles well at least compared to the real business cycle models the key factor is cyclical capital utilization which is based on imperfect competition slow adjustments in capital stock and fixed requirement of labor input we also demonstrate theoretically that a representative agent economy with preference shocks could be viewed as the reduced form of a heterogeneous agents economy with incomplete markets specifically a heterogeneous agents economy with incomplete markets is aggregated into a representative agent economy with preference shocks this result would provide a microeconomic foundation for preference shock models it is also shown that a shock to marginal utility of consumption and a shock to marginal disutility of labor have different effects

real wages over the business cycle evidence from panel data one topic on which keynes did not disagree with classical economists was the cyclical behavior of real wages keynes 1936 as well as various classical writers predicted that real wages should move countercyclically quoting the general theory p 17 in general an increase in employment can only occur through the accompaniment of a decline in real wages thus i am not disputing this vital fact which the classical economists have rightly asserted as indefeasible this prediction is based on the premise of competition and a given short run capital stock increases in employment then correspond to more intensive use of capital and through diminishing product lower real wages for this reason evidence by dunlop 1938 and tarshis 1939 that real wages move procyclically was viewed as paradoxical both dunlop and tarshis based their findings on an observed positive correlation between real and money wages which given the procyclical movement of money wages implies a positive correlation between

family labor supply and aggregate fluctuations abstract this paper considers an economy which is populated by a continuum of identical families consisting of two members the two members have different productivities and the family faces a fixed utility cost if both members supply labor simultaneously although both family members have the same preferences they display very different elasticities of labor supply a real business cycle model is calibrated and it is seen that this cross sectional heterogeneity results in interesting forms of aggregation bias

current real business cycle theories and aggregate labor market fluctuations hours worked and the return to working are weakly correlated traditionally the ability to account for this fact has been a litmus test for macroeconomic models existing real business cycle models fail this test dramatically we modify prototypical real business cycle models by allowing government consumption shocks to influence labor market dynamics this modification can in principle bring the models into closer conformity with the data our empirical results indicate that it does

big locational unemployment differences despite high labor mobility considerable labor mobility exists across us states enough that if migration arbitrages local unemployment one might expect very low unemployment differences across states however cross state data reveal large unemployment differences an equilibrium multi location model with stochastic worker location match productivity and within location trading frictions can account for these facts in the model some workers move to or stay in a location with high unemployment because they are more productive there than elsewhere according to the model labor mobility and aggregate unemployment are negatively related this prediction is in stark contrast to standard sectoral reallocation theory but consistent with the us data

the cyclical and secular behaviour of the labour input comparing efficiency units and hours worked summary a monthly labour input series designed to correct for the fact that all hours worked are not of the same quality is constructed and its properties compared with unadjusted hours worked this efficiency units series is constructed from bls data on hours worked and earnings by age and sex the cyclical fluctuations displayed by the efficiency units series are smaller on average than those displayed by hours worked although the difference is not large however the secular behaviour of the series is quite different hours worked per capita displays a significant positive trend while efficiency units per capita does not

moving back home insurance against labor market risk this paper demonstrates that the option to move in and out of the parental home is a valuable insurance channel against labor market risk which facilitates the pursuit of jobs with the potential for high earnings growth using monthly panel data i document an empirical relationship among coresidence individual labor market events and subsequent earnings growth i estimate the parameters of a dynamic game between youths and parents to show that the option to live at home can account for features of aggregate data for low skilled young workers small consumption responses to shocks high labor elasticities and low savings rates

uninsured countercyclical risk an aggregation result and application to optimal monetary policy we consider an incomplete markets economy with capital accumulation and endogenous labor supply individuals face countercyclical idiosyncratic labor and asset risk we derive conditions under which the aggregate allocations and price system can be found by solving a representative agent problem this result is applied to analyze the properties of an optimal monetary policy in a new keynesian economy with uninsured countercyclical individual risk the optimal monetary policy that emerges from our incomplete markets economy is the same as the optimal monetary policy in a representative agent model with preference shocks when price rigidity is the only friction the optimal monetary policy calls for stabilizing the ination rate at zero

