Department of Economics
Gatton College of Business and Economics
University of Kentucky
550 S Limestone
Lexington, KY 40513
Institutional Affiliation: University of Kentucky
Information about this author at RePEc
NBER Working Papers and Publications
|April 2019||After the Panic: Are Financial Crises Demand or Supply Shocks? Evidence from International Trade|
with Alan M. Taylor: w25790
Are financial crises a negative shock to demand or a negative shock to supply? This is a fundamental question for both macroeconomics researchers and those involved in real-time policymaking, and in both cases the question has become much more urgent in the aftermath of the recent financial crisis. Arguments for monetary and fiscal stimulus usually interpret such events as demand-side shortfalls. Conversely, arguments for tax cuts and structural reform often proceed from supply-side frictions. Resolving the question requires models capable of admitting both mechanisms, and empirical tests that can tell them apart. We develop a simple small open economy model, where a country is subject to deleveraging shocks that impose binding credit constraints on households and/or firms. These financial...
|April 2018||The Transmission of Commodity Price Super-Cycles|
with Felipe Saffie, Sergio Urzúa: w24560
We examine two key channels through which commodity price super-cycles affect the economy. Higher commodity prices increase domestic demand (wealth channel), disproportionately benefiting nonexporters, and induce wage increases (cost channel) especially among unskilled workers, hurting unskilled-intensive industries. By exploiting regional variation in exposure to commodity price shocks and administrative firm-level data from Brazil, we empirically disentangle these transmission channels. We introduce a dynamic model with heterogeneous firms and workers to further quantify the mechanisms and evaluate welfare. The cost channel explains two-thirds of intersectoral labor reallocation, and the wealth channel explains two-thirds of the labor reallocation between exporters and non-exporters. Lab...