This paper studies the effects of a one-child policy. A benchmark without the fertility constraint is compared to a counterfactual experiment with the fertility constraint in place. The results suggest that imposing the one-child policy promotes the accumulation of human capital and increases output per capita. In partial equilibrium, an unskilled adult’s welfare is lowered by the policy. Howev...

We examine global economic dynamics under infinite-horizon learning in a New Keynesian model in which the interest-rate rule is subject to the zero lower bound. As in Evans, Guse and Honkapohja (2008), we find that under normal monetary and fiscal policy the intended steady state is locally but not globally stable. Unstable deflationary paths can arise after large pessimistic shocks to expectat...

This paper studies the effect of market structure and macroeconomic uncertainty on the transmission of monetary policy. We motivate our analysis with a simple model which predicts that: 1) investment and production in more concentrated sectors are more affected by demand changes and 2) high uncertainty makes investment and production more sensitive to demand changes. The empirical analysis esti...

This paper studies the effects of a one-child policy. A benchmark without the fertility constraint is compared to a counterfactual experiment with the fertility constraint in place. The results suggest that imposition of a one-child policy promotes the accumulation of human capital and increases per capita output. In partial equilibrium, an unskilled adult’s welfare is lowered by the policy. Ho...

Many macroeconomic policy exercises consider the mean values of parameter estimates but do not use the variances and covariances. One can argue that the uncertainty of these parameter estimates is sufficiently small that it can safely be ignored. Or one can take the position that this kind of uncertainty cannot be avoided no matter what one does. Thus it is just as well to ignore it while makin...

We study the interaction of multiple large economies in dynamic stochastic general equilibrium. Each economy has a monetary policymaker that attempts to control the economy through the use of a linear nominal interest rate feedback rule. We show how the determinacy of worldwide equilibrium depends on the joint behavior of policymakers worldwide. We also show how indeterminacy exposes all econom...

What I am going to describe for you is a revolution in macroeconomics, a transformation in methodology that has reshaped how we conduct our science. Prior to the transformation, macroeconomics was largely separate from the rest of economics. Indeed, some considered the study of macroeconomics fundamentally different and thought there was no hope of integrating macroeconomics with the rest of ec...

This paper was delivered at a National Poverty Center conference. Any opinions, findings, conclusions, or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the view of the National Poverty Center or any sponsoring agency.

A focal point of macroeconomic policy analysis over the past decade has been whether central banks should respond to changes in asset prices. This thesis addresses the question from the distinct perspective of equilibrium determinacy. By obtaining the conditions for equilibrium determinacy, it is possible to ascertain whether a central bank could induce additional volatility in an economy by ad...