Pub Date : 2025-07-31DOI: 10.1016/j.jmoneco.2025.103808
Urban Jermann , Haotian Xiang
We document properties of crypto monetary policies based on a large sample of tokens. We present a dynamic model to determine the optimal issuance and fee policies for issuers. Committing to low future money growth and fees increases profits, and the degree of commitment matters for equilibrium existence. A Ramsey issuer who maximizes profits, after the initial period, makes choices that maximize the utility value of all tokens. We present a model with probabilistic commitment, solve for the steady state in closed form, and show that empirically relevant long-run money growth rates align with very high levels of commitment.
{"title":"Tokenomics: Optimal monetary and fee policies","authors":"Urban Jermann , Haotian Xiang","doi":"10.1016/j.jmoneco.2025.103808","DOIUrl":"10.1016/j.jmoneco.2025.103808","url":null,"abstract":"<div><div>We document properties of crypto monetary policies based on a large sample of tokens. We present a dynamic model to determine the optimal issuance and fee policies for issuers. Committing to low future money growth and fees increases profits, and the degree of commitment matters for equilibrium existence. A Ramsey issuer who maximizes profits, after the initial period, makes choices that maximize the utility value of all tokens. We present a model with probabilistic commitment, solve for the steady state in closed form, and show that empirically relevant long-run money growth rates align with very high levels of commitment.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"155 ","pages":"Article 103808"},"PeriodicalIF":4.1,"publicationDate":"2025-07-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145098992","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-30DOI: 10.1016/j.jmoneco.2025.103813
Lam Nguyen
Instrument validity cannot be tested in a just-identified model, and it is not clear what conclusion to draw when instrument validity is rejected in an over-identified model. In practice, researchers tend to regard instruments as valid when they lead to sensible inferences. This paper develops a proxy structural vector autoregression with imperfect confidence in instrument validity, enabling researchers to incorporate and investigate those prior beliefs alongside other identifying information such as sign restrictions. The empirical application offers a new explanation to the observation in Stock and Watson (2012) that shocks predicted by different monetary policy instruments are correlated with oil and fiscal policy shocks, but not with each other.
{"title":"Bayesian inference in proxy SVARs with incomplete identification: Re-evaluating the validity of monetary policy instruments","authors":"Lam Nguyen","doi":"10.1016/j.jmoneco.2025.103813","DOIUrl":"10.1016/j.jmoneco.2025.103813","url":null,"abstract":"<div><div>Instrument validity cannot be tested in a just-identified model, and it is not clear what conclusion to draw when instrument validity is rejected in an over-identified model. In practice, researchers tend to regard instruments as valid when they lead to sensible inferences. This paper develops a proxy structural vector autoregression with imperfect confidence in instrument validity, enabling researchers to incorporate and investigate those prior beliefs alongside other identifying information such as sign restrictions. The empirical application offers a new explanation to the observation in Stock and Watson (2012) that shocks predicted by different monetary policy instruments are correlated with oil and fiscal policy shocks, but not with each other.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"155 ","pages":"Article 103813"},"PeriodicalIF":4.1,"publicationDate":"2025-07-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145098989","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-26DOI: 10.1016/j.jmoneco.2025.103811
Federico Mandelman , Mishita Mehra , Hewei Shen
This paper examines the impact of immigration policy frictions on technology-intensive firms by age cohort. The firm-level empirical evidence shows that H-1B policy restrictions on skilled immigrants directly affect the survival of young firms in technology-intensive sectors. We develop a novel general equilibrium model with firm entry and exit that mimics the policy frictions in the H-1B program. The model matches the age distribution of firms in high-technology sectors and shows that immigration policy reforms that increase the entry of younger firms induce greater exit of older, less productive firms, thereby increasing efficiency.