the elasticity of substitution between time and market goods evidence from the great recession the elasticity of substitution between time and market goods we document a change in household shopping behavior during the great recession households purchased more on sale larger sizes and generic products increased coupon usage and shopping at discount stores we estimate that the returns to these shopping activities declined during the recession and therefore this behavior implies a significant decrease in households opportunity cost of time using the estimated cost of time and time use data we estimate a high elasticity of substitution between market expenditure and time spent on non market work we find that households smooth a sizable fraction of consumption by varying their time allocation during recessions institutional subscribers to the nber working paper series and residents of developing countries may download this paper without additional charge at www nber org

household search and the aggregate labor market we develop a theoretical model with labour market frictions incomplete financial markets and with households which have two members households face unemployment risks but their members adjust their labour supplies to insure against unemployment we use the model to explain the cyclical properties of aggregate employment and participation as in the u s data the model predicts that the participation rate the fraction of individuals that want jobs is not strongly correlated with aggregate economic activity this property is in sharp contrast to the strongly procyclical participation predicted by both neoclassical models and models with search frictions when we assume bachelor households or households with infinitely many members complete markets in the two member household model and in the data primary earners are always in the labour force secondary earners have a mildly countercyclical participation rate and a mildly procyclical employment rate their behaviour insures the household against unemployment risks

indivisible labor lotteries and equilibrium abstract this paper considers an economy where labor is indivisible and agents are identical although the discontinuity in labor supply at the individual level disappears as a result of aggregation it is shown that indivisible labor has strong consequences for the aggregate bahavior of the economy it is also shown that optimal allocations involve lotteries over employment and consumption

heterogeneity and aggregation implications for labor market fluctuations we demonstrate that aggregate employment and consumption can increase without a corresponding movement in productivity in a model with heterogeneous agents where the only aggregate disturbance is a productivity shock the interaction between incomplete capital markets and indivisible labor results in a low employment productivity correlation and creates a time varying wedge between the marginal rate of substitution for commodity consumption and hours and productivity our results caution against viewing the measured wedge as an inefficiency due to a failure of labor market clearing or as a fundamental driving force behind business cycles jel d31 e32 j22 j24 j31

taxes transfers and employment in an incomplete markets model the consequences of increases in the scale of tax and transfer programs are assessed in the context of a model with idiosyncratic productivity shocks and incomplete markets the effects are contrasted with those obtained in a stand in household model featuring no idiosyncratic shocks and complete markets the main finding is that the impact on hours remains very large but the welfare consequences are very different the analysis also suggests that tax and transfer policies have large effects on average labor productivity via selection effects on employment

the heterogeneous responses of consumption between poor and rich to government spending shocks government spending shocks have substantially different effects on consumers across the income distribution consumption increases for the poor whereas it decreases for the rich in response to a rise in government expenditure i shed light on this issue by incorporating a progressive tax scheme and productive public expenditure into a heterogeneous agent model economy with indivisible labor the model economy is able to successfully match aggregate and disaggregate effects of government spending shocks on consumption when the government increases its spending and accompanies it by a rise in tax progressivity the poor are employed and increase their consumption since after tax wage rates increase while the rich decrease their consumption because of a fall in after tax wage rates

a three state model of worker flows in general equilibrium abstract we develop a simple model featuring search frictions and a nondegenerate labor supply decision along the extensive margin the model is a standard version of the neoclassical growth model with indivisible labor and idiosyncratic productivity shocks and frictions characterized by employment loss and employment opportunity arrival shocks we argue that it is able to account for the key features of observed labor market flows for reasonable parameter values persistent idiosyncratic productivity shocks play a key role in allowing the model to match the persistence of the employment and out of the labor force states found in individual labor market histories

demand for beef and chicken products separability and structural change several studies have indicated that the recent shift from beef to poultry in consumption is not entirely caused by changes in rela tive prices or income braschler chavas dahlgran hudson and vertin moschini and meilke frank thurman most studies of structural change have focused on red meat consumption only thurman has looked closely at the poultry market and no one has considered poultry products yet the mix of chicken products marketed changed dramat ically during the last twenty years and should have influenced aggregate meat demand the share of broiler slaughter marketed as whole birds declined from 74 in 1965 to 28 in 1985 while cut up parts and processed chick en products increased from 26 to 72 whole birds are inferior goods and cut up parts and processed chicken are normal goods haidacher et al the shift in chicken prod uct mix away from whole birds should have increased the preference for total chicken in this article two related questions are ad dressed first do consumers allocate expendi tures among meats by animal origin or by product type second does disaggregation of meat into products in a meat demand model give insight into the causes of structural

