After the 1990 unification, East Germany's capital income share plunged to 15.2% in 1991, then increased to 37.4% by 2015. To account for these large changes in the capital share, I model an economy ...that gains access to a higher productivity technology embodied in new plants. As existing low productivity plants decrease production, the capital share varies due to the nonconvex production technology: plants require a minimum amount of labor to produce output. Two policies—transfers and government‐mandated wage increases—have opposite effects on output growth, but contribute to lowering the capital share early in the transition. (JEL E20, E25, O11)
Asset price data imply a large degree of international risk sharing, while aggregate consumption data do not. We show that a model with trade in goods and endogenously segmented asset markets can ...account for this puzzling discrepancy. Active households—who pay a fixed cost to transfer money into or out of assets—share risk within and across countries, and their marginal utility growth prices assets, so asset prices imply high risk sharing. Inactive households consume their current income and do not share risk, so aggregate consumption (which averages across all households) reflects lower risk sharing. The model also provides a resolution to the Backus-Smith-Kollmann puzzle.
Empirical evidence suggests financial intermediaries increase risky investments when interest rates are low. We develop a model consistent with this observation and ask whether the risks undertaken ...exceed the social optimum. Interest rate policy affects risk taking in the model through two opposing channels. First, low policy rates make riskier assets more attractive than safe bonds. Second, low policy rates reduce the amount of safe bonds available for collateralized borrowing in interbank markets. The calibrated model features excessive risk taking at the optimal policy. However, at low policy rates, collateral constraints tighten and risk taking does not exceed the social optimum.
US hours at work Cociuba, Simona E.; Prescott, Edward C.; Ueberfeldt, Alexander
Economics letters,
08/2018, Letnik:
169
Journal Article
Recenzirano
We construct quarterly US average hours worked using Current Population Survey data on employed persons at work and their actual hours worked. Our methodology can be applied to different demographic ...groups, providing researchers with readily available long-run series of hours.
•We construct a novel measure of US hours worked using data on persons at work.•Our measure is an alternative to estimates using data on all employed persons.•Focus on persons at work eliminates the need for hard to obtain data on weeks worked.•Our methodology allows us to disaggregate hours by subgroups of the population.
We develop a model in which a financial intermediary's investment in risky assets—risk taking—is excessive due to limited liability and deposit insurance, and characterize the policies that implement ...efficient risk taking. In the calibrated model, combining interest rate policy with state‐contingent macroprudential regulations—either capital or leverage regulation, and a tax on profits—achieves efficiency. Interest rate policy mitigates excessive risk taking by altering the return and the supply of collateralizable safe assets. In contrast to commonly used capital regulation, leverage regulation has stronger effects on risk taking and calls for higher interest rates. (JEL E44, E52, G11, G18)
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.
Asset price data imply a large degree of international risk sharing, while aggregate consumption data do not. We evaluate whether a model with trade in goods and endogenously segmented asset markets ...accounts for this puzzling discrepancy. Active households pay a Oxed cost to transfer income into or out of assets. These households share risk within and across countries, and their marginal utility growth prices assets, so asset prices imply high international risk sharing. Inactive households consume current income and do not share risk, so aggregate consumption (which averages across all households) reaects lower risk sharing. Trade in goods is essential for generating these di§erences in the asset price-based and the consumption-based measures of risk sharing. Indeed, without trade, consumption is constrained by domestic resources and there is no international risk sharing. The calibrated model predicts risk sharing measures in line with data, and also partly resolves the Backus-Smith-Kollmann puzzle.
I evaluate the quantitative implications of technology change and government policies for output and factor income shares during East Germany's transition since 1990. I model an economy that gains ...access to a high productivity technology embodied in new plants. As existing low productivity plants decrease production, the capital income share varies due to variation in the profit share of these plants. Two policies - transfers and government-mandated wage increases - have opposite effects on output growth, but both contribute to reducing the capital share during the transition. The model's output and capital share line up with counterparts in East German data.
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