march, 2019

12mar12:00 pm1:15 pmChristian WolfThe Missing Intercept: A Semi-Structural Approach to General Equilibrium EffectsEvent:Student Research Workshop


Event Details

Micro-level quasi-experiments can identify direct household and firm spending responses to macroeconomic shocks and policy stimulus, but are necessarily silent on common general equilibrium effects. I provide a new method to identify these second-round effects without the need to specify and solve a full structural model. My results build on a simple intuition – the general equilibrium propagation of greater private purchases is likely to be similar to that of higher government expenditure. I give sufficient conditions under which general equilibrium feedback is indeed exactly identical for the two kinds of demand shocks, and show that it is nearly identical in a wide class of popular business-cycle models. Applied to the study of income tax rebates, this demand equivalence logic implies that the aggregate consumption effects of the stimulus can be obtained simply by summing the micro-estimated direct consumption response to the rebate and the macro-estimated response of consumption to an expansion in government spending.


(Tuesday) 12:00 pm - 1:15 pm


Bendheim Center for Finance Room 101