Turning the Table on Assessment: The Grantee Perception Report

This book chapter describes the origins of the GPR, illustrates lessons learned, and provides examples of changes made by foundations that have used this tool. It also reports on some of the broadly applicable insights gained from CEP's large-scale surveys of grantees. (This material is excerpted from the Grantmakers for Effective Organizations (GEO) book, A Funder's Guide to Organizational Assessment.

Ups and downs: how wages change over the business cycle

In “Ups and Downs: How Wages Change Over the Business Cycle,” Kevin Huang discusses the shift in the cyclicality of real wages — from countercyclical before World War II to procyclical postwar. He outlines the standard explanation for this change but offers evidence of an alternative explanation: the increased role that intermediate goods play in the production process in the postwar era.Wages ; Business cycles

Financial Intermediation, markets, and growth

This paper contributes to the literature comparing the relative performance of financial intermediaries and markets by studying an environment in which a trade-off between risk sharing and growth arises endogenously. Financial intermediaries provide insurance to households against a liquidity shock. Households can also invest directly on a financial market if they pay a cost. In equilibrium, the ability of intermediaries to share risk is constrained by the market. Moreover, intermediaries invest less in the productive technology when they provide more risk-sharing. This creates a trade-off between risk-sharing and growth. We show the mix of intermediaries and market that maximizes welfare depend on parameter valuesFinancial intermediation, financial markets, risk-shring, growth

Financial intermediaries, markets, and growth

This paper contributes to the literature comparing the relative performance of financial intermediaries and markets by studying an environment in which a trade-off between risk sharing and growth arises endogenously. Financial intermediaries provide insurance to households against a liquidity shock. Households can also invest directly on a financial market, if they pay a cost. In equilibrium, the ability of intermediaries to share risk is constrained by the market. Moreover, intermediaries invest less in the productive technology when they provide more risk-sharing. This creates a trade-off between risk-sharing and growth. We show the balance of intermediaries and market that maximizes welfare depend on parameter values.Financial intermediaries; Financial markets; Risk-sharing; Growth

Specific factors meet intermediate inputs: implications for strategic complementarities and persistence.

A central challenge to monetary business-cycle theory is to find a solution to the problem of persistence and delay in the real effects of monetary shocks. Previous research has identified separately specific factors and intermediate inputs as two promising mechanisms for generating the persistence and delay in a staggered price-setting framework. Models based on either of these two mechanisms have also been used in the design of optimal monetary policy. ; By examining a staggered price model that features both specific factors and intermediate inputs, the author finds an offsetting interaction between the two individually promising mechanisms, which leads to a cancellation of much of the impact of each in propagating monetary shocks. This finding posits a challenge to the search for a robust monetary transmission mechanism and design of optimal monetary policy.Business cycles

Consistent High-Frequency Calibration

Economic models are meant to provide a framework to describe real-world economic activities. In principle, how well a model performs this task can be evaluated by how close the model's simulated activities track the observed ones. A necessary first step in simulating a model is to choose values for the model's parameters in accordance with actual economic data. A fundamental problem in economic modelling, however, is that actual economic data are sampled at time intervals that are typically longer than the decision intervals of actual economic agents. One popular resolution of this problem is to constrain the length of the decision intervals of theoretical economic agents to be equal to the length of the actual data-sampling intervals. This widely adopted approach makes it feasible to directly calibrate theoretical models to the observed data, but it can introduce substantial biases in the models' empirical performance, as demonstrated by recent research that has allowed the decision intervals to be shorter than the data-sampling intervals. This alternative, high-frequency modelling approach, however, has brought with itself a fundamental issue that direct calibration of the models' parameters is no longer feasible. In response, researchers have employed a simple, yet ad hoc, rule to transform commonly chosen lower-frequency parameter values (which can be calibrated directly from the available data) to their high-frequency counterparts. We show in this paper that this simple transformation rule has three major drawbacks. First, it produces internal inconsistencies in steady- state equilibrium conditions. Second, it is sometimes at odds with microeconomic evidence. And third, it can result in inaccurate log- linear approximations to the models' true equilibrium solutions by worsening the fit of both the transition dynamic coefficients and the point of approximation itself. We present here an alternative, coherent transformation rule for calibrating high-frequency models that directly addresses these three shortcomings. We then use our consistent transformation rule to calibrate high-frequency versions of two well- known economic models and show how it improves these models' empirical performance.calibration temporal aggregation

International real business cycles with endogenous markup variability

The aggregate impact of decisions made at the level of the individual firm has recently attracted a lot of attention in both the macro and trade literatures. We adapt the benchmark international real business cycle model to a game-theoretic environment to add a channel for the strategic interaction among domestic and foreign firms. We show how the sum of strategic pricing decisions made at the level of the individual firm can have significant effects on the volatility and cross country co-movement of GDP and its components. Specifically we show that the addition of this one channel for strategic interaction leads to a significant increase in the cross-country co-movement of production and investment, as well as a significant decrease in the volatility of investment and the trade balance over the benchmark IRBC model.Industrial organization (Economic theory) ; Business cycles - Econometric models ; International finance ; International trade - Econometric models ; Gross domestic product

Temptation and Self-Control: Some Evidence from the Consumer Expenditure Survey

Temptation, Self-Control, Gul-Pesendorfer Preferences, Asset Pricing

Vertical production and trade interdependence and welfare

The authors study international transmissions and welfare implications of monetary shocks in a two-country world with multiple stages of production and multiple border-crossings of intermediate goods. This empirically relevant feature is important, as it has opposite implications for two external spillover effects of a unilateral monetary expansion. If all production and trade are assumed to occur in a single stage, the conflict-of-interest terms-of-trade effect tends to dominate the common-interest efficiency-improvement effect for reasonable parameter values, so that the international welfare effects would depend in general on the underlying assumptions about the currencies of price setting. The stretch of production and trade across multiple stages of processing magnifies the efficiency-improvement effect and dampens the terms-of-trade effect. Thus, a monetary expansion can be mutually beneficial regardless of its source or the pricing assumptions.Production (Economic theory) ; Trade ; Monopolistic competition ; Welfare