We analyze the ups and downs in economic growth recent decades by constructing a model with recurrent bubbles, crashes, endogenous growth. Once realized, bubbles crowd investment stimulate growth, but expectation about future crowds out reduces identify bubbly episodes estimating using US data. Counterfactual simulations suggest that IT housing not only caused booms also lifted GDP almost 2 per...

This paper investigates the interrelationship between urbanization, structural transformation, and post-2000 Chinese housing boom through lens of a dynamic spatial equilibrium model that features migration rich market structure with mortgages. Urbanization transformation emerge as key drivers China's house price boom, while at same time rising prices impede these forces economic transition. Pol...

Sea level rise will cause spatial shifts in economic activity over the next 200 years. Using a spatially disaggregated, dynamic model of world economy, this paper estimates consequences probabilistic projections local sea changes. Under an intermediate scenario greenhouse gas emissions, permanent flooding is projected to reduce global real GDP by 0.19 percent present value terms. By year 2200, ...

Is credit expansion a sign of desirable financial deepening or the prelude to an inevitable bust? We study this question in modern US data using structural VAR model 10 monthly frequency variables, identified by heteroskedasticity. Negative reduced-form responses output growth are caused endogenous monetary policy response shocks. On average, and remain positively associated. “Financial stress”...

This paper presents a novel and unique measure of cross-sectional uncertainty constructed from stock options on individual firms. Cross-sectional varied little between 1980 1995 subsequently had three distinct peaks—during the tech boom, financial crisis, coronavirus epidemic. has mixed relationship with overall economic activity, aggregate is much more powerful for forecasting growth. The data...

General purpose technologies (GPTs) like AI enable and require significant complementary investments. These investments are often intangible poorly measured in national accounts. We develop a model that shows how this can lead to underestimation of productivity growth new GPTs early years and, later, when the benefits harvested, overestimation. call phenomenon Productivity J-curve. apply our me...

We develop a theory of low-frequency movements in inflation expectations, and use it to interpret joint dynamics expectations for the United States other countries over postwar period. In our theory, long-run are endogenous. They driven by short-run surprises, way that depends on recent forecasting performance monetary policy. This distinguishes from common explanations properties inflation. Th...

We study optimal monetary policy in an analytically tractable heterogeneous agent New Keynesian model with rich cross-sectional heterogeneity. Optimal differs from a representative benchmark because can affect consumption inequality, by stabilizing risk arising both idiosyncratic shocks and unequal exposures to aggregate shocks. The trade-off between productive efficiency, price stability is su...

Using a normalized CES function with factor-augmenting technical progress, we estimate a supply-side system of the US economy from 1953 to 1998. Avoiding potential biases that have occurred in earlier estimations and putting a high emphasis on the consistency of the data set, required by the estimated system, we obtain robust results not only for the aggregate elasticity of substitution but als...