1,412 research outputs found
EconomicDynamics Forum: Patrick Kehoe on Whether Price Rigidities Matter for Business Cycle Analysis
No full textPatrick Kehoe is Monetary Adviser at the Research Department of the Federal Reserve Bank of Minneapolis and the Frenzel Professor of International Economics at the University of Minnesota. His interests span the study of international business cycles as well as monetary and fiscal policy.
International business cycles with endogenous incomplete markets
No full textBackus, Kehoe, and Kydland (1992), Baxter and Crucini (1995), and Stockman and
Tesar (1995) find two major discrepancies between standard international business cycle
models with complete markets and the data: In the models, cross-country correlations are
much higher for consumption than for output, while in the data the opposite is true; and
cross-country correlations of employment and investment are negative, while in the data
they are positive. This paper introduces a friction into a standard model that helps resolve
these anomalies. The friction is that international loans are imperfectly enforceable; any
country can renege on its debts and suffer the consequences for future borrowing. To
solve for equilibrium in this economy with endogenous incomplete markets, the methods
of Marcet and Marimon (1999) are extended. Incorporating the friction helps resolve the
anomalies more than does exogenously restricting the assets that can be traded
Reply to Solow
No full textHere we reply to Robert Solow’s comment (forthcoming) on our work (Chari and Kehoe (2007)).Macroeconomics
Competitive Equilibria with Limited Enforcement
No full textWe show how to decentralize constrained efficient allocations that arise from enforcement constraints between sovereign nations. In a pure exchange economy these allocations can be decentralized with private agents acting competitively and taking as given government default decisions on foreign debt. In an economy with capital these allocations can be decentralized if the government can tax capital income as well as default on foreign debt. The tax on capital income is needed to make private agents internalize a subtle externality. The decisions of the government can arise as an equilibrium of a dynamic game between governments. ∗We thank Urban Jermann, Karsten Jeske, Dirk Krueger and David Levine as well as an anonymous referee and an associate editor for helpful comments. Both authors thank the NSF for research support. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System. In this paper we study equilibria in economies in which there is limited ability to enforce credit arrangements between sovereign nations. In previous work (Kehoe and Perri [12]) we have discussed how this limited ability manifests itself in enforcement constraints which require that i
Asset Prices and Unemployment Fluctuations: A Resolution of the Unemployment Volatility Puzzle
No full textReplication package for Asset Prices and Unemployment Fluctuations: A Resolution of the Unemployment Volatility Puzzle by PATRICK J. KEHOE, PIERLAURO LOPEZ, VIRGILIU MIDRIGAN, and ELENA PASTORIN
Web interface for "Dynamics of the Trade Balance and the Terms of Trade: The J-Curve?"
No full textThis is a version of the program used in David Backus, Patrick Kehoe and Finn Kydland, "Dynamics of the Trade Balance and the Terms of Trade: The J-Curve?," American Economic Review, vol. 84, pp. 84-103, Mar. 1994 The parameter values have to be specified in a separate file.
Lighting the Way or Stealing the Shine? An Examination of the Duality in Star Scientists' Effects on Firm Innovative Performance
No full textDo star employees enhance or constrain the innovative performance of an organization? Using data from 456 biotechnology firms between 1973 and 2003, we highlight the duality of the effects that stars have on firm performance. We show that while stars positively affect firms’ productivity, their presence constrains the emergence of other innovative leaders in an organization. We find that firm productivity and innovative leadership among non-stars in a firm are greatest when a star has broad expertise and collaborates frequently. We offer cross-disciplinary insights into the role of human capital as a source of competitive advantage, suggesting that the value of human capital in a firm is contingent on the mutual dependence inherent in high-status employees’ relationships with other individuals in a firm.Peer reviewe
Examining Strategic Fit and Misfit in the Management of Knowledge Workers
No full textThis study advances research on strategic human resource management by examining the importance of alignment between an organization’s HR system and innovation strategy in achieving superior performance. We argue that alternative innovation strategies require different forms of knowledge behaviors from core knowledge workers to deal with the unique knowledge problems underlying exploration versus exploitation innovation strategies. Further, we argue that companies make distinct choices in terms of their HR strategies for managing core knowledge workers, and these alternative HR systems theoretically produce different employee ability, motivation, and opportunity outcomes which support different knowledge search and combination behaviors. We demonstrate, in a field study of 230 software firms, that alternative HR systems support either an exploration or exploitation strategy, and the alignment or misalignment between a firm’s HR system and strategy results in firm performance gains or penalties, respectively
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