nep-dge New Economics Papers
on Dynamic General Equilibrium
Issue of 2011‒10‒15
28 papers chosen by
Christian Zimmermann
Federal Reserve Bank of St. Louis

  1. Continuous-Time Overlapping Generations Models By Hippolyte D'Albis; Emmanuelle Augeraud-Véron
  2. Financial Factors and Labour Market Fluctuations By Yahong Zhang
  3. Bayesian Dynamic Factor Analysis of a Simple Monetary DSGE Model By Maxym Kryshko
  4. Data-Rich DSGE and Dynamic Factor Models By Maxym Kryshko
  5. Business Cycle Effects of Credit and Technology Shocks in a DSGE Model with Firm Defaults By Pesaran, M. H.; Xu, T.
  6. New Business Start-ups and the Business Cycle By Coles, Melvyn G; Kelishomi, Ali Moghaddasi
  7. Directed search and job rotation By Li, Fei; Tian, Can
  8. Macroeconomic Stability and Wage Inequality: A Model with Credit and Labor Market Frictions By Petra Marotzke
  9. Optimal taxation in the Uzawa-Lucas Model with externality in human capital By Arantza Gorostiaga; Jana Hromcová; Miguel Ángel López García
  10. Taking Multi-Sector Dynamic General Equilibrium Models to the Data By Huw Dixon; Engin Kara
  11. Equilibrium Search and Tax Credit Reform By Andrew Shephard
  12. It's About Time: Implications of the Period Length in an Equilibrium Job Search Model By Wolthoff, Ronald
  13. "Effects of Legal and Unauthorized Immigration on the US Social Security System" By Selcuk Eren; Hugo Benitez-Silva; Eva Carceles-Poveda
  14. Multi-product firms and business cycle dynamics By Antonio Minniti; Francesco Turino
  15. Incorporating Financial Stability in Inflation Targeting Frameworks By Burcu Aydin; Engin Volkan
  16. A reinforcement learning approach to solving incomplete market models with aggregate uncertainty By Andrei Jirnyi; Vadym Lepetyuk
  17. A general equilibrium evaluation of the sustainability of the new pension reforms in Italy By Riccardo Magnani
  18. Free-riding on liquidity By Aleksander Berentsen; Samuel Huber; Alessandro Marchesiani
  19. Search and Non-Wage Job Characteristics By Paul Sullivan; Ted To
  20. Price dispersion in the housing market: the role of bargaining and search costs By Lisi, Gaetano
  21. Evaluating the Effects of Entry Regulations and Firing Costs on International Income Differences By Hernan J. Moscos Boedo; Toshihiko Mukoyama
  22. How to Solve Dynamic Stochastic Models Computing Expectations Just Once By Kenneth L. Judd; Lilia Maliar; Serguei Maliar
  23. Modelling Forestry in Dynamic General Equlibrium By Lennox, James A.; Turner, James A.; Daigneault, Adam J.; Jhunjhnuwala, K.
  24. A general equilibrium model of the oil market By Anton Nakov; Galo Nuño
  25. Measuring farmersâ risk aversion: the unknown properties of the value function By Cao, Ruixuan; Carpentier, Alain; Gohin, Alexandre
  26. Autobiography By Pissarides, Christopher A.
  27. Autobiography By Mortensen, Dale T.
  28. Autobiography By Siamond, Peter A.

  1. By: Hippolyte D'Albis (LERNA - Economie des Ressources Naturelles - INRA : UR1081 - CEA : DPG - Université des Sciences Sociales - Toulouse I); Emmanuelle Augeraud-Véron (MIA - Mathématiques, Image et Applications - Université de La Rochelle : EA3165)
    Abstract: Age structured populations are studied in economics through overlapping generations models. These models allow for a realistic characterization of life-cycle behaviors and display intertemporal equilibrium that are not necessarily efficient. This article uses the latest developments in continuous time overlapping generations models to show the influence of the vintage structure of the population on the volatility of intertemporal prices. Permanent cycles can be found on the neighborhood of steady-states while the transitional dynamics are generically governed by short run fluctuations.
