Three great american disinflations

In this paper, we examine three famous episodes of deliberate deflation (or disinflation) in U.S. history, including episodes following the Civil War, World War I, and the Volcker disinflation of the early 1980s. These episodes were associated with widely divergent effects on the real economy, which we attribute both to differences in the policy actions undertaken, and to the transparency and credibility of the monetary authorities. We attempt to account for the salient features of each episode within the context of a stylized DSGE model. Our model simulations indicate how a more predictable policy of gradual deflation could have helped avoid the sharp post-WWI depression. But our analysis also suggests that the strong argument for gradualism under a transparent monetary regime becomes less persuasive if the monetary authority lacks credibility; in this case, an aggressive policy stance (as under Volcker) can play a useful signalling role by making a policy shift more apparent to private agents. JEL Classification: E31, E32, E5

The Ins and Outs of Cyclical Unemployment

One of the strongest trends in recent macroeconomic modeling of labor market fluctuations is to treat unemployment inflows as acyclical. This trend stems in large part from an influential paper by Shimer on "Reassessing the Ins and Outs of Unemployment," i.e., the extent to which increased unemployment during a recession arises from an increase in the number of unemployment spells versus an increase in their duration. After broadly reviewing the previous literature, we replicate and extend Shimer's main analysis. Like Shimer, we find an important role for increased duration. But contrary to Shimer's conclusions, we find that even his own methods and data, when viewed in an appropriate metric, reveal an important role for increased inflows to unemployment as well. This finding is further strengthened by our refinements of Shimer's methods of correcting for data problems and by our detailed examination of particular components of the inflow to unemployment. We conclude that a complete understanding of cyclical unemployment requires an explanation of countercyclical inflow rates as well as procyclical outflow rates.

Three Great American Disinflations

In this paper, we examine three famous episodes of deliberate deflation (or disinflation) in U.S. history, including episodes following the Civil War, World War I, and the Volcker disinflation of the early 1980s. These episodes were associated with widely divergent effects on the real economy, which we attribute both to differences in the policy actions undertaken, and to the transparency and credibility of the monetary authorities. We attempt to account for the salient features of each episode within the context of a stylized DSGE model. Our model simulations indicate how a more predictable policy of gradual deflation could have helped avoid the sharp post-WWI depression. But our analysis also suggests that the strong argument for gradualism under a transparent monetary regime becomes less persuasive if the monetary authority lacks credibility; in this case, an aggressive policy stance (as under Volcker) can play a useful signalling role by making a policy shift more apparent to private agents.DSGE Model, Credibility, Deflation

Labor Market Frictions and Dynamic Labor Demand.

This dissertation explores the microeconomic and aggregate implications of an array of employment adjustment frictions. Chapter 1 investigates the JOBS Bank, a unique employment adjustment cost that prevailed in the domestic automobile industry for nearly 20 years. The JOBS Bank required manufacturers to pay full salary to a worker for each week spent on layoff beyond an allotment specified in the labor contract. The paper presents a model in which JOBS generates an option value of production: the firm produces more often than otherwise to safeguard its allotment of layoff weeks in case future vehicle demand deteriorates within the life of the contract. The paper tests this implication on plant-level data, and reduced-form analysis rejects the qualitative predictions of the model. To understand this result, the paper then estimates the structural model by indirect inference. This exercise enables a series of counterfactual simulations that indicate the features of the plant's environment which may have muted the effect of the JOBS Bank. In the models of Chapters 2 and 3, the firm faces a different set of adjustment frictions. In Chapter 2, the firm must post vacancies in order to match with unemployed workers and pays a cost to advertise each opening. The model allows for non-linear production technology and both idiosyncratic and aggregate risk. In a set of quantitative applications, the model is shown to provide a coherent account of a) the steady- state distributions of employer size and employment growth across establishments; b) the cyclicality of flows between employment and unemployment; c) the negative comovement of unemployment and vacancies; and d) the dynamics of the employer size distribution. Chapter 3 investigates the analytics of labor demand in the presence of a fixed cost of employment adjustment. It shows how the forward-looking policy rule nests the solution of the corresponding static, or myopic, problem. The paper then demonstrates that, for reasonable parameterizations of the model, the myopic policy provides a remarkably accurate approximation to forward-looking labor demand. This suggests that the myopic rule may serve as a useful guide to the mechanics of a rich class of dynamic models.Ph.D.EconomicsUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/78895/1/rmikes_1.pd

Elucidation of the Photorhabdus temperata Genome and Generation of a Transposon Mutant Library To Identify Motility Mutants Altered in Pathogenesis

The entomopathogenic nematode Heterorhabditis bacteriophora forms a specific mutualistic association with its bacterial partner Photorhabdus temperata. The microbial symbiont is required for nematode growth and development, and symbiont recognition is strain specific. The aim of this study was to sequence the genome of P. temperata and identify genes that plays a role in the pathogenesis of the Photorhabdus-Heterorhabditis symbiosis. A draft genome sequence of P. temperata strain NC19 was generated. The 5.2-Mb genome was organized into 17 scaffolds and contained 4,808 coding sequences (CDS). A genetic approach was also pursued to identify mutants with altered motility. A bank of 10,000 P. temperata transposon mutants was generated and screened for altered motility patterns. Five classes of motility mutants were identified: (i) nonmotile mutants, (ii) mutants with defective or aberrant swimming motility, (iii) mutant swimmers that do not require NaCl or KCl, (iv) hyperswimmer mutants that swim at an accelerated rate, and (v) hyperswarmer mutants that are able to swarm on the surface of 1.25% agar. The transposon insertion sites for these mutants were identified and used to investigate other physiological properties, including insect pathogenesis. The motility-defective mutant P13-7 had an insertion in the RNase II gene and showed reduced virulence and production of extracellular factors. Genetic complementation of this mutant restored wild-type activity. These results demonstrate a role for RNA turnover in insect pathogenesis and other physiological functions