{"title":"Skilled immigration frictions as a barrier for young firms","authors":"Federico Mandelman , Mishita Mehra , Hewei Shen","doi":"10.1016/j.jmoneco.2025.103811","DOIUrl":"10.1016/j.jmoneco.2025.103811","url":null,"abstract":"<div><div>This paper examines the impact of immigration policy frictions on technology-intensive firms by age cohort. The firm-level empirical evidence shows that H-1B policy restrictions on skilled immigrants directly affect the survival of young firms in technology-intensive sectors. We develop a novel general equilibrium model with firm entry and exit that mimics the policy frictions in the H-1B program. The model matches the age distribution of firms in high-technology sectors and shows that immigration policy reforms that increase the entry of younger firms induce greater exit of older, less productive firms, thereby increasing efficiency.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"155 ","pages":"Article 103811"},"PeriodicalIF":4.1,"publicationDate":"2025-07-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145098991","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-25DOI: 10.1016/j.jmoneco.2025.103810
Fabio Ghironi , Daisoon Kim , Galip Kemal Ozhan
We develop a framework combining dynamic, intertemporal choices of general-equilibrium macro models with microfoundations of modern trade theory to study sanctions. In a two-country, two-sector setup, Home holds a comparative advantage in producing differentiated consumption goods via heterogeneous firms with endogenous entry, while Foreign in homogeneous intermediate goods from a fixed number of firms. Sanctions include trade bans and financial restrictions excluding particular Foreign agents from markets. In our model, sanctions reallocate resources across and within countries, affecting production, exchange rates, and welfare, with larger welfare losses when targeting sectors of comparative disadvantage. Focusing only on long-run outcomes, overlooking initial dynamics, inaccurately assesses welfare impacts. Sanctions weaken international comovement and fragment markets but leave business cycles intact.
{"title":"International trade and macroeconomic dynamics with sanctions","authors":"Fabio Ghironi , Daisoon Kim , Galip Kemal Ozhan","doi":"10.1016/j.jmoneco.2025.103810","DOIUrl":"10.1016/j.jmoneco.2025.103810","url":null,"abstract":"<div><div>We develop a framework combining dynamic, intertemporal choices of general-equilibrium macro models with microfoundations of modern trade theory to study sanctions. In a two-country, two-sector setup, Home holds a comparative advantage in producing differentiated consumption goods via heterogeneous firms with endogenous entry, while Foreign in homogeneous intermediate goods from a fixed number of firms. Sanctions include trade bans and financial restrictions excluding particular Foreign agents from markets. In our model, sanctions reallocate resources across and within countries, affecting production, exchange rates, and welfare, with larger welfare losses when targeting sectors of comparative disadvantage. Focusing only on long-run outcomes, overlooking initial dynamics, inaccurately assesses welfare impacts. Sanctions weaken international comovement and fragment markets but leave business cycles intact.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"154 ","pages":"Article 103810"},"PeriodicalIF":4.1,"publicationDate":"2025-07-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144809739","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-25DOI: 10.1016/j.jmoneco.2025.103812
Nicholas Kozeniauskas
Why has there been a steady decline in entrepreneurship in the US in recent decades? To answer this question, I develop a general equilibrium occupation choice model and combine it with data on these choices. Skill-biased technical change can account for much of the decline in the relative entrepreneurship rate of more educated people, but cannot explain the decline in the aggregate level of entrepreneurship. The major factors in the decline in the share of people who are entrepreneurs, the firm entry rate, and the size of the entrepreneur sector are rising entry costs and outsized productivity gains by large non-entrepreneur firms.
{"title":"What’s driving the decline in entrepreneurship?","authors":"Nicholas Kozeniauskas","doi":"10.1016/j.jmoneco.2025.103812","DOIUrl":"10.1016/j.jmoneco.2025.103812","url":null,"abstract":"<div><div>Why has there been a steady decline in entrepreneurship in the US in recent decades? To answer this question, I develop a general equilibrium occupation choice model and combine it with data on these choices. Skill-biased technical change can account for much of the decline in the relative entrepreneurship rate of more educated people, but cannot explain the decline in the aggregate level of entrepreneurship. The major factors in the decline in the share of people who are entrepreneurs, the firm entry rate, and the size of the entrepreneur sector are rising entry costs and outsized productivity gains by large non-entrepreneur firms.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"154 ","pages":"Article 103812"},"PeriodicalIF":4.1,"publicationDate":"2025-07-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144809836","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-24DOI: 10.1016/j.jmoneco.2025.103809
Christoph Grosse-Steffen , Laura Pagenhardt , Malte Rieth
We study the implications of fiscal rules for macroeconomic stabilization when countries are hit by adverse exogenous shocks. Exploiting the unpredictability of natural disasters, we document that economies with a fiscal rule absorb these shocks better than those without: the responses of GDP and private demand are significantly higher. This difference is coupled with more expansionary fiscal policy and hinges on fiscal space. We analyze the interaction of rule flexibility and rule tightness in a quantitative model of sovereign default that exerts strong market discipline on governments conditional on disaster shocks. The results show potential welfare gains and a countercyclical fiscal response to adverse disaster shocks in the presence of tight rules and escape clauses.
