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Fourth Quarter 2018

In This Edition

  • Effects of Credit Supply on Unemployment and Income Inequality

    The Great Recession, which was preceded by the Financial Crisis, resulted in higher unemployment and income inequality. We propose a simple model where firms producing varieties face labor-market frictions and credit constraints. 


  • Comparing Measures of Potential Output

    One of the goals of stabilization policy is to reduce the output gap—the difference between potential and actual output—during downturns. Potential output, however, is an unobserved variable whose definition can vary. 


  • Payment Systems and Privacy

    Privacy in payments is desired not just for illegal transactions, but also for protection from malfeasance or negligence by counterparties or by the payments system provider itself. Proposals to abolish cash take inadequate account of these legitimate demands for privacy.


  • Domestic Innovation and International Technology Diffusion as Sources of Comparative Advantage

    Productivity differences across countries determine patterns of international trade—hence, comparative advantage. We use a multi-industry model of international trade to estimate a measure of industry productivity.