    Keywords: overlapping generations; continuous time; life-cycle; intertemporal prices.
    Date: 2011
  2. By: Yahong Zhang
    Abstract: What are the effects of financial market imperfections on unemployment and vacancies? Since standard DSGE models do not typically model unemployment, they abstract from this issue. In this paper I augment a standard monetary DSGE model with explicit financial and labour market frictions and estimate the model using US data for the period 1964:Q1-2010:Q3. I find that the estimated degree of financial frictions is higher when financial data and shocks are included. The model matches the aggregate volatility in the data reasonably well. In particular, for the labour market, the model is able to generate highly volatile unemployment and vacancies, and a relatively rigid real wage. Further, I find that the financial accelerator mechanism plays an important role in amplifying the effects of financial shocks on unemployment and vacancies. Overall, financial shocks explain about 37 per cent of the fluctuations in unemployment and vacancies.
    Keywords: Economic models; Financial markets; Labour markets
    JEL: E32 E44 J6
    Date: 2011
  3. By: Maxym Kryshko
    Abstract: When estimating DSGE models, the number of observable economic variables is usually kept small, and it is conveniently assumed that DSGE model variables are perfectly measured by a single data series. Building upon Boivin and Giannoni (2006), we relax these two assumptions and estimate a fairly simple monetary DSGE model on a richer data set. Using post-1983 on real output, inflation, nominal interest rates, measures of inverse money velocity, and a large panel of informational series, we compare the data-rich DSGE model with the regular - few observables, perfect measurement - DSGE model in terms of deep parameter estimates, propagation of monetary policy and technology shocks and sources of business cycle fluctuations. We document that the data-rich DSGE model generates a higher implied duration of Calvo price contracts and a lower slope of the New Keynesian Phillips curve. To reduce the computational costs of the likelihood-based estimation, we employed a novel speedup as in Jungbacker and Koopman (2008) and achieved the time savings of 60 percent.
    Keywords: Business cycles , Economic models , Monetary policy ,
    Date: 2011–09–19
  4. By: Maxym Kryshko
    Abstract: Dynamic factor models and dynamic stochastic general equilibrium (DSGE) models are widely used for empirical research in macroeconomics. The empirical factor literature argues that the co-movement of large panels of macroeconomic and financial data can be captured by relatively few common unobserved factors. Similarly, the dynamics in DSGE models are often governed by a handful of state variables and exogenous processes such as preference and/or technology shocks. Boivin and Giannoni(2006) combine a DSGE and a factor model into a data-rich DSGE model, in which DSGE states are factors and factor dynamics are subject to DSGE model implied restrictions. We compare a data-richDSGE model with a standard New Keynesian core to an empirical dynamic factor model by estimating both on a rich panel of U.S. macroeconomic and financial data compiled by Stock and Watson (2008).We find that the spaces spanned by the empirical factors and by the data-rich DSGE model states are very close. This proximity allows us to propagate monetary policy and technology innovations in an otherwise non-structural dynamic factor model to obtain predictions for many more series than just a handful of traditional macro variables, including measures of real activity, price indices, labor market indicators, interest rate spreads, money and credit stocks, and exchange rates.
    Keywords: Economic models , Monetary policy ,
    Date: 2011–09–16
  5. By: Pesaran, M. H.; Xu, T.
    Abstract: This paper proposes a theoretical framework to analyze the impacts of credit and technology shocks on business cycle dynamics, where firms rely on banks and households for capital financing. Firms are identical ex ante but differ ex post due to different realizations of firm specific technology shocks, possibly leading to default by some firms. The paper advances a new modelling approach for the analysis of financial intermediation and firm defaults that takes account of the financial implications of such defaults for both households and banks. Results from a calibrated version of the model highlights the role of financial institutions in the transmission of credit and technology shocks to the real economy. A positive credit shock, defined as a rise in the loan to deposit ratio, increases output, consumption, hours and productivity, and reduces the spread between loan and deposit rates. The effects of the credit shock tend to be highly persistent even without price rigidities and habit persistence in consumption behaviour.