{"title":"Committed to flexible fiscal rules","authors":"Christoph Grosse-Steffen , Laura Pagenhardt , Malte Rieth","doi":"10.1016/j.jmoneco.2025.103809","DOIUrl":"10.1016/j.jmoneco.2025.103809","url":null,"abstract":"<div><div>We study the implications of fiscal rules for macroeconomic stabilization when countries are hit by adverse exogenous shocks. Exploiting the unpredictability of natural disasters, we document that economies with a fiscal rule absorb these shocks better than those without: the responses of GDP and private demand are significantly higher. This difference is coupled with more expansionary fiscal policy and hinges on fiscal space. We analyze the interaction of rule flexibility and rule tightness in a quantitative model of sovereign default that exerts strong market discipline on governments conditional on disaster shocks. The results show potential welfare gains and a countercyclical fiscal response to adverse disaster shocks in the presence of tight rules and escape clauses.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"154 ","pages":"Article 103809"},"PeriodicalIF":4.1,"publicationDate":"2025-07-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144809738","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-22DOI: 10.1016/j.jmoneco.2025.103807
Jorge Miranda-Pinto , Daniel Murphy , Kieran James Walsh , Eric R. Young
We introduce a new quantitative model of household expenditure shocks to rationalize the common anecdote of a low-income and low-liquidity household that uses additional income to save (repay debt) rather than consume. Our model also rationalizes key features of the joint dynamics of household-level consumption and income, including our finding that consumption is volatile yet disconnected from income, especially for households experiencing episodes of high consumption. The key feature of our model is stochastic consumption thresholds that yield large utility costs if violated. The stochastic thresholds increase the welfare cost of income fluctuations by an order of magnitude.
{"title":"A model of expenditure shocks","authors":"Jorge Miranda-Pinto , Daniel Murphy , Kieran James Walsh , Eric R. Young","doi":"10.1016/j.jmoneco.2025.103807","DOIUrl":"10.1016/j.jmoneco.2025.103807","url":null,"abstract":"<div><div>We introduce a new quantitative model of household expenditure shocks to rationalize the common anecdote of a low-income and low-liquidity household that uses additional income to save (repay debt) rather than consume. Our model also rationalizes key features of the joint dynamics of household-level consumption and income, including our finding that consumption is volatile yet disconnected from income, especially for households experiencing episodes of high consumption. The key feature of our model is stochastic consumption thresholds that yield large utility costs if violated. The stochastic thresholds increase the welfare cost of income fluctuations by an order of magnitude.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"154 ","pages":"Article 103807"},"PeriodicalIF":4.1,"publicationDate":"2025-07-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144809737","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-07DOI: 10.1016/j.jmoneco.2025.103798
Shu Lin Wee
This paper examines how unemployment transfers should be allocated over the business cycle. When risk-averse workers can submit multiple applications, the optimal UI policy is countercyclical. In contrast, optimal policy in a standard search model featuring one-to-one matching is procyclical. In the latter, more generous UI during a downturn discourages search effort, dampening job creation. In the former, decreased search effort aids job creation. Because firms cannot coordinate and commit to not making the same worker an offer, lower search effort by reducing the number of applications sent mitigates this coordination friction. This in turn boosts job creation incentives, supporting employment outcomes.
