Research

Current Research ‘Methods versus Substance: Measuring the Effects of Technology Shocks on Hours’ joint with Víctor Ríos-Rull, Frank Schorfheide, Maxym Kryshko, and Raül Santaeulàlia-Llopis (November 2007) Abstract: Different empirical methodologies have coexisted in macroeconomics over the past decades: calibrated dynamic stochastic general equilibrium (DSGE) models, econometrically estimated DSGE models, and structural vector autoregressions. Using these methodologies we re-visit a long-standing question in business cycle research: what fraction of variation in hours worked is due to technology shocks. We analyze to what extent and why the methodologies generate different quantitative answers to our substantive question. ‘Technology Shocks, Statistical Models, and The Great Moderation’ (First version: May 2007. Current version: October 2007). Slides Comments are welcome! Abstract: In this paper we compare the cyclical features implied by an RBC model with two technology shocks under several statistical specifications for the stochastic processes governing technological change. We conclude that while a trend-stationary model accounts better for the observed volatilities, a difference-stationary model does a relatively better job of accounting for the correlation of the variables of interest with output. We also explore some counterfactuals to assess the ability of our model to replicate the volatility slowdown of the mid 1980s. First, we conclude that the stochastic growth model outperforms the deterministic growth model in accounting for the Great Moderation. Finally, we obtain that even though the neutral technology shock is the main driving force in the volatility slowdown, allowing for a larger financial flexibility in the form of a smaller volatility for the investment-specific innovation improves the ability of our model to account for the magnitude of the Great Moderation. Previous papers ‘Structural Breakpoint Tests in a Markov-Switching Model: An Empirical Application to the EMU Member Countries’ (September 2006. Available upon request) Abstract: This paper aims to estimate a dynamic non-linear model with state dependent mean and volatility for the real GDP growth series of several EMU member countries. We test the existence of a structural breakpoint at the starting point of the monetary union. We reject the null of parameter constancy for the Markov-switching model for only eight countries. Given the small length of the subsample after monetary union available for analysis, we proceed to analyze the empirical power of our test for a grid of alternatives. We conclude that our test is powerful enough if the null and the alternative are sufficiently far apart. ‘Can the International Environmental Cooperation Be Bought?’ joint with Santiago J. Rubio (June 2004. Last version: October 2006) Submitted Abstract: In this paper a two-stage game of international environmental agreement formation with asymmetric countries is analytically solved. The equilibrium of the game allows to determine the number of countries interested in signing the agreement. Two cases are studied. In the first case, the countries differ only in the abatement costs, and in the second case, in the environmental damages. In both cases, two different institutional settings, one without side payments and another with side payments, are considered. The results establish that the asymmetry assumption has no important effects on the scope of cooperation in comparison with the symmetric case if side payments are not used or the only difference among countries is given by the abatement costs. However, when the only difference is given by the environmental damages, the result is that the level of cooperation that can be bought through a self-financed side payment system increases with the degree of asymmetry. ‘An Analysis of the Stability of International Environmental Agreements’ (February 2004). This paper is a survey on the literature on IEAs.