New Research
Benjamin and Wright: Deconstructing Delays in Sovereign Debt Restructuring
Negotiations to restructure sovereign debt are time consuming, taking almost a decade on average to resolve. In this paper, we analyze a class of widely used complete information models of delays in sovereign debt restructuring and show that, despite superficial similarities, there are major differences across models in the driving force for equilibrium delay, the circumstances in which delay occurs, and the efficiency of the debt restructuring process.
read moreChari, Nicolini, Teles: Optimal Capital Taxation Revisited
We revisit the question of how capital should be taxed, arguing that if governments are allowed to use the kinds of tax instruments widely used in practice, for preferences that are standard in the macroeconomic literature, the optimal approach is to never distort capital accumulation.
read moreBhandari, Birinci, McGrattan, See: What Do Survey Data Tell Us about U.S. Businesses?
This paper examines the reliability of survey data for research on pass-through businesses activities. Passthrough businesses account for over half of all net income to businesses in the United States and most of the rise in top income shares.
read moreAtkeson, d’Avernas, Eisfeldt, Weill: Government Guarantees and the Valuation of American Banks
In this paper we argue that banks’ market-to-book ratio is the sum of two components: franchise value and the value of government guarantees. We empirically decompose the ratio between these two components and find that a large portion of the variation in this ratio over time is due to changes in the value of government guarantees.
read moreKehoe, Midrigan, Pastorino: Evolution of Modern Business Cycles: Accounting for the Great Recession
Modern business cycle theory focuses on the study of dynamic stochastic general equilibrium models that generate aggregate fluctuations similar to those experienced by actual economies.
read moreAguiar and Amador: Self-Fulfilling Debt Dilution: Maturity and Multiplicity in Debt Models
We establish that creditor beliefs regarding future borrowing can be self-fulfilling, leading to multiple equilibria with markedly different debt accumulation patterns.
read moreAmador and Phelan: Reputation and Sovereign Default
This paper presents a continuous-time model of sovereign debt. In it, a relatively impatient sovereign government’s hidden type switches back and forth between a commitment type, which cannot default, and an optimizing type, which can default on the country’s debt at any time, and assume outside lenders have particular beliefs regarding how a commitment type should borrow for any given level of debt and bond price.
read moreOhanian, Restrepo-Echavarria, Wright: Bad Investments and Missed Opportunities? Postwar Capital Flows to Asia and Latin America
After World War II, international capital flowed into slow-growing Latin America rather than fast-growing Asia. This is surprising as, everything else equal, fast growth should imply high capital returns. This paper develops a capital flow accounting framework to quantify the role of different factor market distortions in producing these patterns.
read moreGuvenen, Mataloni Jr, Rassier, Ruhl: Offshore Profit Shifting and Domestic Productivity Measurement
Official statistics display a significant slowdown in U.S. aggregate productivity growth that begins in 2004. We show how offshore profit shifting by U.S. multinational enterprises affects GDP and, thus, productivity measurement.
read morePrescott and Wessel: Money in the Production Function
Businesses hold large quantities of cash reserves, which have average returns well below their investments in tangible capital. Businesses do this because these monetary assets provide services.
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