Macro Dynamics

Noah Williams

Williams asks whether the recurrent boom-bust dynamics of Minsky's financial instability hypothesis — "periods of stability lead to periods of instability" — can arise endogenously from a tractable …

Stephie Fried

This paper develops a macro heterogeneous-agent model to quantify the distributional welfare impacts of higher temperatures from climate change across income groups in the United States. The …

Simon Johnson · Lukasz Rachel · Catherine Wolfram

This paper asks what the optimal response of an exhaustible-resource producer is to sanctions in the form of a price cap, and how a sanctioning coalition should set the cap. The motivation is the …

Fatih Guvenen · Alisdair McKay · Conor Ryan

Guvenen, McKay, and Ryan estimate a stochastic income process for US male workers that simultaneously matches five empirical regularities from Social Security Administration administrative panel data …

Lukasz Rachel

This paper builds a tractable, fully analytical version of the workhorse macro-epidemiology ("econ-epi") model and uses it to characterize how susceptible individuals behave during a deadly epidemic, …

Andrew Y. Chen · Francisco Palomino

Chen and Palomino prove a general irrelevance theorem identifying when risk aversion and time-varying risk are irrelevant for key model dynamics in representative-agent macroeconomic models. The …

Axel Gottfries

This paper resolves a long-standing theoretical impasse in labor search models: how to model wage bargaining when workers search on the job (OJS) and the quit rate depends on the wage. Shimer (2006) …

Kjetil Storesletten · Bo Zhao · Fabrizio Zilibotti

This paper asks why the nature of business cycles changes systematically as economies develop and shed their large agricultural sectors. The motivation is both empirical and theoretical.

Ana Fostel · John Geanakoplos · Gregory Phelan

The paper asks why large gross financial flows exist between similarly rich countries (especially the U.S. and Europe), why financial integration raises rather than lowers asset price volatility, and …

Saki Bigio · Diego R Känzig · Pablo Sánchez · Conor Walsh

This paper quantifies the sources and distributional consequences of unexpected carbon price changes for European households using a money-metric welfare framework. The motivation is stark: while …

Antoine Bertheau · Rune Vejlin

Research question and motivation. On-the-job search models typically organize firms along a "job ladder" — a common ranking by workers of available jobs — but they disagree on whether the rung is best …

Katharina Bergant · Prachi Mishra · Raghuram Rajan · Freddy Pinzon-Puerto

This paper examines how unexpected changes in U.S. monetary policy transmit to cross-border merger and acquisition (M&A) activity globally, covering both the volume of deals and their quality as …

Julien Acalin · Laurence Ball

The fall in the US federal debt-held-by-the-public/GDP ratio from a postwar peak of 106% in fiscal year 1946 to a trough of 23% in 1974 is widely cited (Elmendorf-Mankiw, Krugman) as evidence that an …

Mikael Carlsson · Alex Clymo · Knut-Eric Joslin

Carlsson, Clymo, and Joslin use Swedish manufacturing firm-level microdata for 1998–2013 to separately identify and characterize the cyclical behavior of physical productivity (TFPQ) shocks and demand …

Stephen Ayerst · Loren Brandt · Diego Restuccia

This paper asks how institutional distortions to factor markets affect not only the static allocation of inputs across farms but also the dynamic choices — crop selection and productivity-enhancing …

Philipp Hochmuth · Per Krusell · Kurt Mitman

This paper investigates how the EU's Fit-for-55 climate package will affect aggregate output and distribute its costs across the income distribution. The question matters because energy is a necessity …

Eugene Tan

This paper investigates how the illiquidity of entrepreneurial capital shapes investment dynamics and wealth inequality. The central question is whether entrepreneurship drives wealth heterogeneity or …

Ia Vardishvili

US cohorts of establishments born in recessions persistently employ fewer workers at entry and over their life cycle, yet are on average more productive than expansionary cohorts; the number of …