individual and aggregate labor supply in heterogeneous agent economies with intensive and extensive margins we develop a heterogeneous agent general equilibrium model that incorporates both intensive and extensive margins of labor supply a nonconvexity in the mapping between time devoted to work and labor services distinguishes between extensive and intensive margins we consider calibrated versions of this model that dier in the value of a key preference parameter for labor supply and the extent of heterogeneity the model is able to capture the salient features of the empirical distribution of hours worked including how individuals transit within this distribution we then study how the various specications inuence labor supply responses to aggregate technology shocks we nd that abstracting from intensive margin adjustment has large eects on the volatility of aggregate hours even if intensive margin uctuates relatively little

discussion of estimating linearized heterogeneous agent models using panel data abstract the techniques proposed in papp and reiter 2020 allow the use of cross sectional and aggregate data observed at different frequencies in the estimation of dynamic stochastic macroeconomic models however the question is whether technique is getting ahead of what is sensible in terms of currently available empirical strategies to estimate macroeconomic models which are without exception misspecified

the determinants of uk business cycles this paper considers the causes of post war uk business cycles using an extended stochastic growth model we construct estimates of productivity and preference shocks both of which are highly persistent volatile and potentially capable of explaining uk business cycles we find the productivity term is the dominant explanation of uk output fluctuations but our estimated preference shift is crucial in understanding employment movements a variety of granger causality tests establish whether these productivity and preference terms are unpredictable and so can be potentially considered as the cause of uk business cycles or whether they are themselves granger caused by other variables the aim of business cycle theory is to identify the causes of business cycles and outline the various propagation mechanisms through which these produce cyclical fluctuations the purpose of this paper is to study the former using uk data we investigate the main sources of uk post war business cycles our aim in doing so is to discriminate between competing theories of the business cycle as well as to increase our understanding of particular episodes of uk post war economic history to achieve this aim we focus on two fundamental sources of business cycle fluctuations productivity shocks and a preference shift or more generally a supply and demand shock we choose these because i they can be easily calculated using only published data avoiding the need for any econometric identification assumptions ii they represent the simplest extension to the neoclassical stochastic growth model which can explain observed uk business cycle patterns they therefore form a natural benchmark with which to assess prescott s 1986 claim that this model can account for both growth and business cycles however while our main focus is on these two shocks our methodology is broad enough to allow for a wide range of potential causes of uk business cycles in section 1 of the paper we outline some stylised facts of the uk business cycle and motivate more rigorously our focus on productivity and preference shocks in section 2 we provide estimates of these shocks discuss their univariate properties and examine their correlation with key business cycle variables we find both shocks to be very volatile and persistent with the productivity variable accounting for a large proportion of output fluctuations and preference shifts more important in explaining employment movements simulations show that in combination with a neoclassical growth model these shocks are capable of matching uk business cycles however if

time preference and the distributions of wealth and income this paper presents a dynamic competitive equilibrium model in which heterogeneity in time preferences alone can generate the observed patterns of wealth and income inequality in the united states this model generalizes the standard deterministic neoclassical growth model by introducing i a direct preference for wealth by the consumers and ii human capital formation the rst feature prevents the wealth distribution from collapsing into a degenerate distribution the second feature generates a strong positive correlation between earnings and wealth across agents a calibrated version of this model is able to replicate the wealth and income distributions of the united states

estimating linearized heterogeneous agent models using panel data abstract we develop a method to estimate heterogeneous agent models that uses not only time series of macroeconomic aggregates but can also incorporate micro level data repeated cross section or panel the micro data may be collected at lower frequency and time aggregated the method is based on the linearization approach of reiter 2009 combined with optimal state aggregation as in reiter 2010 the model may contain decision problems with both continuous and discrete choice linearity of the model solution allows fast computation of second moments and likelihood we discuss various computational devices to maximize the speed of the estimation

ex post heterogeneity and the business cycle abstract a temporary heterogeneity in individual skills is introduced in the indivisible labor model studied by rogerson 1984 and hansen 1985 and the model is calibrated and simulated the results suggest that heterogeneity may be a very important factor affecting the volatilities and comovements of output and other variables the results also show that the average quality variation of employed workers can be as much as 16 percent of the output volatility

