We provide a new channel through which monetary policy has distributional consequences at business cycle frequencies. show that an unexpected easing increases labor income inequality between high-skilled and less-skilled workers. To rationalize these findings, we build New Keynesian DSGE model with asymmetric search-and-matching (SAM) frictions capital-skill complementarity (CSC) in production....

We build an equilibrium model of a small open economy with labor market frictions and imperfectly enforced regulations. Heterogeneous firms sort into the formal or informal sector. estimate using data from Brazil, use counterfactual simulations to understand how trade affects economic outcomes in presence informality. show that: (1) Trade openness unambiguously decreases informality tradable se...

Abstract This paper studies arbitrage-free financial markets with bid-ask spreads whose super-hedging prices are submodular. The submodular assumption on the price, or supermodularity usually assumed utility functions, is formal expression of perfect complementarity, which dates back to Fisher, Pareto, and Edgeworth, according Samuelson (J Econ Lit 12:1255–1289, 1974). Our main contribution pro...

We analyze the role of search frictions in the market for commercial health insurance. Frictions increase the cost of insurance by enabling insurers to set price above marginal cost, and by creating incentives for inefficiently high levels of marketing. Frictions also lead to price dispersion for identical products and, as a consequence, to increases in the rate of insurance turnover. Our empir...

We study the implications of economic policies on household’s decisions. focus Chile in 2019. Using a life-cycle search model and survey data, we found that an equivalent change labor tax rates non-contributory pensions (NCP) have opposite effects markets, specifically informality unemployment duration. NCP offers milder trade-off as it produces second-order increase informality. However, due t...

Theoretical research in international trade increasingly focuses on …rm heterogeneity in di¤erentiated product markets following Melitz (2003). A key implication of this line of research is that …rms are unevenly affected by trade liberalization: low productivity …rms exit, intermediate-productivity domestic …rms contract, and high-productivity exporting …rms expand. More recent theoretical res...

In this paper, we decompose city size wage premia into various components. We base these decompositions on an estimated on-the-job search model that incorporates latent ability, search frictions, firm-worker match quality, human capital accumulation and endogenous migration between large, medium and small cities. Counterfactual simulations of the model indicate that variation in returns to expe...