A Redux of the Workhorse NOEM Model with Capital Accumulation and Incomplete Asset Markets

2011 ◽  
Author(s):  
Enrique Martinez-Garcia
Keyword(s):  
Capital Accumulation ◽  
Asset Markets ◽  
Incomplete Asset Markets

scholarly journals Inferring Inequality With Home Production

Econometrica ◽  
2021 ◽  
Vol 89 (5) ◽  
pp. 2517-2556 ◽  
Author(s):  
Job Boerma ◽  
Loukas Karabarbounis
Keyword(s):  
Production Efficiency ◽  
Policy Implications ◽  
Asset Markets ◽  
Home Production ◽  
Market Outcomes ◽  
Working At Home ◽  
Standards Of Living ◽  
Incomplete Asset Markets ◽  
Uninsurable Risk ◽  
At Home

We revisit the causes, welfare consequences, and policy implications of the dispersion in households' labor market outcomes using a model with uninsurable risk, incomplete asset markets, and home production. Allowing households to be heterogeneous in both their disutility of home work and their home production efficiency, we find that home production amplifies welfare‐based differences, meaning that inequality in standards of living is larger than we thought. We infer significant home production efficiency differences across households because hours working at home do not covary with consumption and wages in the cross section of households. Heterogeneity in home production efficiency is essential for inequality, as home production would not amplify inequality if differences at home only reflected heterogeneity in disutility of work.

Anticipated Fiscal Policy Changes and Goods Market Adjustments

2006 ◽  
Vol 7 (2) ◽  
pp. 135-161 ◽  
Author(s):  
Stefan F. Schubert ◽  
Stephen J. Turnovsky
Keyword(s):  
Open Economy ◽  
Capital Accumulation ◽  
Government Expenditure ◽  
Small Open Economy ◽  
Adjustment Costs ◽  
Asset Markets ◽  
Policy Changes ◽  
Rates Of Return ◽  
Goods Market ◽  
Production Flexibility

Abstract Government policies are frequently known to be temporary and thus their termination is perfectly anticipated. These foreseen policy changes must be consistent with equilibrium in both the goods market and asset markets. Potential problems arise because prices often play dual roles, both as final goods prices, and as asset prices, as components of rates of return. We show how the economy accommodates an anticipated policy change depends upon its production flexibility and its structure. With flexible investment, an anticipated reduction in government expenditure is fully accommodated by capital accumulation. When investment involves adjustment costs, the marginal utility of wealth and the price of capital both jump so as to maintain equality among rates of return. Goods market clearance is maintained by a combination of increases in consumption and investment. Extensions of the model to include inventories and to a small open economy are also considered and contrasted.

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