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Research Papers:
‘Aggregate Effects of AIDS on Development’ [JOB MARKET PAPER]. In this paper I study the consequences of the AIDS epidemic for economic development. To this purpose I extend a standard theory of economic development, in which capital and labor are reallocated from a Malthusian-agricultural sector to a neoclassical-industrial sector, with a population model that relates the age distribution of the population of each period to the preceding one via a fertility process, a mortality process and an aging process. This population process replicates the main demographic effects of AIDS on (i) the rate of growth of the population, (ii) the age distribution of the population, (iii) life expectancy, and (iv) individual labor efficiency in Sub-Saharan Africa. When I incorporate the AIDS epidemic (i)- (iv) into a model economy calibrated to an African country unaffected by AIDS I find that the AIDS epidemic slows down the transition from agriculture to industry by about one century. I find also that, if the AIDS epidemic had not existed, per capita consumption would have been 12% larger in 2008. Finally, I find the impact that AIDS has on the age distribution of the population accounts for 32% of the effects of AIDS on development.
‘Redistributive Shocks and Productivity Shocks’ , joint with José-Víctor Ríos-Rull (September 2007). We document the cyclical interaction between labor share and the Solow residual: an innovation to the Solow residual produces an initial reduction of labor share, making it countercyclical, but it also produces a long-lasting subsequent increase that peaks five years later at a level larger in absolute terms than the initial drop. We pose and estimate a bivariate shock to the production function that, under the assumption of competition in factor markets, simultaneously accounts for movements in the Solow residual and in the factor shares of production. We then incorporate this bivariate process into an otherwise standard real business cycle model and compare the outcomes with those that result from the specification of a univariate productivity shock that matches the properties of the Solow residual. The volatility of hours worked in the bivariate shock economy is a lot smaller than that in the standard univariate shock economy (about 33% of the standard deviation or 11% of the variance), with productivity innovations in the bivariate economy generating barely 1% of the variance of hours in the data. The effect of the productivity innovation on labor share reduces dramatically the incentives to work now relative to later. This behavior can be described in terms of a very strong positive wealth effect in the bivariate shock economy relative to the univariate shock economy, while the implied substitution effects tend to delay, first intra- and then intertemporally, the response of hours and not to mitigate them. Our results hold independently of the Frischian elasticity of labor supply. We conclude that understanding the joint cyclical movements of labor share and productivity, and hence constructing theories that incorporate and explain their particular interaction should become an important piece of business cycle research.
‘Method versus Substance: Measuring the Effect of Technology Shocks on Hours’, joint with José-Víctor Ríos-Rull, Frank Schorfheide, Cristina Fuentes-Albero and Max Kryshko (October 2007). 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.
Work in Progress:
1. ‘AIDS Shocks, Families and Development’ [ Extended Abstract ] 2. ‘Small Fluctuations and Jobless Recoveries’, joint with Jay Hong.
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