This paper develops a theory of subjective beliefs that departs from rational expectations,
and shows that biases in household beliefs have quantitatively large effects on …

We study the relation between inflation and real activity over the business cycle. We employ
a Trend-Cycle VAR model to control for low-frequency movements in inflation …

We revisit the question of why shifts in aggregate demand drive business cycles. Our theory
combines intertemporal substitution in production with rational confusion, or bounded …

We find that high macroeconomic uncertainty is associated with greater accumulation of
physical capital, despite a reduction in investment and valuations. To reconcile this puzzling …

We develop a data-rich measure of expected macroeconomic skewness in the US economy.
Expected macroeconomic skewness is strongly procyclical, mainly reflects the cyclicality in …

We investigate whether the Federal Reserve has responded systematically to house and
stock prices and whether this response has changed over time using a Bayesian structural …

We employ a nonlinear proxy‐VAR approach to document the large response of real activity
to a financial uncertainty shock during and in the aftermath of the Great Recession. We …

This paper presents a fear theory of the economy, based on the interplay between fear of
rare disasters and the interest rate on safe assets. To do this, I study the macroeconomic …

Central elements that the canonical micro-theory understands to define firms (ownership of
non-human assets), employment (investment in human capital that is asset specific), and …

We show that time variation in risk premia leads to time-varying idiosyncratic income risk for
workers. Using US administrative data on worker earnings, we show that increases in risk …