Verlag:
National Bureau of Economic Research, Cambridge, Mass
How should the government respond to automation? We study this question in a heterogeneous agent model that takes worker displacement seriously. We recognize that displaced workers face two frictions in practice: reallocation is slow and borrowing is...
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ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
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How should the government respond to automation? We study this question in a heterogeneous agent model that takes worker displacement seriously. We recognize that displaced workers face two frictions in practice: reallocation is slow and borrowing is limited. We first show that these frictions result in inefficient automation. Firms fail to internalize that displaced workers have a limited ability to smooth consumption while they reallocate. We then analyze a second best problem where the government can tax automation but lacks redistributive tools to fully overcome borrowing frictions. The equilibrium is (constrained) inefficient. The government finds it optimal to slow down automation on efficiency grounds, even when it has no preference for redistribution. Using a quantitative version of our model, we find that the optimal speed of automation is considerably lower than at the laissez-faire. The optimal policy improves aggregate efficiency and achieves welfare gains of 4%. Slowing down automation achieves important gains even when the government implements generous social insurance policies
Verlag:
National Bureau of Economic Research, Cambridge, Mass
Stimulus checks have become an increasingly important policy tool in recent U.S. recessions. How does the households' marginal propensity to spend (MPX) vary as checks become larger? To quantify this size-dependence in the MPX, we augment a canonical...
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ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
Fernleihe:
keine Fernleihe
Stimulus checks have become an increasingly important policy tool in recent U.S. recessions. How does the households' marginal propensity to spend (MPX) vary as checks become larger? To quantify this size-dependence in the MPX, we augment a canonical model of durable spending by introducing a smooth adjustment hazard. We discipline this hazard by matching a rich set of micro moments. We find that the MPX declines slowly with the size of checks. In contrast, the MPX is flatter in a purely state-dependent model of durables, and declines sharply in a two-asset model of non-durables. Finally, we embed our spending model into an open-economy heterogeneous-agent New-Keynesian model. In a typical recession, a large check of $2,000 increases output by 25 cents per dollar, compared to 37 cents for a $300 check. Large checks thus remain effective but extrapolating from the response out of small checks overestimates their impact