While investment in most sectors declines response to a contractionary monetary policy shock, the manufacturing sector increases. Using manually digitized aggregate income and balance sheet data for universe of US firms, I show this increase is driven by types firms which are least likely be financially constrained. A two-sector New Keynesian model with financial frictions can match these facts...

Moonlighting Behavior over the Business Cycle Using data from the 1979 National Longitudinal Survey of Youth, we examine the cyclicality by sex of moonlighting and moonlighting hours. We find that, once we account for the sample selection into employment, both men and women exhibit procyclical moonlighting probabilities. Likewise, moonlighting hours for male multiple job holders are procyclical...

Much attention has been given to the large increases in safety net spending during the Great Recession. We examine the relationship between poverty, the safety net, and business cycles historically and test whether there has been a significant change in this relationship. We find that post–welfare reform, Temporary Assistance for Needy Families did not respond during the Great Recession and ext...

Mark-up cyclical behaviour is relevant in determining the size of government spending multiplier on output. While theoretical literature priviliged the counteryclical hypothesis, empirical evidence is far from being conclusive. Based on seminal Rotemberg and Saloner (1986) contribution, we build a theoretical framework based on Bertrand duopoly, stochastic demand and product di¤erentiation, whe...

counted as unemployed. I show that an increase in the job-finding rate or an increase in the separation rate raises the job-to-job transition rate. Therefore, when I feed the measured time series for the job-finding and separation rates into this simple model, I predict that the job-to-job transition rate should be procyclical (Figure 4). This is quantitatively consistent with two direct measur...

We propose cyclical persistence as an important factor in‡uencing the timing of innovation. Schumpeter (1939) argues innovation should be concentrated during recessions when its marginal opportunity cost as forgone output is low. We propose the timing of innovation should be a¤ected additionally by innovation’s marginal expected return. A simple theory is presented, showing higher persistence r...

In contrast to industrialized countries, emerging market economies are characterized by proor acyclical monetary policies and high output volatility. This paper argues that those facts can be related to a long-run feature of the economy – namely, its institutional quality (IQL). The paper presents evidence that supports the link between an index of IQL (law and order, government stability, inve...

This paper analyzes the behavior of the tax revenue to output ratio over the business cycle. In order to replicate the empirical evidence, we develop a simple model combining the standard Ak growth model with the tax evasion phenomenon. When individuals conceal part of their true income from the tax authority, they face the risk of being audited and hence of paying the corresponding …ne. Under ...

This paper presents estimates of the effects that terms of trade volatility has on real GDP per capita growth. Based on 5-year non-overlapping panel data comprising 175 countries during 1980-2010, the paper finds that terms of trade volatility has significant adverse effects on economic growth in countries with procyclical government spending; in countries where government spending is countercy...