the labor wedge as a matching friction abstract we use a search and matching model to decompose the labor wedge into three classes of labor market frictions and evaluate their role for the labor wedge and unemployment we find that there is an asymmetric effect of labor market frictions on the labor wedge and unemployment while the wedge is to a large extent explained by changes in matching efficiency unemployment is accounted for by the combination of frictions to matching efficiency job destruction and bargaining if search and matching frictions give rise to the labor wedge then it is relevant for explaining unemployment mainly through changes in matching efficiency

income and wealth heterogeneity in the macroeconomy how do movements in the distribution of income and wealth affect the macroeconomy we analyze this question using a calibrated version of the stochastic growth model with partially uninsurable idiosyncratic risk and movements in aggregate productivity our main finding is that in the stationary stochastic equilibrium the behavior of the macroeconomic aggregates can be almost perfectly described using only the mean of the wealth distribution this result is robust to substantial changes in both parameter values and model specification our benchmark model whose only difference from the representative agent framework is the existence of uninsurable idiosyncratic risk displays far less cross sectional dispersion and skewness in wealth than u s data however an extension that relies on a small amount of heterogeneity in thrift does succeed in replicating the key features of the wealth data furthermore this extension features aggregate time series that depart significantly from permanent income behavior

the value of genetic information to bull buyers a combined revealed stated preference approach dna profile information has begun appearing in purebred bull auction catalogs however the value of this information is as of yet unknown this study uses data from actual bull sales at a test station and combines it with stated preference survey data to determine the value of the dna profile information consistent with previous research we find that expected progeny differences epds test performance and ultrasound information significantly influence bull buyers willingness to pay the newer dna profile information however was unrelated to buyers preferences methodologically we find statistically significant differences but highly correlated willingness to pay values across the stated and revealed preference data sources

environmental accidents under moral hazard and limited firm liability we study optimal government policy when firms operations involve a risk of a large environmental accident firms do not have sufficient assets to cover such costs and the risk is affected by firms efforts which are unobservable to outsiders when firms profits and government revenues have equal weights in the social welfare function a first best can be implemented and requires that the firm be subsidized heavily when operating with no accident and all its assets confiscated in the event of an accident with a lower weight on firm profits the solution is always second best with lower subsidies to the firm and a firm effort lower than at the first best solution when firm investments affect both the required accident preventing effort for given risk and the work effort required for a given output the first best never involves specific investment subsidies while a second best solution generally always does

strict liability as a deterrent in toxic waste management empirical evidence from accident and spill data abstract this paper examines whether strict liability imposed on polluters has reduced uncontrolled releases of toxics into the environment we fit regressions relating spills of selected chemicals to the type of liability in force in a state and to state manufacturing activity for some chemicals spills are more numerous in states imposing strict liability this could be due to unobserved state characteristics with small firms being responsible for a disproportionate number of spills regardless of the liability structure alternatively separate regressions for the two liability regimes suggest that only under strict liability are small firms responsible for a disproportionate number of spills

heterogeneity and long run changes in aggregate hours and the labor wedge abstract from 1961 to 2007 u s aggregate hours worked increased and the labor wedge measured as the discrepancy between a representative household s marginal rate of substitution and the marginal product of labor declined substantially the labor wedge is negatively related to hours and is often attributed to labor income taxes however u s labor income taxes increased since 1961 we examine a model with gender and marital status heterogeneity which accounts for the trends in the u s hours and the labor wedge apart from taxes the model s labor wedge reflects non distortionary cross sectional differences in households hours worked and productivity we provide evidence that household heterogeneity is important for long run changes in labor wedges and hours in other oecd economies

environmental impairment liability as an instrument of environmental policy abstract this paper evaluates the role of liability that may arise in the context of an impairment of the environment environmental impairment liability or eil for short is analyzed as an instrument of environmental policy interrelationships between injurers victims the legal system insurers and the environment serve to show that eil may contribute to preserve the environment however peculiarities such as mass torts and uncertain behavior of courts serve to detract from the effectiveness of eil the question arises of whether these shortcomings are 1 mitigated or exacerbated by eil insurance the potential contribution of insurance to eil is found to be undermined by partial market failure which however can be alleviated by permitting the flotation of environmental risk warrants on capital markets

