E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment
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The Carrot and the Stick: The Business Cycle Implications of Incentive Pay in the Labor Search Model
This paper considers a real business cycle model with labor search frictions where two types of incentive pay are explicitly introduced following the insights from the micro literature on performance pay (e.g. Lazear, 1986). -
Heterogeneity in the Dynamic Effects of Uncertainty on Investment
How does aggregate profit uncertainty influence investment activity at the firm level? We propose a parsimonious adaptation of a factor-autoregressive conditional heteroscedasticity model to exploit information in a subindustry sales panel for an efficient and tractable estimation of aggregate volatility.