W o r k i n g P a p e r {

Old Keynes and New-Fisher: A Model of Animal Spirit Driven Recessions New

May 2021.

This paper analyses a model of recessions caused by non-rational expectations about future output and employment in the economy. Optimal government policy is Old Keynesian --- fiscal and monetary expansion. If rational expectations are assumed, optimal government policies reverse in sign, and Neo-Fisherian monetary and fiscal policies are optimal. The relationship between the two models is characterized with a simple diagram, a general equilibrium Keynesian cross, the slope of which is determined by the feedback between current income and expectations of future income. If feedback is low and the slope of the cross is less than 1, normal Keynesian results hold: greater than 1, Neo-Fisherian results are ascendant.

Covid-19 Businesses Reopenings and Consumer Spending New

April 2021.

This paper studies if Covid-19 retail and restaurant shutdowns and reopenings were responsible for the dramatic `V' shaped pattern of consumer spending in the United States. We find reopening policies substantially increased spending for categories directly impacted by the laws: a 68.4 p.p. increase in non-essential in-store spending and a 16.7 p.p. increase in full-service indoor dining. For sectors not directly impacted --- essential retail, limited-service restaurants, and online --- we find a limited impact of reopenings. The overall effect is an 9.5 p.p. increase in total retail spending and an 8.6 p.p. increase in restaurant spending. We estimate that retail reopenings are responsible for 26% of the total trough-to-peak recovery in spending, while restaurant reopenings are responsible for 18% of the recovery.

Covid-19 and Real Time Consumer Spending

July 2020.

This paper uses a new real-time data source to study the effect of Covid-19 on consumer spending. The data is representative of aggregate spending trends, closely matching retail and restaurant data from the Census Monthly Retail Trade Survey and Quarterly Service Survey. The onset of Covid-19 in March led to a 20% decline in retail good spending, 50% decline in restaurant spending, and 50% decline in other service spending. Retail spending rose from its lows in April, but restaurant and service spending remains depressed. The pandemic caused a dramatic shift of spending towards home consumption and online spending.

Job market paper: Capital Gains and the Distribution of Income in the United States

November 2018.

This paper constructs a new data series on aggregate capital gains and their distribution, and documents that since 1980 capital gains have been the main driver of wealth accumulation. Over this period, capital gains averaged 8% of national income and comprised a third of total capital income. Capital gains are not included in the national income and product accounts, where the definition of national income reflects the goal of measuring current production. To explain the accumulation of household wealth and distribution of capital income, both of which are affected by changes in asset prices, this paper uses the Haig-Simons income concept, which includes capital gains. Accounting for capital gains increases the measured capital share of income by 5 p.p., increases the comprehensive savings rate (inclusive of capital gains) by 6 p.p., and leads to a greater measured increase in income inequality.

P u b l i c a t i o n {

Kaldor and Piketty's Facts: The Rise of Monopoly Power in the United States

Forthcoming: Journal of Monetary Economics With Gauti Eggertsson and Ella Getz Wold.

The macroeconomic data of the last thirty years has overturned at least two of Kaldor's famous stylized growth facts: constant interest rates, and a constant labor share. At the same time, the research of Piketty and others has introduced several new and surprising facts: an increase in the financial wealth-to-output ratio in the US, an increase in measured Tobin's Q, and a divergence between the marginal and the average return on capital. In this paper, we argue that these trends can be explained by an increase in market power and pure profits in the US economy, i.e., the emergence of a non-zero-rent economy, along with forces that have led to a persistent long term decline in real interest rates. We make three parsimonious modifications to the standard neoclassical model to explain these trends. Using recent estimates of the increase in markups and the decrease in real interest rates, we show that our model can quantitatively match these new macroeconomic facts.

A Model of Secular Stagnation: Theory and Quantitative Evaluation

American Economic Journal: Macroeconomics, January 2019.

With Gauti Eggertsson and Neil Mehrotra.

This paper formalizes and quantifies the secular stagnation hypothesis, defined as a persistently low or negative natural rate of interest leading to a chronically binding zero lower bound. Output-inflation dynamics and policy prescriptions are fundamentally different than in the standard New Keynesian framework. Using a 56-period quantitative lifecycle model, a standard calibration to US data delivers a natural rate ranging from -1.5% to -2%, implying an elevated risk of ZLB episodes for the foreseeable future. We decompose the contribution of demographic and technological factors to the decline in interest rates since 1970 and quantify changes required to restore higher rates.

Medicare Payments and System-level Health Care

American Journal of Health Economics, 2015.

With Katherine Baicker.

Pay for Performance in Medicaid: Evidence From Three Natural Experiments

Health Services Research, 2015.

With Meredith Rosenthal, Mary Beth Landrum, and Eric C. Schneider.

The Spillover Effects of Medicare Managed Care: Medicare Advantage and Hospital Utilization

Journal of Health Economics, 2013.

With Katherine Baicker and Michael E. Chernew.

L i n k t o C V

C o n t a c t

E m a i l jake.a.robbins@gmail.com