New Paper Alert!
Winners and Losers from Reducing Global Imbalances
(with Ayse Dur and Jacek Rothert)
We highlight the welfare effect of policies that balance global current accounts when households face uninsurable income risk and borrowing constraints. Subsidizing savings in debtor economies reduces imbalances and raises the welfare of almost all citizens by increasing world-wide capital, raising wages, and improving insurance for low-wealth households. However, the same balancing of current accounts is achieved by taxing savings in lender economies, but hurts most households by reducing capital. We conclude that balancing global imbalances should not be a goal unto itself, but may be a by-product of raising investment rates, especially in debtor countries.
(with Ayse Dur and Jacek Rothert)
We highlight the welfare effect of policies that balance global current accounts when households face uninsurable income risk and borrowing constraints. Subsidizing savings in debtor economies reduces imbalances and raises the welfare of almost all citizens by increasing world-wide capital, raising wages, and improving insurance for low-wealth households. However, the same balancing of current accounts is achieved by taxing savings in lender economies, but hurts most households by reducing capital. We conclude that balancing global imbalances should not be a goal unto itself, but may be a by-product of raising investment rates, especially in debtor countries.
Profits, Markups, and Inflation:
Coauthors and I have recently been working to understand the current and historical contribution of profits/markups to inflation. This research has been published through the Federal Reserve Bank of Kansas City's Economic Review and Economic Bulletin and has been covered by national and regional media, including NPR's Planet Money.
1. How Much Have Record Corporate Profits Contributed to Recent Inflation? (with José Mustre-del-Río and Alice von Ende-Becker) with estimates of 2022 markup growth here.
2. Corporate Profits Contributed a Lot to Inflation in 2021 but Little in 2022 -- A Pattern Seen in Past Economic Recoveries (with José Mustre-del-Río and Jalen Nichols)
Coauthors and I have recently been working to understand the current and historical contribution of profits/markups to inflation. This research has been published through the Federal Reserve Bank of Kansas City's Economic Review and Economic Bulletin and has been covered by national and regional media, including NPR's Planet Money.
1. How Much Have Record Corporate Profits Contributed to Recent Inflation? (with José Mustre-del-Río and Alice von Ende-Becker) with estimates of 2022 markup growth here.
2. Corporate Profits Contributed a Lot to Inflation in 2021 but Little in 2022 -- A Pattern Seen in Past Economic Recoveries (with José Mustre-del-Río and Jalen Nichols)
Equilibrium Evictions
(with Dean Corbae and Michael Nattinger)
We develop a simple equilibrium model of rental markets for housing in which eviction occurs endogenously. A landlord chooses whether to evict a delinquent renter and may do so because the landlord incurs fixed costs for maintaining a housing unit and has the option of posting a new vacancy. Renters who are persistently delinquent are more likely to be evicted and they pay more per quality-adjusted unit of housing than renters who are less likely to be delinquent. Evictions are never socially optimal once a match has been made, since the housing services accruing to the renter must be larger than the landlord’s costs in order for a lease to be signed in the first place. If rents can be set sufficiently high, optimal eviction policy forbids evictions completely, while if rents are constrained then optimal policy allows some evictions to support landlord profits and ensure sufficient rental supply. In general, the decentralized equilibrium with constraints on how much rent can be charged features both socially inefficient evictions and too few vacancies. We also consider the welfare implications of state dependent policies during aggregate crisis events. Finally, we show that neighborhood externalities can widen the gap between rich and poor renters.
(with Dean Corbae and Michael Nattinger)
We develop a simple equilibrium model of rental markets for housing in which eviction occurs endogenously. A landlord chooses whether to evict a delinquent renter and may do so because the landlord incurs fixed costs for maintaining a housing unit and has the option of posting a new vacancy. Renters who are persistently delinquent are more likely to be evicted and they pay more per quality-adjusted unit of housing than renters who are less likely to be delinquent. Evictions are never socially optimal once a match has been made, since the housing services accruing to the renter must be larger than the landlord’s costs in order for a lease to be signed in the first place. If rents can be set sufficiently high, optimal eviction policy forbids evictions completely, while if rents are constrained then optimal policy allows some evictions to support landlord profits and ensure sufficient rental supply. In general, the decentralized equilibrium with constraints on how much rent can be charged features both socially inefficient evictions and too few vacancies. We also consider the welfare implications of state dependent policies during aggregate crisis events. Finally, we show that neighborhood externalities can widen the gap between rich and poor renters.
