Department of Economics
50 Memorial Drive
Cambridge, MA 02142
NBER Program Affiliations:
NBER Affiliation: Faculty Research Fellow
Institutional Affiliation: Massachusetts Institute of Technology
NBER Working Papers and Publications
|January 2020||Technological Transitions with Skill Heterogeneity Across Generations|
with Rodrigo Adão, Nitya Pandalai-Nayar: w26625
We study how inequality, skills, and economic activity adjust over time to technological innovations. We develop a theory of technological transitions where economies adjust through two margins: (i) within-generation reallocation of workers with heterogeneous skills, and (ii) cross-generation changes in the skill distribution driven by entering generations investing in skills. We then characterize the equilibrium dynamics, showing that they resemble those of a q-theory of skill investment where q is lifetime inequality. Technological transitions are slower and more unequal whenever innovations are biased towards economic activities intensive in skills which differ more from those used in the rest of the economy—i.e., technology-skill specificity is higher. This is because the first margin ...
|March 2017||Regional Heterogeneity and Monetary Policy|
with Andreas Fuster, Erik Hurst, Joseph Vavra: w23270
We argue that the time-varying regional distribution of housing equity influences the aggregate consequences of monetary policy through its effects on mortgage refinancing. Using detailed loan-level data, we show that regional differences in housing equity affect refinancing and spending responses to interest rate cuts but that these effects vary over time with changes in the regional distribution of house price growth. We then build a heterogeneous household model of refinancing with both mortgage borrowers and lenders and use it to explore the aggregate implications for monetary policy arising from our regional evidence. We find that the 2008 equity distribution made spending in depressed regions less responsive to interest rate cuts, thus dampening aggregate stimulus and increasing regi...
|February 2016||The Aggregate Implications of Regional Business Cycles|
with Erik Hurst, Juan Ospina: w21956
Making inferences about aggregate business cycles from regional variation alone is diffcult because of economic channels and shocks that differ between regional and aggregate economies. However, we argue that regional business cycles contain valuable information that can help discipline models of aggregate fluctuations. We begin by documenting a strong relationship across US states between local employment and wage growth during the Great Recession. This relationship is much weaker in US aggregates. Then, we present a methodology that combines such regional and aggregate data in order to estimate a medium-scale New Keynesian DSGE model. We find that aggregate demand shocks were important drivers of aggregate employment during the Great Recession, but the wage stickiness necessary for them...
Published: Martin Beraja & Erik Hurst & Juan Ospina, 2019. "The Aggregate Implications of Regional Business Cycles," Econometrica, Econometric Society, vol. 87(6), pages 1789-1833, November. citation courtesy of