    JEL: E32 E44 G21
    Date: 2011–10–07
  6. By: Coles, Melvyn G; Kelishomi, Ali Moghaddasi
    Abstract: This paper considers new business start-up activity within a stochastic equilibrium model of unemployment. The resulting job creation process is both natural and tractable, and generates equilibrium unemployment and vacancy dynamics which match the volatility and persistence observed in the data. The insight is that the standard Diamond/Mortensen/Pissarides matching framework works beautifully once the free entry of vacancies assumption is replaced by a model of business start-up activity. The approach is particularly important as it is demonstrated that a large part of net job creation in the U.S. economy can be attributed to new business start-ups.
    Keywords: aggregate dynamics; equilibrium unemployment; startups
    JEL: E24 E32 J63 J64
    Date: 2011–10
  7. By: Li, Fei; Tian, Can
    Abstract: In this note, we consider the impact of job rotation in a directed search model in which firm sizes are endogenously determined, and match quality is initially unknown. A large firm benefits from the opportunity of rotating workers so as to partially overcome mismatch loss. As a result, in the unique symmetric subgame perfect equilibrium, large firms have higher labor productivity and lower separation rate. In contrast to the standard directed search model with multi-vacancy firms, this model can generate a positive correlation between firm size and wage without introducing any exogenous productivity shock or imposing non-concave production function assumption.
    Keywords: Directed Search; Job Rotation; Firm Size and Wage; Firm Size and Labor Productivity
    JEL: L11 J31 J64
    Date: 2011–10–04
  8. By: Petra Marotzke (Department of Economics, University of Konstanz, Germany)
    Abstract: While macroeconomic volatility in the US economy decreased since the early 1980's, individual earnings volatility and wage inequality increased. This paper argues that increasing financial development can contribute to both changes. I develop a real business cycle model with sectoral productivity shocks and labor as well as credit market frictions. Credit market frictions take the form of collateral-based credit constraints. It is shown that there are interactions between the labor and the credit market that matter for the development of wages and output. When workers are not perfectly mobile between sectors, financial development comes along with an increase in the volatility of individual earnings and in wage inequality, although aggregate output volatility is lower.
    Keywords: Financial development, labor market frictions, sectoral shocks, volatility, wage inequality
    JEL: E32 E44 J60
    Date: 2011–09–30
  9. By: Arantza Gorostiaga (Dpto. Fundamentos del Análisis Económico II); Jana Hromcová (Universitat de Girona); Miguel Ángel López García (Dpt. Economia Aplicada)
    Abstract: We show that in the Uzawa-Lucas model with externality in human capital with agents that value both consumption and leisure, the government pursuing the first best can achieve its goal by subsidizing the foregone earnings while studying. The subsidy should be financed by a schooling fee. We obtain that countries with similar initial conditions may issue different fees because multiple equilibria can arise for empirically plausible values of parameters. This result differs from the one obtained in ananalogous economy where agents only value consumption.
    Keywords: optimal policy, two-sector model, endogenous growth, indeterminacy.
    JEL: O41 E62 H31
    Date: 2011–09
  10. By: Huw Dixon (Cardiff Business School); Engin Kara (University of Bristol, Economics Department)
    Abstract: We estimate and compare two models, the Generalized Taylor Economy (GTE) and the Multiple Calvo model (MC); that have been built to model the distributions of contract lengths observed in the data. We compare the performances of these models to those of the standard models such as the Calvo and its popular variant, using the ad hoc device of indexation. The estimations are made with Bayesian techniques for the US data. The results indicate that the data strongly favour the GTE.
    Keywords: DSGE models, Calvo, Taylor, price-setting.