{"title":"Optimal unemployment insurance with multiple applications","authors":"Shu Lin Wee","doi":"10.1016/j.jmoneco.2025.103798","DOIUrl":"10.1016/j.jmoneco.2025.103798","url":null,"abstract":"<div><div>This paper examines how unemployment transfers should be allocated over the business cycle. When risk-averse workers can submit multiple applications, the optimal UI policy is countercyclical. In contrast, optimal policy in a standard search model featuring one-to-one matching is procyclical. In the latter, more generous UI during a downturn discourages search effort, dampening job creation. In the former, decreased search effort aids job creation. Because firms cannot coordinate and commit to not making the same worker an offer, lower search effort by reducing the number of applications sent mitigates this coordination friction. This in turn boosts job creation incentives, supporting employment outcomes.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"154 ","pages":"Article 103798"},"PeriodicalIF":4.1,"publicationDate":"2025-07-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144809735","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-01DOI: 10.1016/j.jmoneco.2025.103800
Merike Kukk , Jan Toczynski , Christoph Basten
Using a unique set of bank account-level data from a period of volatile inflation in a small open economy in 2005–11 and interactive fixed effect estimation, we find that individual consumption spending responds to personal inflation exposure beyond the headline rate. Households are exposed to different inflation because they have different expenditure baskets. For each percentage point of higher personal inflation rate, they increase their spending by 1.4%. These responses are consistent with intertemporal substitution when households form their inflation expectations from their personal experience. Increased spending is financed with savings or borrowing, except when households are liquidity-constrained or over-indebted. Extra demand when inflation is already high can make inflation persistent and dependent on its current distribution.
{"title":"Beyond the headline: How personal exposure to inflation shapes the financial choices of households","authors":"Merike Kukk , Jan Toczynski , Christoph Basten","doi":"10.1016/j.jmoneco.2025.103800","DOIUrl":"10.1016/j.jmoneco.2025.103800","url":null,"abstract":"<div><div>Using a unique set of bank account-level data from a period of volatile inflation in a small open economy in 2005–11 and interactive fixed effect estimation, we find that individual consumption spending responds to personal inflation exposure beyond the headline rate. Households are exposed to different inflation because they have different expenditure baskets. For each percentage point of higher personal inflation rate, they increase their spending by 1.4%. These responses are consistent with intertemporal substitution when households form their inflation expectations from their personal experience. Increased spending is financed with savings or borrowing, except when households are liquidity-constrained or over-indebted. Extra demand when inflation is already high can make inflation persistent and dependent on its current distribution.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"153 ","pages":"Article 103800"},"PeriodicalIF":4.3,"publicationDate":"2025-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144579683","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-01DOI: 10.1016/j.jmoneco.2025.103785
David Berger , Thomas Hasenzagl , Kyle Herkenhoff , Simon Mongey , Eric A. Posner
What are the welfare, wage, and output implications of applying merger review guidelines to the labor market? To answer this question, we develop a theory of multi-plant ownership and labor market monopsony. We estimate the model using U.S. Census data and demonstrate the model’s ability to replicate empirically documented paths of employment and wages following mergers. We then simulate a representative set of U.S. mergers in order to evaluate merger review thresholds. Assuming mergers generate efficiency gains of 5 percent, our simulations yield welfare losses under the enforcement of the more lenient 2010 merger guidelines and welfare gains under enforcement of the more stringent 2023 and 1982 merger guidelines. Lastly, we estimate the aggregate effects of allowed mergers on output and labor’s share of income under each set of merger guidelines.
{"title":"Merger guidelines for the labor market","authors":"David Berger , Thomas Hasenzagl , Kyle Herkenhoff , Simon Mongey , Eric A. Posner","doi":"10.1016/j.jmoneco.2025.103785","DOIUrl":"10.1016/j.jmoneco.2025.103785","url":null,"abstract":"<div><div>What are the welfare, wage, and output implications of applying merger review guidelines to the labor market? To answer this question, we develop a theory of multi-plant ownership and labor market monopsony. We estimate the model using U.S. Census data and demonstrate the model’s ability to replicate empirically documented paths of employment and wages following mergers. We then simulate a representative set of U.S. mergers in order to evaluate merger review thresholds. Assuming mergers generate efficiency gains of 5 percent, our simulations yield welfare losses under the enforcement of the more lenient 2010 merger guidelines and welfare gains under enforcement of the more stringent 2023 and 1982 merger guidelines. Lastly, we estimate the aggregate effects of allowed mergers on output and labor’s share of income under each set of merger guidelines.</div></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"153 ","pages":"Article 103785"},"PeriodicalIF":4.3,"publicationDate":"2025-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144579711","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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