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Which particular assets have the highest long-run returns?
We answer these questions on the basis of a new and comprehensive dataset for all major asset classes, including—for the first time—total returns to the largest, but oft ignored, component of household wealth, housing.
Recent employment breaks negative duration dependence in unemployment exits and the unemployed who report long durations after recent employment have similar job finding rates as those who report short durations.
Using our proposed approach, we reexamine the unemployment duration distribution and current approach to misclassification error in the CPS.
Is it higher than the growth rate of the economy and, if so, by how much?
Is there a tendency for returns to fall in the long-run?
Moreover, financial recessions that are preceded by strong increases in income inequality or low productivity growth are also associated with deeper and slower recoveries.
We introduce a novel approach to studying heterogeneity in job finding rates by classifying the non-employed, the unemployed and those out of the labor force (OLF), according to their labor force status (LFS) histories using four-month panels in the CPS.I find that changes in top income shares and productivity growth are strong early warning indicators as well.In fact, changes in top income shares outperform credit as crises predictors.The representative agent contemplates the possibility of an occasionally binding ZLB that is driven by switching between two local rational expectations equilibria, labeled the "targeted" and "deflation" solutions, respectively. economy experienced a massive expansion of credit, a slowdown in productivity growth, and a rapid increase in income inequality.
Sustained periods when the real interest rate remains below the central bank's estimate of r-star can induce the agent to place a substantially higher weight on the deflation equilibrium, causing it to occasionally become self-fulfilling. In model simulations, raising the central bank's inflation target to 4% from 2% can reduce, but not eliminate, the endogenous switches to the deflation equilibrium. All of these developments may have contributed to an unusual buildup of financial instability.
During such episodes, intermediaries expand their lending and leverage, thereby building up financial fragility.