Commentary on "Long-run risks and financial markets"

Financial markets ; Risk

Rational Expectations, the Real Rate of Interest, and the Natural Rate of Unemployment

macroeconomics, real rate interest, unemployment rate

"Rational Expectations": A Correction

macroeconomics, rational expectations, unemployment

Indivisible Labor and Its Supply Elasticity: Do Taxes Explain European Employment?

We first scrutinize and challenge Prescott's (2002, 2004) quantitative analysis of the role of differences in taxes in explaining cross-country differences in labor market outcomes, and then defend an alternative model that assigns an important role to cross-country differences in social unemployment insurance institutions that Prescott argues can be safely ignored. In the process, we explore how the assumption of indivisible labor interacts with assumptions regarding the (in)completeness of financial markets and any frictions in the labor market, to determine the labor supply elasticity.Employment lotteries, indivisible labor, labor supply elasticity, taxation, unemployment, unemployment insurance

Interest rate risk and other determinants of post WWII U.S. government debt/GDP dynamics

This paper uses a sequence of government budget constraints to motivate estimates of returns on the U.S. Federal government debt. Our estimates differ conceptually and quantitatively from the interest payments reported by the U.S. government. We use our estimates to account for contributions to the evolution of the debt-GDP ratio made by inflation, growth, and nominal returns paid on debts of different maturities.Holding period returns, capital gains, inflation, growth, debt- GDP ratio, government budget constraint