Aguiar, Mark, and Erik Hurst. “
The Macroeconomics of Time Allocation”.
Handbook of Macroeconomics. Elsevier, 2016. Print.
AbstractIn this chapter we explore the macroeconomics of time allocation. We begin with an overview of the trends in market hours in the US, both in the aggregate and for key sub-samples. After introducing a Beckerian theoretical framework, the chapter then discusses key empirical patterns of time allocation, both in the time series (including business cycle properties) and over the lifecycle. We focus on several core non-market activities, including home production, childcare, and leisure. The chapter concludes with a discussion of why these patterns are important to macroeconomics and spells out directions for future research.
handbook_draft_submit.pdf Aguiar, Mark, et al. “
Quantitative Models of Sovereign Debt Crises”.
Handbook of Macroeconomics. Elsevier, 2016. Print.
AbstractThis chapter is on quantitative models of sovereign debt crises in emerging economies. We interpret debt crises broadly to cover all of the major problems a country can experience while trying to issue new debt, including default, sharp increases in the spread and failed auctions. We examine the spreads on sovereign debt of 20 emerging market economies since 1993 and document the extent to which fluctuations in spreads are driven by country-specific fundamentals, common latent factors and observed global factors. Our findings motivate quantitative models of debt and default with the following features: (i) trend stationary or stochastic growth, (ii) risk averse competitive lenders, (iii) a strategic repayment/borrowing decision, (iv) multi-period debt, (v) a default penalty that includes both a reputation loss and a physical output loss and (vi) rollover defaults. For the quantitative evaluation of the model, we focus on Mexico and carefully discuss the successes and weaknesses of various versions of the model. We close with some thoughts on useful directions for future research.
accs_handbook.pdf Aguiar, Mark, and Manuel Amador. “
Fiscal Policy in Debt Constrained Economies”.
Journal of Economic Theory 161 (2016): ,
161, 37-75. Web.
Publisher's VersionAbstractWe study optimal fiscal policy in a small open economy (SOE) with sovereign and private default risk and limited commitment to tax plans. The SOE's government uses linear taxation to fund exogenous expenditures and uses public debt to inter-temporally allocate tax distortions. We characterize a class of environments in which the tax on labor goes to zero in the long run, while the tax on capital income may be non-zero, reversing the standard prediction of the Ramsey tax literature. The zero labor tax is an optimal long run outcome if the economy is subject to sovereign debt constraints and the domestic households are impatient relative to the international interest rate. The front loading of tax distortions allows the economy to build a large (aggregate) debt position in the presence of limited commitment. We show that a similar result holds in a closed economy with imperfect inter-generational altruism, providing a link with the closed-economy literature that has explored disagreement between the government and its citizens regarding inter-temporal tradeoffs.
fiscal.pdf