Eric Jondeau · Gregory Levieuge · Jean-Guillaume Sahuc · Gauthier Vermandel

This paper asks whether public subsidies to green-technology producers, financed by a carbon tax, can materially reduce the macroeconomic cost of reaching net-zero CO2 emissions by 2060. The …

Ruixue Jia · Xiao Ma · Victoria Wenxin Xie

This paper studies how the expectation of rising flood risk — distinct from realized flood events — reshapes where firms locate, where workers live and how much they work, and what this implies for …

Tristany Armangué-Jubert · Tancredi Rapone · Alessandro Ruggieri

Firms are larger and grow faster over the life cycle in high-income countries, while labor markets in poorer countries are less competitive (employers hold more wage-setting power). The paper asks how …

Alessandro Ferrari · Francisco Queirós

Ferrari and Queirós ask why US recoveries have become progressively slower and argue that rising firm heterogeneity and market power — well-documented long-run trends — can substantially increase the …

Hiroshi Inokuma · Juan M. Sánchez

This paper asks how the well-documented slowdown in labor-force growth affects aggregate total factor productivity (TFP) growth, a question that prior work on business dynamism had left unanswered. …

Rodrigo Adão · Costas Arkolakis · Federico Esposito

How do international trade shocks propagate through spatially connected regional labor markets, and how large are the general equilibrium effects that standard shift-share specifications miss? Adão, …

Nick Pretnar · Maria Feldman

The paper investigates why the U.S. health-services sector has simultaneously experienced a tripling of relative prices since 1948 and a rise in the personal consumption expenditure (PCE) share from …

Flavien Moreau · Ludovic Panon

Moreau and Panon ask how much cartels cost the aggregate economy — in terms of both total factor productivity and welfare — and find the losses are considerably larger than the received wisdom from …

S. Borağan Aruoba · Thomas Drechsel

To study how monetary policy affects the economy, macroeconomists must isolate "shocks" — changes in interest rates that are not systematic responses to economic conditions. The paper proposes a new …

Maria-Jose Carreras-Valle

This paper documents and explains a previously unreported reversal in U.S. manufacturing inventory trends: after a 25-year secular decline, inventories-to-sales ratios have been rising steadily since …

Carlo Altavilla · Giacomo Carboni · Michele Lenza · Harald Uhlig

This paper asks whether uncertainty in the interbank market — distinct from general macroeconomic uncertainty — raises the cost of bank credit to firms, and whether bank-specific characteristics …

Isabel Cairó · Avi Lipton

This paper addresses two connected questions: why do Black workers face persistently higher and more volatile unemployment than white workers, and can the Federal Reserve's August 2020 shift from a …

Benjamin Bridgman · Berthold Herrendorf

The paper asks why the U.S. labor share has declined over the postwar period, and whether rising markups or capital deepening (automation, falling capital prices) is the primary driver. The authors …

Christian Bredemeier · Babette Jansen · Roland Winkler

This paper proposes a novel fiscal transmission channel through which government spending expansions reduce employer monopsony power in the labor market, generating larger fiscal multipliers and …

Andrea Ferrero · Maurizio Michael Habib · Livio Stracca · Fabrizio Venditti

This paper investigates how institutional quality shapes (i) the domestic financial and macroeconomic impact of Global Financial Cycle (GFC) shocks on emerging market economies (EMEs) and (ii) the …

Sebastian Ellingsen

This paper asks whether the location of economic activity adapts to changes in the location of trading opportunities, or whether historical patterns of trade permanently fix where cities emerge and …

Jianjun Miao · Zhouxiang Shen · Dongling Su

This paper asks how bank holdings of long-term government securities interact with interest-rate-driven monetary tightening to amplify macroeconomic downturns and generate banking crises. The …

Vincenzo De Lipsis · Matteo Deleidi · Mariana Mazzucato · Paolo Agnolucci

This paper estimates the dynamic macroeconomic effects of US government R&D investment using a Structural Vector Autoregressive (SVAR) framework, with an extension to a Rational Expectations SVAR …

