Andreas Hornstein

Research Department
Federal Reserve Bank of Richmond
POB 27622
Richmond, VA 23261-7622

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Institutional Affiliation: Federal Reserve Bank of Richmond

NBER Working Papers and Publications

May 2019Aggregate Implications of Changing Sectoral Trends
with Andrew Foerster, Pierre-Daniel Sarte, Mark W. Watson: w25867
We find disparate trend variation in TFP and labor growth across major U.S. production sectors over the post-WWII period. When aggregated, these sector-specific trends imply secular declines in the growth rate of aggregate labor and TFP. We embed this sectoral trend variation into a dynamic multi-sector framework in which materials and capital used in each sector are produced by other sectors. The presence of capital induces important network effects from production linkages that amplify the consequences of changing sectoral trends on GDP growth. Thus, in some sectors, changes in TFP and labor growth lead to changes in GDP growth that may be as large as three times these sectors' share in the economy. We find that trend GDP growth has declined by more than 2 percentage points since 1950, a...
November 2007Frictional Wage Dispersion in Search Models: A Quantitative Assessment
with Per Krusell, Giovanni L. Violante: w13674
Standard search and matching models of equilibrium unemployment, once properly calibrated, can generate only a small amount of frictional wage dispersion, i.e., wage differentials among ex-ante similar workers induced purely by search frictions. We derive this result for a specific measure of wage dispersion -- the ratio between the average wage and the lowest (reservation) wage paid. We show that in a large class of search and matching models this statistic (the "mean-min ratio") can be obtained in closed form as a function of observable variables (i.e., the interest rate, the value of leisure, and statistics of labor market turnover). Various independent data sources suggest that actual residual wage dispersion (i.e., inequality among observationally similar workers) exceeds the model's ...

Published: Andreas Hornstein & Per Krusell & Giovanni L. Violante, 2011. "Frictional Wage Dispersion in Search Models: A Quantitative Assessment," American Economic Review, American Economic Association, vol. 101(7), pages 2873-98, December. citation courtesy of

January 1996Can Technology Improvements Cause Productivity Slowdowns?
with Per Krusell
in NBER Macroeconomics Annual 1996, Volume 11, Ben S. Bernanke and Julio J. Rotemberg, Editors
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