Recently I have studied whether job matching models are consistent with the cyclical behavior of labor markets ( Employment Fluctuations with Downwards Wage Rigidity, joint with Marcel Jansen), and with the observed effects of labor market policies ( BCs, UI, and the Calibration of Matching Models, with Michael Reiter).
Michael Reiter and I used our matching model to study the costs of business cycles, and optimal fiscal policy, in Stabilization versus Insurance. We find that in a real business cycle model with imperfect insurance, procyclical taxes should be used to stabilize the cycle.
Earlier, I showed how portfolio choice under imperfect insurance could give rise to strategic complementarities and thus amplify fluctuation, in A Simple Model of Multiple Equilibria Based on Risk. Michael Reiter and I attempted to solve an infinite-horizon version of this same model in Computing Business Cycles with Endogenous Risk, but we were unable to obtain a sufficiently accurate solution.
Productivity Shocks and the Business Cycle:
Reconciling Recent VAR Evidence.
Joint with
Beatriz de Blas P&erez (U. Navarra). Work in progress.
Stabilization versus Insurance: Welfare Effects
of Procyclical Taxation under Incomplete Markets.
Joint with
Michael Reiter (U. Pompeu Fabra). Nov. 2004;
revised as U. Pompeu Fabra Economics Working Paper #890, Sept. 2005.
Business Cycles, Unemployment Insurance, and the Calibration of
Matching Models.
Joint with
Michael Reiter
(U. Pompeu Fabra).
CESifo Working Paper #1008, Aug. 2003;
U. Pompeu Fabra Economics Working Paper #872, July 2005; revised Oct. 2006.
Computing Business Cycles with Endogenous Risk.
Joint with
Michael Reiter
(U. Pompeu Fabra). March 2001.
A Simple Model of Multiple Equilibria Based on Risk.
U. Pompeu Fabra Economics Working Paper #407, July 1999;
revised Oct. 2000.