    JEL: E32 E52 E58
    Date: 2011–10
  11. By: Andrew Shephard (Princeton University)
    Abstract: An empirical equilibrium job search model with wage posting is developed to analyze the labor market impact of UK tax reforms. The model allows for a rich characterization of the labor market, with hours responses, accurate representations of the tax and transfer system, and both worker and firm heterogeneity. The model is estimated with pre-reform longitudinal survey data using a semi-parametric estimation technique, and the impact of actual tax reform policies is simulated. The model predicts that the British Working Families’ Tax Credit and contemporaneous reforms increased employment, with equilibrium effects found to play a relatively minor role.
    Keywords: Labour market equilibrium, job search, wage dispersion, unemployment, monopsony, incidence, tax credits
    JEL: H29 J08 J30 J20
    Date: 2011–09
  12. By: Wolthoff, Ronald (University of Toronto)
    Abstract: This paper analyzes the role of the period length in a search model of the labor market and argues that it has profound implications for the market equilibrium. In the model, job offers and job destruction shocks arrive according to a Poisson process in continuous time, but institutional factors and/or informational frictions may delay workers' transitions into or out of a job. This effectively creates discrete time periods of arbitrary length, with continuous time being the limit case when the period length goes to zero. Longer periods introduce the possibility of simultaneity or recall of job offers, affecting the labor share, the amount of wage dispersion, as well as the allocation of workers over jobs with different productivity levels. Misspecification of the period length may therefore lead to inconsistent estimates of structural parameters and wrong conclusions on optimal policy.
    Keywords: simultaneous search, on-the-job search, wage dispersion, labor market frictions
    JEL: J64 J31 D83
    Date: 2011–10
  13. By: Selcuk Eren; Hugo Benitez-Silva; Eva Carceles-Poveda
    Abstract: Immigration is having an increasingly important effect on the social insurance system in the United States. On the one hand, eligible legal immigrants have the right to eventually receive pension benefits but also rely on other aspects of the social insurance system such as health care, disability, unemployment insurance, and welfare programs, while most of their savings have direct positive effects on the domestic economy. On the other hand, most undocumented immigrants contribute to the system through taxed wages but are not eligible for these programs unless they attain legal status, and a large proportion of their savings translates into remittances that have no direct effects on the domestic economy. Moreover, a significant percentage of immigrants migrate back to their countries of origin after a relatively short period of time, and their savings while in the United States are predominantly in the form of remittances. Therefore, any analysis that tries to understand the impact of immigrant workers on the overall system has to take into account the decisions and events these individuals face throughout their lives, as well as the use of the government programs they are entitled to. We propose a life-cycle Overlapping Generations (OLG) model in a general equilibrium framework of legal and undocumented immigrants' decisions regarding consumption, savings, labor supply, and program participation to analyze their role in the financial sustainability of the system. Our analysis of the effects of potential policy changes, such as giving some undocumented immigrants legal status, shows increases in capital stock, output, consumption, labor productivity, and overall welfare. The effects are relatively small in percentage terms but considerable given the size of our economy.
    Keywords: Legal and Undocumented Immigration; Social Security; Remittances; Life-cycle Models; OLG Models; General Equilibrium Models
    JEL: J14 J26 J65
    Date: 2011–10
  14. By: Antonio Minniti (Facoltà di Economia); Francesco Turino (Universidad de Alicante)
    Abstract: Recent empirical evidence provided by Bernard et al. (2010) and Broda and Weinstein (2010) shows that a significant share of product creation and destruction in U.S. industries occurs within existing firms and accounts for a relevant share of aggregate output. In the present paper, and consistently with this evidence, we relax the standard assumption of mono-product firms that is typically made in dynamic general equilibrium models. Building on the work of Jaimovich and Floetotto (2008), we develop an RBC model with multi-product firms and endogenous markups to assess the implications of the intra-firm extensive margin on business cycle fluctuations. In this environment, the procyclicality of product creation emerges as a consequence of strategic interactions among firms. Because of the proliferation effect induced by changes in product scope, our model embodies a quantitatively important magnification mechanism of technology shocks.
