This paper argues that unemployment insurance increases labor productivity by encouraging workers to seek higher productivity jobs, and by encouraging firms to create those jobs. We use a quantitative general equilibrium model to investigate whether this effect is comparable in magnitude to the standard moral hazard effects of unemployment insurance. Our model economy captures the behavior of t...

Econometrics has become an integral part of training in modern economics and business. Together with microeconomics and macroeconomics, econometrics has been taught as one of the three core courses in most undergraduate and graduate economic programs in North America. In China, the importance of econometrics has been increasingly recognized and econometric tools and methods have been widely emp...

The paper develops a simple stochastic new open economy macroeconomic model based on sticky nominal wages. Explicit solution of the wage-setting problem under uncertainty allows one to analyze the effects of the monetary regime on welfare, expected output, and the expected terms of trade. Despite the potential interplay between imperfections due to sticky wages and monopoly, the optimal monetar...

The small open economy model with incomplete asset markets features a steady-state that depends on initial conditions and equilibrium dynamics that possess a random walk component. A number of modifications to the standard model have been proposed to induce stationarity. This paper presents a quantitative comparison of these alternative approaches. Five different specifications are considered: ...

California has embarked on a bold experiment in trying to reduce carbon emissions without causing undue harm to the state’s economy. The goal is made more difficult by the State’s inability to erect protective tariffs to restrict imports from states and countries without costly carbon regulations. Without coordinated international action to reduce greenhouse gas emissions, this is the same prob...

We examine the setting of national competition policy in a two-country setting, emphasizing the relationship of trade to the goals of competition policy (such as the degree and nature of competition). The issues we address involve the general equilibrium distributional effects of competition policy, the relationship of national competition policy to terms-of-trade gains and losses, the implicat...

This paper analyzes the role of nominal assets in ranking intertemporal budget policies in a growing open economy. The budget policies are ranked in terms of the public's intertemporal stock of tax liabilities. Our main result is that, in a small open economy, the valuation of private and public assets is in terms of the exogenous foreign price level under purchasing power parity. This constrai...

An emergent paradigm, referred to as Open Economy Politics (OEP), now structures and guides research among many scholars. This essay sketches the general contours of the paradigm. Scientific accumulation is, in my view, the potential and great benefit of a self-conscious understanding of OEP as a single, unifying paradigm. The essay also provides a sympathetic critique of OEP and shows how the ...

This paper considers a small open economy where government pursues debt targeting policy. In this setting, I find the optimal debt targeting rule crucially hinges on the assumption of bond market structure, i.e. whether household can purchase state-contingent bond. In addition, the country’s foreign asset holding and government’s debt level may have substantial impact on the optimal debt target...