Christiaan van der Kwaak

When central banks pay interest on reserves — as the Federal Reserve has done since October 2008 and as is standard operating procedure today — does financing fiscal stimulus by permanently expanding …

Hassan Afrouzi · Marina Halac · Kenneth Rogoff · Pierre Yared

Post-pandemic inflation across advanced economies rose to levels not seen since the early 1980s, reviving interest in central bank credibility. The standard quantitative macro models used to interpret …

Salomon Garcia-Villegas

This paper develops a quantitative general equilibrium model of the U.S. housing finance system that jointly determines mortgage credit and mortgage-backed security (MBS) issuance, with the aim of …

Tuo Chen · Chang-Tai Hsieh · Zheng (Michael) Song

Chen, Hsieh, and Song study the use of unofficial non-tariff barriers (NTBs) by China during the U.S.-China trade war of 2018–2019 and in the first year of the Phase 1 purchase agreement (2020). The …

Davide Debortoli · Mario Forni · Luca Gambetti · Luca Sala

This paper measures how the inflation-unemployment tradeoff associated with monetary policy varies with both the sign of the monetary intervention (easing versus tightening) and the state of the …

Luca Gagliardone · Mark Gertler

Gagliardone and Gertler ask why the US inflation surge that began in mid-2021 was both sudden and persistent, and whether a simple structural model can account for it without targeting inflation in …

Minsu Chang · Frank Schorfheide

This paper asks how conventional and informational monetary policy shocks affect the cross-sectional distributions of labor earnings, consumption, and financial income in the United States. The …

Vahagn Jerbashian

This paper estimates the elasticities of substitution between labor, information and communication technology (ICT) and intellectual property (IP) capital, and traditional capital using a nested …

Thomas Douenne · Albert Jan Hummel · Marcelo Pedroni

This paper asks whether inequality and redistributive taxation should make climate policy more or less ambitious, and how optimal carbon taxes interact with optimal income taxes when households differ …

Frédéric Docquier · Stefano Iandolo · Hillel Rapoport · Riccardo Turati · Gonzague Vannoorenberghe

This paper investigates how the skill structure of globalization shocks — rather than globalization per se — drives the long-run evolution of populism across countries, making a unified empirical case …

Matthew Klepacz

This paper asks whether increases in aggregate volatility reduce the effectiveness of monetary policy by making aggregate prices more flexible. The motivation is concrete: policymakers worry that …

Lukasz A. Drozd · Marcin Kolasa · Jaromir B. Nosal

This paper evaluates five microfounded pricing-to-market (PTM) mechanisms and one reduced-form aggregator in a two-country DSGE model with volatile exchange rates driven by financial shocks (following …

Andrés Fernández · Daniel Guzman · Ruy Lama · Carlos Végh

Developing and emerging economies exhibit procyclical fiscal policy on both the spending and taxation sides: government expenditures expand in booms and contract in recessions, and tax rates fall in …

Ferdinando Monte · Charly Porcher · Esteban Rossi-Hansberg

Monte, Porcher, and Rossi-Hansberg ask why remote work surged abruptly and permanently after COVID-19 despite information-technology advances raising it only marginally between 1980 and 2019, why the …

Yuriy Gorodnichenko · Debora Revoltella · Jan Svejnar · Christoph T. Weiss

This paper investigates why firms in the European Union exhibit wide dispersion in marginal revenue products (MRP) of capital and labor — a direct indicator of resource misallocation — and asks how …

Scott French · Tess M. Stafford

A large empirical literature uses micro data to estimate the intertemporal elasticity of substitution (IES) of labor supply, a parameter crucial for understanding business-cycle fluctuations in hours …

Martin Shu

This paper asks whether worker self-selection, rather than slow technological progress, can explain the low measured labor productivity growth in the U.S. service sector — a phenomenon known as …

Sushant Acharya · Jess Benhabib

Research question and motivation: A central tenet of monetary policy is that aggressively raising nominal rates more than one-for-one with inflation (the Taylor principle) nips self-fulfilling …

