831 research outputs found
Why Inflation Rose and Fell: Policymakers' Beliefs and US Postwar Stabilization Policy
This paper provides an explanation for the run-up of U.S. inflation in the 1960s and 1970s and the sharp disinflation in the early 1980s, which standard macroeconomic models have difficulties in addressing. I present a model in which rational policymakers learn about the behavior of the economy in real time and set stabilization policy optimally, conditional on their current beliefs. The steady state associated with the self-confirming equilibrium of the model is characterized by low inflation. However, prolonged episodes of high inflation ending with rapid disinflations can occur when policymakers underestimate both the natural rate of unemployment and the persistence of inflation in the Phillips curve. I estimate the model using likelihood methods. The estimation results show that the model accounts remarkably well for the evolution of policymakers' beliefs, stabilization policy and the postwar behavior of inflation and unemployment in the United States.
The Time Varying Volatility of Macroeconomic Fluctuations
In this paper we investigate the sources of the important shifts in
the volatility of U.S. macroeconomic variables in the postwar period. To this
end, we propose the estimation of DSGE models allowing for time variation in
the volatility of the structural innovations. We apply our estimation strategy
to a large-scale model of the business cycle and …nd that investment speci…c
technology shocks account for most of the sharp decline in volatility of the last
two decadesGreat Moderation, Stochastic Volatility, Investment Specific Technology Shock, Relative Price of Investment, DSGE Models
Inequality over the business cycle: Estimating income risk using micro-data on consumption
We use CEX repeated cross-section data on consumption and income, to evaluate the nature of increased income inequality in the 1980s and 90s. We decompose unexpected changes in family income into transitory and permanent, and idiosyncratic and aggregate components, and estimate the contribution of each component to total inequality. The model we use is a linearized incomplete markets model, enriched to incorporate risk-sharing while maintaining tractability. Our estimates suggest that taking risk sharing into account is important for the model fit; that the increase in inequality in the 1980s was mainly permanent; and that inequality is driven almost entirely by idiosyncratic income risk. In addition we find no evidence for cyclical behavior of consumption risk, casting doubt on Constantinides and Duffie’s (1995) explanation for the equity premium puzzle.Consumption, inequality, risk, incomplete markets, business cycle
Inequality over the Business Cycle: Estimating Income Risk using Micro-Data on Consumption
We use CEX repeated cross-section data on consumption and income, to evaluate the nature of increased income inequality in the 1980s and 90s. We decompose unexpected changes in family income into transitory and permanent, and idiosyncratic and aggregate components, and estimate the contribution of each component to total inequality. The model we use is a linearized incomplete markets model, enriched to incorporate risk- sharing while maintaining tractability. Our estimates suggest that taking risk sharing into account is important for the model fit; that the increase in inequality in the 1980s was mainly permanent; and that inequality is driven almost entirely by idiosyncratic income risk. In addition we find no evidence for cyclical behavior of consumption risk, casting doubt on Constantinides and Duffie's (1995) explanation for the equity premium puzzle.consumption inequality risk incomplete markets business cycle
Measuring the equilibrium real interest rate
The equilibrium real interest rate represents the real rate of return required to keep the economy’s output equal to potential output. This article discusses how to measure the equilibrium real interest rate, using an empirical structural model of the economy.Interest rates ; Monetary policy
The Time Varying Volatility of Macroeconomic Fluctuations
In this paper we investigate the sources of the important shifts in the volatility of U.S. macroeconomic variables in the postwar period. To this end, we propose the estimation of DSGE models allowing for time variation in the volatility of the structural innovations. We apply our estimation strategy to a large-scale model of the business cycle and find that investment specific technology shocks account for most of the sharp decline in volatility of the last two decades.
Heterogeneous life-cycle profiles, income risk and consumption inequality
Was the increase in income inequality in the US due to permanent shocks or merely to an increase in the variance of transitory shocks? The implications for consumption and welfare depend crucially on the answer to this question. We use CEX repeated cross-section data on consumption and income to decompose idiosyncratic changes in income into predictable life-cycle changes, transitory and permanent shocks and estimate the contribution of each to total inequality. Our model fits the joint evolution of consumption and income inequality well and delivers two main results. First, we find that permanent changes in income explain all of the increase in inequality in the 1980s and 90s. Second, we reconcile this finding with the fact that consumption inequality did not increase much over this period. Our results support the view that many permanent changes in income are predictable for consumers, even if they look unpredictable to the econometrician, consistent with models of heterogeneous income profiles.Consumption, inequality, risk, incomplete markets, heterogeneity
Intertemporal disturbances
Disturbances affecting agents' intertemporal substitution are the key driving force of macroeconomic fluctuations. We reach this conclusion exploiting the asset pricing implications of an estimated general equilibrium model of the U.S. business cycle with a rich set of real and nominal frictionsBusiness Cycle, Fluctuations, Euler equation, shocks, frictions
Investment shocks and business cycles
Shocks to the marginal efficiency of investment are the most important drivers of business cycle fluctuations in US output and hours. Moreover, these disturbances drive prices higher in expansions, like a textbook demand shock. We reach these conclusions by estimating a DSGE model with several shocks and frictions. We also find that neutral technology shocks are not negligible, but their share in the variance of output is only around 25 percent, and even lower for hours. Labor supply shocks explain a large fraction of the variation of hours at very low frequencies, but not over the business cycle. Finally, we show that imperfect competition and, to a lesser extent, technological frictions are the key to the transmission of investment shocks in the model.Investments ; Business cycles
An innovative, fast and facile soft-template approach for the fabrication of porous PDMS for oil-water separation
Oil wastewater and spilled oil caused serious environmental pollution and
damage to public health in the last years. Therefore, considerable efforts are
made to develop sorbent materials able to separate oil from water with high
selectivity and sorption capacity. However most of them are low reusable, with
low volume absorption capacity and poor mechanical properties. Moreover, the
synthesis is time-consuming, complex and expensive limiting its practical
application in case of emergency. Here we propose an innovative approach for
the fabrication of porous PDMS starting from an inverse water-in-silicone
procedure able to selectively collect oil from water in few seconds. The
synthesis is dramatically faster than previous approaches, permitting the
fabrication of the material in few minutes independently from the dimension of
the sponges. The porous material evidenced a higher volume sorption capacity
with respect to other materials already proposed for oil sorption from water
and excellent mechanical and reusability properties.This innovative fast and
simple approach can be successful in case of emergency, as oil spill accidents,
permitting in situ fabrication of porous absorbents
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