April 2015 calls for papers

April 26, 2015

This is the 300th post on the NEP-DGE blog! Note that you can also follow the paper announcements through email, RSS and Twitter.

Monetary Policy and the Distribution of Income and Wealth, St. Louis, 11-12 September 2015.

Liquidity and Financial Crises, Philadelphia, 9-10 October 2015.

Ifo Conference on Macroeconomics and Survey Data, Munich, 4-5 December 2015.


Fertility Shocks and Equilibrium Marriage-Rate Dynamics: Lessons from World War 1 in France

April 20, 2015

By John Knowles and Guillaume Vandenbroucke


Low sex ratios are often equated with unfavorable marriage prospects for women, but in France after World War 1, the marriage probability of single females rose 50%, despite a massive drop in the male/female ratio. We conjecture that the war-time birth-rate bust induced an abnormal postwar abundance of singles with relatively high marriage propensities. We compute the equilibrium response, in a life-cycle matching model, of marriage hazards to war-time fertility and male-mortality shocks. Our results implicate two powerful forces: an abnormal abundance of marriageable men, and increased gains from marriage due to post-war pro-natalism.

This paper addresses an interesting puzzle that lasted well beyond the immediate post-war years. What makes even more interesting is that one needs more than simple bean-counting, as too often in demographics, to offer a solution. To quantitatively match the increase in marriage rates, one has to factor in the added incentives from having children after war, first because the father is less likely to die, and second because there were explicit pro-natalist propaganda and fiscal nudges.

Dynamic Directed Search

April 12, 2015

By Gabriele Camera and Jaehong Kim


The directed search model (Peters, 1984) is static; its dynamic extensions typically restrict strategies, often assuming price or match commitments. We lift such restrictions to study equilibrium when search can be directed over time, without constraints and at no cost. In equilibrium trade frictions arise endogenously, and price commitments, if they do exist, are self-enforcing. In contrast to the typical model, there exists a continuum of equilibria that exhibit trade frictions. These equilibria support any price above the static price, including monopoly pricing in arbitrarily large markets. Dispersion in posted prices can naturally arise as temporary or permanent phenomenon despite the absence of pre-existing heterogeneity.

I think directed search holds much promise, foremost because we all search with some direction, not randomly. This paper also shows that directed search can get to many of the stylized facts that hard (but not impossible) to achieve with random search models, such as price dispersion, multiple equilibria, and endogenous frictions. I most intrigued by self-enforcing price commitments: This is like reputation, and to get that endogenously is not obvious.

A quantitative analysis of the U.S. housing and mortgage markets and the foreclosure crisis

April 9, 2015

By Satyajit Chatterjeeand Burcu Eyigungor


We present a model of long-duration collateralized debt with risk of default. Applied to the housing market, it can match the homeownership rate, the average foreclosure rate, and the lower tail of the distribution of home-equity ratios across homeowners prior to the recent crisis. We stress the role of favorable tax treatment of housing in matching these facts. We then use the model to account for the foreclosure crisis in terms of three shocks: overbuilding, financial frictions, and foreclosure delays. The financial friction shock accounts for much of the decline in house prices, while the foreclosure delays account for most of the rise in foreclosures. The scale of the foreclosure crisis might have been smaller if mortgage interest payments were not tax deductible. Temporarily higher inflation might have lowered the foreclosure rate as well.

This paper is a perfect example of good use of DSGE and micro-foundations: an important question, careful modeling that addresses that question, replication of data, and alternative policy scenarios.

Monetary policy transmission in China: A DSGE model with parallel shadow banking and interest rate control

April 7, 2015

By Michael Funke, Petar Mihaylovski and Haibin Zhu


The paper sheds light on the interplay between monetary policy, the commercial banking sector and the shadow banking sector in mainland China by means of a nonlinear stochastic general equilibrium (DSGE) model with occasionally binding constraints. In particular, we analyze the impacts of interest rate liberalization on monetary policy transmission as well as the dynamics of the parallel shadow banking sector. Comparison of various interest rate liberalization scenarios reveals that monetary policy results in increased feed-through to the lending and investment under complete liberalization. Furthermore, tighter regulation of interest rates in the commercial banking sector in China leads to an increase in loans provided by the shadow banking sector.

China is special, and the Chinese financial sector extra-special, with a heavy regulated and nudged official banking sector and an over-sized shadow banking system. How to conduct monetary policy in such an environment is a challenge, and so is understanding how undoing some of the constraints is going to impact all sectors. This paper is a nice attempt at tackling this.