Sjak Smulders · Sophie Zhou

This paper by Smulders and Zhou challenges the standard lock-in narrative for the slow green transition. The conventional explanation — path dependency in directed technical change (DTC) — is hard to …

Loren Brandt · Ruochen Dai · Gueorgui Kambourov · Kjetil Storesletten · Xiaobo Zhang

This paper studies entrepreneurship and new firm creation in China through the lens of serial entrepreneurs (SEs) — individuals who establish more than one firm — contrasting them with non-serial …

Heejeong Kim · Jung Hwan Kim

U.S. outstanding student debt rose roughly 20-fold, from about $50 billion in 1985 to nearly $1 trillion in 2014 (about 7% of GDP), making it the second-largest form of household debt after mortgages.

Sakai Ando · Tamon Asonuma · Prachi Mishra · Alexandre Sollaci

Sovereign debt restructuring is a central tool for countries in debt distress, yet surprisingly little evidence exists on whether it actually reduces the debt-to-GDP ratio — the metric used in …

Esther Ann Bøler · Andreas Moxnes · Karen Helene Ulltveit-Moe

Firms that invest heavily in intangible assets — patents, R&D, software — face a structural financing disadvantage: intangibles offer limited collateral value to banks, so intangible-intensive firms …

Robert J Barro · V V Chari

Barro and Chari (2024) revisit the long-standing debate over optimal capital income taxation, unifying the Chamley-Judd zero-tax result, the Straub-Werning positive-tax amendment, and the …

Russell Cooper · Ozgen Ozturk

This paper investigates what drives the countercyclical dispersion of TFPR — total factor productivity measured in revenue terms — a pattern that is well documented empirically but poorly understood …

Corina Boar · Denis Gorea · Virgiliu Midrigan

Research question and motivation. A large literature argues that credit constraints are the dominant financial friction holding private businesses below their optimal scale, so that easing credit …

Hideki Nakamura · Masakatsu Nakamura · Shota Moriwaki

This paper asks a foundational question: can the economy-wide degree of automation be measured coherently from standard macroeconomic data, without relying on technology-specific proxies such as robot …

Eunkyung Lee

Research question and motivation. This paper asks how monetary policy transmits to corporate investment through bank credit, and specifically whether the relevant credit margin is the origination of …

Maximilian Konradt · Giacomo Mangiante

This paper asks whether carbon pricing through the EU Emissions Trading System (EU ETS) imposes economic costs that are unequally distributed across European regions, and whether those economic costs …

Thomas Bourany · Jordan Rosenthal-Kay

This paper asks who wins and loses from climate policies — carbon taxes, renewable subsidies, and carbon tariffs — across 193 heterogeneous countries, and by how much. The motivation is that the …

Rüdiger Bachmann · Kai Carstensen · Stefan Lautenbacher · Manuel Menkhoff · Martin Schneider

A large literature shows that firms perceiving more uncertainty make more cautious intertemporal decisions (investment, hiring, price setting), but it is far less clear what makes firms uncertain in …

Donggyu Lee

This paper asks whether the Federal Reserve's unconventional monetary policies (UMP) — specifically quantitative easing (QE) and forward guidance — exacerbated income and welfare inequality in the …

Horng Chern Wong

Why do some firms pay persistently higher wages for observably similar workers, and what role do firms' product-market power (monopoly/markups), labor-market power (monopsony/markdowns), and workers' …

Michael W. L. Elsby · Axel Gottfries · Pawel Krolikowski · Gary Solon

This paper develops a tractable theoretical model of wage dynamics in long-term employment relationships, situated between two polar extremes in the existing literature: continual Nash renegotiation …

Maria Alsina-Pujols

This paper asks how the threat of forced climate migration — international displacement driven by climate-induced natural disasters — should alter optimal carbon taxation. The motivation is twofold.