    Keywords: Multi-product Firms, Business Cycles, Firm Dynamics.
    JEL: E32 L11
    Date: 2011–09
  15. By: Burcu Aydin; Engin Volkan
    Abstract: The global financial crisis has exposed the limitations of a conventional inflation targeting (IT) framework in insulating an economy from shocks, and demonstrated that its rigid application may aggravate the effect of shocks on output and inflation. Accordingly, we investigate possible refinements to the IT framework by incorporating financial stability considerations. We propose a small open economy DSGE model, calibrated for Korea during the period of 2003 - 07, with real and financial frictions. The findings indicate that incorporating financial stability considerations can help smooth business cycle fluctuations more effectively than a conventional IT framework.
    Keywords: Economic models , Financial crisis , Financial stability , Global Financial Crisis 2008-2009 , Inflation targeting , Korea, Republic of , Monetary policy ,
    Date: 2011–09–26
  16. By: Andrei Jirnyi (Kellogg School of Management); Vadym Lepetyuk (Universidad de Alicante)
    Abstract: We develop a method of solving heterogeneous agent models in which individual decisions depend on the entire cross-sectional distribution of individual state variables, such as incomplete market models with liquidity constraints. Our method is based on the principle of reinforcement learning, and does not require parametric assumptions on either the agents' information set, or on the functional form of the aggregate dynamics.
    Keywords: Heterogeneous agents, macroeconomics, dynamic programming, reinforcement learning.
    JEL: C63 C68 E20
    Date: 2011–09
  17. By: Riccardo Magnani (CEPN - Centre d'économie de l'Université de Paris Nord - CNRS : UMR7115 - Université Paris-Nord - Paris XIII, CEPII - Centre d'études prospectives et d'informations internationales - CEPII)
    Abstract: Most European countries have recently introduced pension system reforms to face the financial problem related to population ageing. Italy is not an exception. The reforms introduced during the Nineties (Amato Reform in 1992 and Dini Reform in 1995), even if they will produce a strong reduction in pension benefits, are generally considered not sufficient to adequately face the population ageing problem. For this reason, in 2004, the Berlusconi government introduced a new reform that increases the retirement age to 60 years from January 2008 onwards, to 61 years from 2010 and to 62 from 2014. In 2007, the left-wing government replaced this reform with a softer one that fixes the minimum retirement age at 58 from 2008. Using an applied overlapping-generations general equilibrium model with endogenous growth due to human capital accumulation, we analyse the impact of the new reforms on the macroeconomic system and in particular on the long-run sustainability of the pension system. We show that the increase in the retirement age would permit to reduce pension deficits in the short and medium run, while in the long run these reforms would become completely ineffective. ©
    Keywords: pension reforms, applied OLG models, immigration, endogenous growth
    Date: 2011
  18. By: Aleksander Berentsen; Samuel Huber; Alessandro Marchesiani
    Abstract: Do financial market participants free-ride on liquidity? To address this question, we construct a dynamic general equilibrium model where agents face idiosyncratic preference and technology shocks. A secondary financial market allows agents to adjust their portfolio of liquid and illiquid assets in response to these shocks. The opportunity to do so reduces the demand for the liquid asset and, hence, its value. The optimal policy response is to restrict (but not eliminate) access to the secondary financial market. The reason for this result is that the portfolio choice exhibits a pecuniary externality: An agent does not take into account that by holding more of the liquid asset, he not only acquires additional insurance but also marginally increases the value of the liquid asset which improves insurance to other market participants.