COVID-19:
Health vs. Wealth: On The Distributional Effects of Controlling a Pandemic
with Jonathan Heathcote, Dirk Krueger, and Jose Victor Rios-Rull
(Accepted, Journal of Monetary Economics)
FRB KC WP, NBER WP 27046, CEPR COVID Economics Version
Media coverage: NY Times, Bloomberg, Reuters
Summaries: VOX-EU, Minneapolis Fed
Slides: Virtual Brown Bag
with Jonathan Heathcote, Dirk Krueger, and Jose Victor Rios-Rull
(Accepted, Journal of Monetary Economics)
FRB KC WP, NBER WP 27046, CEPR COVID Economics Version
Media coverage: NY Times, Bloomberg, Reuters
Summaries: VOX-EU, Minneapolis Fed
Slides: Virtual Brown Bag
Optimal Age-Based Vaccination and Economic Mitigation Policies for the Second Phase of the Covid-19 Pandemic
with Jonathan Heathcote and Dirk Krueger
Journal of Economic Dynamics and Control, Forthcoming
with Jonathan Heathcote and Dirk Krueger
Journal of Economic Dynamics and Control, Forthcoming
Business Cycles:
Aggregate Effects of Minimum Wage Regulation at the Zero Lower Bound
Journal of Monetary Economics, Nov 2019
SSRN CODE
Journal of Monetary Economics, Nov 2019
SSRN CODE
Intergenerational Redistribution in the Great Recession
(with Jonathan Heathcote, Dirk Krueger, and Jose Victor Rios Rull)
NBER, SSRN
Journal of Political Economy, Oct 2021.
(with Jonathan Heathcote, Dirk Krueger, and Jose Victor Rios Rull)
NBER, SSRN
Journal of Political Economy, Oct 2021.
Inflation Expectations Limit the Power of Negative Interest Rates
(with Emily Pollard)
Federal Reserve Bank of Kansas City Economic Bulletin, March 2020
(with Emily Pollard)
Federal Reserve Bank of Kansas City Economic Bulletin, March 2020
KC Fed LMCI Implies the Labor Market Is Closer to a Full Recovery than the Unemployment Rate Alone Suggests
(with José Mustre-del-Río and Emily Pollard)
(with José Mustre-del-Río and Emily Pollard)
KC Fed LMCI Suggests Recent Inflation Is Not Due to the Tight Labor Market
(with José Mustre-del-Río and Emily Pollard)
(with José Mustre-del-Río and Emily Pollard)
Consumer Credit:
Equilibrium Evictions
(with Dean Corbae and Michael Nattinger)
(with Dean Corbae and Michael Nattinger)
Employer Credit Checks: Poverty Traps versus Matching Efficiency
(with Dean Corbae)
NBER WP 25005
Conditionally Accepted, Review of Economic Studies
(with Dean Corbae)
NBER WP 25005
Conditionally Accepted, Review of Economic Studies
The Unintended Consequences of Employer Credit Check Bans in Labor Markets
with Kristle Cortés and Murat Tasci
Review of Economics and Statistics, Forthcoming
Online Appendix
FRB KC WP, Opportunity & Inclusive Growth WP, SSRN, LEHD SCRIPT, Compiled Laws
Previously titled "The Unintended Consequences of Employer Credit Check Bans in Labor and Credit Markets".
with Kristle Cortés and Murat Tasci
Review of Economics and Statistics, Forthcoming
Online Appendix
FRB KC WP, Opportunity & Inclusive Growth WP, SSRN, LEHD SCRIPT, Compiled Laws
Previously titled "The Unintended Consequences of Employer Credit Check Bans in Labor and Credit Markets".
Labor's Share of Income:
Demographic Origins of the Decline in Labor's Share
with Jacob Short
Submitted
(Previously circulated as "The Life-Cycle Distribution of Earnings and Decline in Labor's Share")
with Jacob Short
Submitted
(Previously circulated as "The Life-Cycle Distribution of Earnings and Decline in Labor's Share")
Can Capital Deepening Explain the Global Decline in Labor's Share?
with Jacob Short
SSRN
Review of Economic Dynamics, Jan 2020
with Jacob Short
SSRN
Review of Economic Dynamics, Jan 2020
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Descriptive Statistical Research:
Facts on the Distributions of Earnings, Income, and Wealth in the United States: 2007 Update
(with Javier Díaz-Giménez and Victor Ríos-Rull) Federal Reserve Bank of Minneapolis Quarterly Review Vol. 34, No. 1, February 2011, pp. 2–31 Entrepreneurship
Puzzlingly Divergent Trends in Household Wealth and Business Formation
(with Justin Barnette) Federal Reserve Bank of Kansas City Economic Review, 2021 Q2, pp. 5-16 Bankruptcy, Incorporation, and The Nature of Entrepreneurial Risk
(joint with Jake Short) *New Draft Coming Soon* |