Drago Bergholt · Fabio Canova · Francesco Furlanetto · Nicolò Maffei-Faccioli · Pål Ulvedal

The paper addresses what drove the post-COVID inflation surge in the United States and internationally. Before answering the substantive question, the authors identify and diagnose a methodological …

Juan J Dolado · Etienne Lalé · Hélène Turon

Dolado, Lalé, and Turon build a structural equilibrium model of the U.K. low-wage labour market to evaluate zero-hours contracts (ZHCs), employment agreements under which firms are not required to …

Behzad Diba · Olivier Loisel

Since 2008 the US economy has gone through two zero-lower-bound (ZLB) episodes (Dec 2008–Dec 2015 and Mar 2020–Mar 2022). Standard New Keynesian (NK) and monetarist models struggle with three broad …

Philippe Bacchetta · Elena Perazzi

As central banks worldwide explore retail central bank digital currency (CBDC), the macroeconomic consequences depend heavily on how CBDC interacts with bank deposits. Prior work spans a wide range of …

Chadwick Curtis · Julio Garín · Robert Lester

The paper asks whether population aging flattens the Phillips curve through a previously unexplored channel — age-related differences in the elasticity of substitution across product varieties. …

Christiaan van der Kwaak · Sweder van Wijnbergen

Does fiscal stimulus still work when it is financed through a banking system that is undercapitalized and holds large quantities of risky domestic government bonds? This was a first-order policy …

Hiona Balfoussia · Harris Dellas · Dimitris Papageorgiou

This paper studies a transmission channel from sovereign fiscal weakness to banking performance that the literature has largely overlooked: government-provided deposit insurance, rather than banks' …

Daan Opschoor · Dick van Dijk · Philip Hans Franses

Research question and motivation. Since the Great Recession, quantifying downside risks to economic activity (rather than only expected outcomes) has become central for policymakers and investors.

Can Xu · Andreas Steiner

Research question and motivation: The paper asks whether and why the type of employment — specifically public-sector employment — affects household saving rates in China. This matters because Chinese …

Gene Ambrocio

Macro-uncertainty is widely believed to depress activity, but existing measures are tied to financial markets, professional forecasters, or economic policy, while a key transmission channel runs …

Rafael Gerke · Sebastian Giesen · Daniel Kienzler

This paper revisits the "reversal puzzle" — the counterintuitive result, first documented by Carlstrom, Fuerst and Paustian (CFP, 2015), that in standard New Keynesian models the effect of forward …

Charles M. Kahn · David Marshall · Robert L. McDonald

This paper develops a theoretical model to explain why financial markets can suffer self-fulfilling liquidity crises and how a central bank acting as a "market-maker of last resort" (MMLR) can …

Cecilia Dassatti · Rodrigo Lluberas · Francesc Rodriguez-Tous

Research question and motivation. Banks reluctant to recognize losses on troubled borrowers engage in "loan evergreening"—rolling over or extending credit to delay loss recognition.

Hidehiko Matsumoto

Emerging economies have rapidly accumulated foreign-currency (mostly dollar) debt — the dollar share of 14 emerging economies' foreign debt rose from 75% in 2010 to 81% in 2018. Such debt is dangerous …

Richard Dennis · Oleg Kirsanov

Experimental and survey evidence robustly documents "present bias" — people are more impatient over the short run than the long run, producing preference reversals inconsistent with standard …

Matthias Gnewuch · Donghai Zhang

Research question and motivation. Investment is a sizable and the most volatile component of aggregate GDP, so understanding the investment channel of monetary policy matters for policymakers.

