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Home > Publications > Economic Research > Working Papers

Working Papers

The following papers were written by economists at the Federal Reserve Bank of Richmond, in some cases in collaboration with outside economists. These working papers represent work prepared for later publication or presentation to professional meetings. They are circulated in this series for purposes of discussion and comment only.
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Recent Working Papers


Housing Externalities: Evidence from Spatially Concentrated Urban Revitalization Programs
By Esteban Rossi-Hansberg, Pierre-Daniel G. Sarte & Raymond E. Owens III
Working Paper 08-3
Released: June 2008

Using data compiled from concentrated residential urban revitalization programs implemented in Richmond, VA, between 1999 and 2004, we study residential externalities. Specifically, we provide evidence that in neighborhoods targeted by the programs, ...

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Long-duration Bonds and Sovereign Defaults
By Juan Carlos Hatchondo & Leonardo Martinez
Working Paper 08-2
Released: May 2008

This paper extends the baseline framework used in recent quantitative studies of sovereign default by assuming that governments can borrow using long-duration bonds. Previous studies have assumed that governments can borrow using bonds that mature after...

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Inflation Dynamics with Search Frictions: A Structural Econometric Analysis
By Michael U. Krause, Thomas A. Lubik & David Lopez-Salido
Working Paper 08-1
Released: April 2008

The New Keynesian Phillips curve explains inflation dynamics as being driven by current and expected future real marginal costs. In competitive labor markets, the labor share can serve as a proxy for the latter. In this paper, we study the role of real...

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Moral Hazard and Persistence
By Hugo Hopenhayn & Arantxa Jarque
Working Paper 07-7
Released: December 2007

We study a multiperiod principal-agent problem with moral hazard in which effort is persistent: the agent is required to exert effort only in the initial period of the contract, and this effort determines the conditional distribution of output in the...

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Avoiding the Inflation Tax
By Huberto M. Ennis
Working Paper 07-6
Released: December 2007

This paper is extensively revised from WP 05-10. I study the effects of inflation on the purchasing behavior of buyers in an economy where money is essential for certain transactions (as in Lagos and Wright, 2005). A long-standing intuition in this...

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The Anatomy of U.S. Personal Bankruptcy under Chapter 13
By Hülya Eraslan, Wenli Li & Pierre-Daniel G. Sarte
Working Paper 07-5
Released: October 2007

By compiling a novel dataset from bankruptcy court dockets recorded in Delaware between 2001 and 2002, we build and estimate a structural model of Chapter 13 bankruptcy. This allows us to quantify how key debtor characteristics, including whether they ...

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Notes on the Inflation Dynamics of the New Keynesian Phillips Curve
By Andreas Hornstein
Working Paper 07-4
Released: August 2007

These notes contain the derivations for results stated without proof in Hornstein (2007). First, I derive the log-linear approximation of the inflation dynamics in the Calvo-model with elements of backward-looking pricing when the approximation takes...

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A Literature Review on the Effectiveness of Financial Education
By Matthew Martin
Working Paper 07-3
Released: June 2007

This survey summarizes current research on financial literacy efforts. Because most financial literacy programs are relatively new, much of the literature reviewed here is also new and part of a field that is still developing as a program of research...

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Bank Runs and Institutions: The Perils of Intervention
By Huberto M. Ennis & Todd Keister
Working Paper 07-2
Released: April 2007

Governments typically respond to a run on the banking system by temporarily freezing deposits and by rescheduling payments to depositors. Depositors may even be required to demonstrate an urgent need for funds before being allowed to withdraw. We study ...

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Heterogeneous Borrowers in Quantitative Models of Sovereign Default
By Juan Carlos Hatchondo, Leonardo Martinez & Horacio Sapriza
Working Paper 07-1
Released: March 2007

We study an economy in which policymakers of different types (patient vs. impatient) alternate in power. Our framework builds on the model used in recent quantitative studies of sovereign default. We show that a default episode may be triggered by a...

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Risky Human Capital and Deferred Capital Income Taxation
By Borys Grochulski & Tomasz Piskorski
Working Paper 06-13
Released: January 2007

We study the structure of optimal wedges and capital taxes in a Mirrlees economy with endogenous skills. Human capital is a private state variable that drives the skill process of each individual. Building on the findings of the labor literature, we...

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Market-Based Regulation and the Informational Content of Prices
By Philip Bond, Itay Goldstein & Edward Simpson Prescott
Working Paper 06-12
Released: November 2006

Various laws and policy proposals call for regulators to make use of the information reflected in market prices. We focus on a leading example of such a proposal, namely that bank supervision should make use of the market prices of traded bank s...

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