Peter Rupert's Research

Some Papers

Calibration has become a standard tool of macroeconomics. This paper extends and refines the calibration methodology along several important dimensions. First, accounting for home production is important both in measuring calibration targets and in organizing the data in a model-consistent fashion. For this reason, thinking about home production is important even if the model under consideration does not include home production. Second, investment-specific technological change is included because of its strong balanced growth parameter restrictions. Third, the measurement strategy is laid out as transparently as possible so that others can easily replicate the underlying calculations. The data and calculations used in this paper are available at http://clevelandfed.org/research/Models/rbc/Index.cfm.

How Amenities Affect Job and Wage Choices Over the Life Cycle, with Ed Nosal (Review of Economic Dynamics)    

Job amenities are explicitly included in a model of job choice over the life cycle. The amenities are characterized by an indivisibility--a worker must be present at a job to enjoy its amenities. This characterization has implications on initial job choice, a worker's wage profile and whether they move to a higher or lower paying job.

General Equilbrium with Nonconvexities and Money, with Karl Shell, Guillaume Rocheteau and Randall Wright (Journal of Economic Theory, 142, 2008)    

In general equilibrium with nonconvexities, there exist sunspot equilibria with good welfare properties, where sunspots ameliorate the nonconvexities. In these equilibria, we show agents act as if they have quasi-linear utility. We use this result to construct a new model of monetary exchange along the lines of the one by Lagos and Wright, where trade occurs in both centralized and decentralized markets, but we replace quasi-linearity with general preferences and indivisible labor. This suggests that modern monetary theory is more robust than one might have thought, and constitutes progress on the classic problem of integrating money and general equilibrium theory.

Crime and the Labor Market: A Search Model with Optimal Contracts , with Bryan Englehardt and Guillaume Rocheteau (Journal of Public Economics, 92, 2008)    

The Labor Market and Female Crime , with Bryan Englehardt and Guillaume Rocheteau (in Frontiers of Family Economics, Emerald Press, 2008)    

This paper extends the Pissarides (2000) model of the labor market to include crime and punishment a la Becker (1968). The model is used to study, analytically and quantitatively, the effects of various labor market and crime policies. For instance, a more generous unemployment insurance system reduces the crime rate of the unemployed but its effect on the crime rate of the employed depends on job duration and jail sentences. When the model is calibrated to U.S. data, the overall effect on crime is positive but quantitatively small. Wage subsidies reduce unemployment and crime rates of employed and unemployed workers, and improve society's welfare. Hiring subsidies reduce unemployment but they can raise the crime rate of employed workers. Crime policies (police technology and jail sentences) affect crime rates significantly but have only negligible effects on the labor market.

Inflation and Unemployment in General Equilbrium, with Guillaume Rocheteau and Randall Wright (Scandanavian Journal of Economics, 2007)    

When labor is indivisible, there exist efficient outcomes where some agents are randomly unemployed (Rogerson 1988). We integrate this idea into a modern model of monetary exchange, where some trade occurs in centralized markets and some in decentralized markets, as in Lagos and Wright (2006). This delivers a general equilibrium model of unemployment and money with explicit microeconomic foundations. We show the implied relation between inflation and unemployment can be positive or negative, depending on simple preference conditions. Our Phillips Curve provides a long-run, exploitable, trade off for monetary policy; it turns out, however, that the optimal policy is the Friedman rule.

The Decline of Manufacturing Employment in the United States, with Eric Fisher    

The Return to Capital and the Business Cycle, with Paul Gomme and B. Ravikumar    

We measure the return to capital directly from the NIPA data and examine the return implications of the real business cycle model. We construct a quarterly time series of the after-tax return to business capital. Its volatility is considerably smaller than that of S&P 500 returns. The standard business cycle model captures almost 50% of the volatility in the return to capital (relative to the volatility of output). We consider several departures from the benchmark model; the most promising is one with higher risk aversion which captures more than 75% of the relative volatility in the return to capital.