Christoph Hambel · Frederick van der Ploeg

Research question and motivation: Central bankers, regulators, and investors increasingly worry about climate "transition risks" — abrupt shifts in climate policy, green technology breakthroughs, or …

Jay Hyun · Ziho Park · Vladimir Smirnyagin

This paper documents a novel channel through which trade shocks propagate across industries: the internal networks of U.S. multisector firms (the working paper circulated as "Import Competition and …

Jasmina Hasanhodzic · Laurence J. Kotlikoff

Hasanhodzic and Kotlikoff ask a question prior work assumed away: how large is generational risk, and can pay-go Social Security actually mitigate it? Earlier studies (Diamond, Bohn, Krueger-Kubler, …

Sebastian Graves · Victoria Gregory · Lars Ljungqvist · Thomas J. Sargent

How does endogenizing retirement (career-length) choice change the labor-supply and human-capital implications of the canonical Heckman, Lochner, and Taber (1998a, HLT) life-cycle general-equilibrium …

Masami Imai · Michiru Sawada

Why do financial crises leave such deep and protracted economic wounds, with crisis-stricken economies failing to revert to pre-crisis growth trends even a decade later? Imai and Sawada test one …

Carlo Altavilla · Refet S. Gürkaynak · Rogier Quaedvlieg

This paper establishes basic facts about the external finance premium (EFP) faced by euro area firms borrowing from banks, and studies how monetary policy is transmitted to it. The EFP — the extra …

Ricardo Duque Gabriel

Research question and motivation. Public procurement accounts for roughly one-third of government spending (12.6% of GDP and 30% of total government expenditures in OECD countries in 2019).

Marius Clemens · Stefan Gebauer · Tobias König

Research question and motivation: The first two pillars of the European Banking Union (single supervision and single resolution) are in place, but the third pillar — a European deposit insurance …

James Tobin

This 1969 paper by James Tobin, published in the inaugural issue of the Journal of Money, Credit and Banking, sets out a general-equilibrium framework for monetary analysis built around the capital …

Maurice Obstfeld · Kenneth Rogoff

The intertemporal approach treats the current account as the outcome of forward-looking saving and investment decisions rather than as a function of relative prices, and this chapter develops it from …

Morten O. Ravn · Stephanie Schmitt-Grohé · Martín Uribe

If households form habits over individual goods rather than over a consumption aggregate, the demand a firm faces depends on its own past sales, its pricing problem becomes dynamic, and mark-ups turn …

Robert E. Lucas Jr.

This 1976 Carnegie-Rochester Conference Series paper by Robert Lucas argues that the standard "theory of economic policy" -- simulating a fixed, estimated econometric model under alternative …

Jeffrey C. Fuhrer

Standard optimising consumption models make spending jump on impact when a shock hits, which the data flatly contradict; replacing time-separable utility with habit formation gives consumers a motive …

Paul A. Samuelson

This short 1939 note by Paul Samuelson formalizes Alvin Hansen's combination of Keynes's income-expenditure multiplier with the accelerator principle of induced private investment.

François Gourio · Anil K. Kashyap

Plant-level data from Chile and the U.S. show that swings in aggregate investment come almost entirely from changes in how many establishments are having an investment spike, not how big those spikes …

Jeremy Greenwood · Zvi Hercowitz · Gregory W. Huffman

Keynes's idea that shocks to the marginal efficiency of investment drive fluctuations is placed inside a neoclassical model in which firms choose how hard to run their capital; a shock that raises the …

Yves Achdou · Francisco J. Buera · Jean-Michel Lasry · Pierre-Louis Lions · Benjamin Moll

Written explicitly to get mathematicians interested in macroeconomics, this review collects the systems of coupled nonlinear partial differential equations that arise once a macro model tracks a whole …

Kazuo Mino · Hiroaki Sasaki

This paper asks how population aging changes the distribution of income and wealth, using a continuous-time overlapping-generations model in which persistent growth in per capita income is sustained …

Erik G. Hurst · Patrick Kehoe · Elena Pastorino · Thomas Winberry

This paper builds a dynamic macroeconomic model with rich worker heterogeneity, firm monopsony power and putty-clay adjustment frictions in order to trace the time path of the effects of the federal …

Lawrence J. Christiano · Richard M. Todd

Investment projects begin with a long planning phase that consumes very little in the way of resources, and building that phase into an otherwise standard real business cycle model delays the response …