    Keywords: Monetary policy, liquidity, financial markets
    JEL: E52 E58 E59
    Date: 2011–09
  19. By: Paul Sullivan (U.S. Bureau of Labor Statistics); Ted To (U.S. Bureau of Labor Statistics)
    Abstract: This paper quantifies the importance of non-wage job characteristics to workers by estimating a structural on-the-job search model. The model generalizes the standard search framework by allowing workers to search for jobs based on both wages and job-specific non-wage utility flows. Within the structure of the search model, data on accepted wages and wage changes at job transitions identify the importance of non-wage utility through revealed preference. The parameters of the model are estimated by simulated minimum distance using the 1997 cohort of the National Longitudinal Survey of Youth (NLSY97). The estimates reveal that utility from non-wage job characteristics plays an important role in determining job mobility, the value of jobs to workers, and the gains from job search. More specifically, non-wage utility accounts for approximately one-third of the total gains from job mobility. These large non-pecuniary gains from search are missed by search models which assume that the wage captures the entire value of a job to a worker.
    Keywords: job search, non-wage job characteristics, wage growth, revealed preference, compensating differentials
    JEL: D1 D9 J4 J6
    Date: 2011–09
  20. By: Lisi, Gaetano
    Abstract: This paper develops a matching model à la Pissarides (2000) in order to explain the basic facts of housing markets, most of all the variance in house prices. Price dispersion is basically due to both the ex-ante heterogeneity of the parties and the search costs of buyers and sellers. In fact, sellers and buyers spend time and money before concluding the deal. Furthermore, the house price is substantially determined by bargaining between the parties. These factors affect the selling price and lead to price dispersion. This simple theoretical model is able to take these distinctive features into account, thus explaining the basic facts of housing markets.
    Keywords: house prices; price dispersion; bargaining power; search frictions
    JEL: R0 D40 D83 R31 R21
    Date: 2011–10–02
  21. By: Hernan J. Moscos Boedo; Toshihiko Mukoyama
    Abstract: This paper analyzes the effects of entry regulations and firing costs on cross-country differences in income and productivity. We construct a general equilibrium industry- dynamics model and quantitatively evaluate it using the cross-country data on entry costs and firing costs. Entry costs lower overall productivity in an economy by keeping low- productivity establishments in operation and making the establishment size inefficiently large. Firing costs lower productivity by reducing the reallocation of labor from low- productivity establishments to high-productivity establishments. The linear regression of the data on the model prediction accounts for 27% of the cross-sectional variation in total factor productivity. Moving the level of entry costs and firing costs from the U.S. level to that of the average of low income countries (countries with a Gross National Income below 2% of the U.S. level) reduces TFP by 27% in the model without capital, and by 34% in the model with capital and capital adjustment costs.
    Keywords: Entry cost, firing cost,international income differences,industry dynamics
    JEL: D24 E23 J65 L11 O11
    Date: 2011–10
  22. By: Kenneth L. Judd; Lilia Maliar; Serguei Maliar
    Abstract: We introduce a technique called "precomputation of integrals" that makes it possible to compute conditional expectations in dynamic stochastic models in the initial stage of the solution procedure. This technique can be applied to any set of equations that contains conditional expectations, in particular, to the Bellman and Euler equations. After the integrals are precomputed, we can solve stochastic models as if they were deterministic. We illustrate the benefits of precomputation of integrals using one- and multi-agent numerical examples.
    JEL: C63
    Date: 2011–09
  23. By: Lennox, James A.; Turner, James A.; Daigneault, Adam J.; Jhunjhnuwala, K.
    Abstract: Adequately representing dynamic characteristics of land use change and forestry in computable general equilibrium models is challenging but essential if modellers are to provide credible assessments of policies that directly or indirectly influence these phenomena. In this paper, we show how a dynamic representation of planted or naturally regenerating forests may be integrated within a neoclassical, intertemporal general equilibrium model. We demonstrate the application of such a model to assess the impacts of including forestry within a hypothetical emissions trading scheme in the US, showing the resulting changes in land use and increases in the optimal rotation length.