the economic value of improvements in beef tenderness by genetic marker selection a genetic simulation model is combined with an economic model of the u s beef industry to determine how consumer demand shifts resulting from bull and heifer selection strategies that improve steak tenderness affect economic profitability at four points in the beef supply chain the results indicate that a selection strategy in which bulls in the upper 30 of genetic merit are selected each year would result in increased profitability of 9 60 head for feeder cattle and 1 23 head for fed cattle in 20 years the net present value of the genetic improvement program is estimated to produce economic benefits of 7 6 billion

cross sectional and aggregate labor supply abstract standard heterogeneous agent macro models that highlight idiosyncratic productivity shocks do not generate the near zero cross sectional correlation between hours and wages found in the data we ask whether matching this moment matters for business cycle properties of these models to do this we explore two extensions of the model in chang et al 2019 that can match this empirical cross section correlation one of these departs from the assumption of balanced growth preferences the other introduces an idiosyncratic shock to the opportunity cost of market work that is highly correlated with the shock to market productivity while both extensions can match the empirical correlation they have large and opposing effects on the cyclical volatility of the labor market we conclude that the cross sectional moment is important for business cycle analysis and that more work is needed to distinguish the potential mechanisms that can generate it

solving heterogeneous agent models by projection and perturbation the paper proposes a numerical solution method for general equilibrium models with a continuum of heterogeneous agents that combines elements of projection and of perturbation methods the basic idea is to solve first for the stationary solution of the model without aggregate shocks but with fully specified idiosyncratic shocks afterwards one computes a first order perturbation of the solution in the aggregate shocks this approach allows to include a high dimensional representation of the cross sectional distribution in the state vector the method is applied to a model of household saving with uninsurable income risk and liquidity constraints techniques are discussed to reduce the dimension of the state space such that higher order perturbations are feasible

aggregate implications of indivisible labor incomplete markets and labor market frictions this paper analyzes a model that features frictions an operative labor supply margin and incomplete markets we flrst provide analytic solutions to a benchmark model that includes indivisible labor and incomplete markets in the absence of trading frictions we show that the steady state levels of aggregate hours and aggregate capital stock are identical to those obtained in the economy with employment lotteries while individual employment and asset dynamics can be difierent second we introduce labor market frictions to the benchmark model we flnd that the efiect of the frictions on the response of aggregate hours to a permanent tax change is highly non linear we also flnd that there is considerable scope for substitution between voluntary and frictional nonemployment in some situations

interpreting labor supply regressions in a model of full and part time work we construct a family model of labor supply that features adjustment along both the intensive and extensive margin intensive margin adjsutment is restricted to two values full time work and part time work using simulated data from the steady state of the calibrated model we examine whether standard labor supply regressions can uncover the true value of the intertemporal elasticity of labor supply parameter we find positive estimated elasticities that are larger for women and that are highly significant but they bear virtually no relationship to the underlying preference parameters

joint bidding entry and the price of ocs leases we use a two equation system to estimate the effects of joint bidding on the number of bids and the maximum bid the government received in auctions for offshore continental shelf tracts held between 1979 and 1983 the estimates are corrected for selection bias and simultaneity we find that joint bidding encourages entry in the sense that the number of bids is positively associated with the existence of joint bidding we also find support for the hypothesis that joint bidding increases the high bid with the number of bids held constant we use these results to estimate the cost of a ban on joint bidding for ocs leases

idiosyncratic shocks and the role of nonconvexities in plant and aggregate investment dynamics we examine a model of lumpy investment wherein establishments face persistent shocks to common and plant specific productivity and nonconvex adjustment costs lead them to pursue generalized s s investment rules we allow persistent heterogeneity in both capital and total factor productivity alongside low level investments exempt from adjustment costs to develop the first model consistent with available evidence on establishment level investment rates reassessing the implications of lumpy investment for aggregate dynamics in this setting we find that they remain substantial when factor supply considerations are ignored but are quantitatively irrelevant in general equilibrium the substantial implications of general equilibrium extend beyond the dynamics of aggregate series while the presence of idiosyncratic shocks makes the time averaged distribution of plant level investment rates largely invariant to market clearing movements in real wages and interest rates we show that the dynamics of plants investments differ sharply in their presence thus model based estimations of capital adjustment costs involving panel data may be quite sensitive to the assumption about equilibrium our analysis also offers new insights about how nonconvex adjustment costs influence investment at the plant when establishments face large and weakly persistent idiosyncratic productivity shocks consistent with existing estimates we find that nonconvex costs do not cause lumpy investments but act to eliminate them