    Keywords: Intertemporal general equilibrium, optimal forest management, forest carbon credits, Crop Production/Industries, Environmental Economics and Policy,
    Date: 2011
  24. By: Anton Nakov (Banco Central Europeo); Galo Nuño (Banco de España)
    Abstract: We present a general equilibrium model of the global oil market, in which the oil price, oil production, and consumption, are jointly determined as outcomes of the optimizing decisions of oil importers and oil exporters. On the supply side the oil market is modelled as a dominant firm – Saudi Aramco – with competitive fringe. We establish that a dominant firm may exist as long as it enjoys a cost advantage over the fringe. We provide an expression for the optimal markup and compute the spare capacity maintained by such a firm. The model produces plausible dynamics in response to oil supply and oil demand shocks. In particular, it reproduces successfully the jump in oil output of Saudi Aramco following the output collapse of Iraq and Kuwait during the first Gulf War, explaining it as the profit-maximizing response of the dominant firm. Oil taxes and subsidies affect the oil price and welfare through their effect on the trade-off between oil production efficiency and oil market competition.
    Keywords: oil price, oil production, dominant firm, Saudi Aramco, oil tax
    JEL: E32 Q43
    Date: 2011–10
  25. By: Cao, Ruixuan; Carpentier, Alain; Gohin, Alexandre
    Abstract: We argue in this paper that available econometric estimates of farmersâ risk aversion do not measure true farmersâ preferences towards risky outcomes. Available analyses are mostly of static nature and indeed measure the parameters of the synthetic optimal value function rather than the deep parameters of the utility functions. We derive analytical and empirical results in a simple dynamic and stochastic framework showing that that there is not a simple relationship between utility functions and value functions when agents have many decision variables. In particular we find that the value function does not necessarily exhibit DARA when the instantaneous utility function satisfies DARA and conversely. We recommend performing dynamic econometric estimation with at least farm production and consumption data.
    Keywords: Risk and Uncertainty,
    Date: 2011
  26. By: Pissarides, Christopher A. (London School of Economics)
    Abstract: I was born in Nicosia, Cyprus, on 20 February 1948. My father Antonios was born in the village of Agros, in the Troodos mountains, a village in a valley surrounded by mountains on three sides and with an opening to the south overlooking in the distance the bay of Limassol. He was one of seven children, and at the age of ten he was taken out of school and sent to Nicosia to work as a shop assistant for his uncle. He lived and worked with his uncle’s family until his twenties, when he was able to open his own shop, selling materials for making clothes and other items for the home. His business flourished when we were growing up but late in his life economic development and cheap imports made his trade obsolete.
    Keywords: Search frictions;
    JEL: E24 J64
    Date: 2011
  27. By: Mortensen, Dale T. (Northwestern University)
    Abstract: As the children of immigrants, my parents were raised in Scandinavian Minnesota. My mother, Verna Ecklund, was a university student for only one year but my father, Thomas Peter Mortensen, graduated from the School of Forestry at the University of Minnesota in 1936. They were married shortly after and moved to Enterprise, Oregon, where I was born in 1939. Enterprise, located in the far northeastern corner of the state, was in cattle ranching country surrounded by one of the most beautiful mountain ranges in the U.S. In these mountains, my father began his career as a lookout officer for the U.S. Forest Service. In the war years, they migrated further west to the Portland area where Dad help build Liberty ships in Mr. Kaiser’s ship yards and Mom provided day care for the children of Rosy the Riveter. After the war, the family, which now included my brother Arne born in 1942, moved to the Hood River Valley 60 miles east of Portland where again my father returned to the practice of forestry. There my brothers and I, who included Irving born in 1947, were raised.
    Keywords: Search frictions;
    JEL: E24 J64
    Date: 2011
  28. By: Siamond, Peter A. (Massachusetts Institute of Technology)
    Abstract: My grandparents immigrated to the U.S. around the turn of the last century. My mother’s parents and six older siblings came from Poland. My father’s parents met in New York, she having come from Russia and he from Romania. My parents, both born in 1908, grew up in New York and never lived outside the metropolitan area. Both finished high school and went to work, my father studying at Brooklyn Law School at night while selling shoes during the day. When they married in 1929, my mother was earning $15 a week as a bookkeeper and my father, $5 a week as a novice lawyer.
    Keywords: Search frictions;
    JEL: E24 J64
    Date: 2011

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