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This paper presents a structural model of crime and output. Individuals make an occupational choice between criminal and legal activities. The return to becoming a criminal is endogenously determined in a general equilibrium together with the level of crime and economic activity. I calibrate the model to the Northern Triangle countries and conduct several policy experiments. I find that for a country like Honduras crime reduces GDP by about 3 percent through its negative effect on employment indirectly, in addition to direct costs of crime associated with material losses, which are in line with literature estimates. Also, the model generates a non-linear effect of crime on output and vice versa. On average I find that a one percent increase in output per capita implies about ½ percent decline in crime, while a decrease of about 5 percent in crime leads to about one percent increase in output per capita. These positive effects are larger if the initial level of crime is larger.

Labor --- Public Finance --- Criminology --- Human Capital --- Skills --- Occupational Choice --- Labor Productivity --- Wages, Compensation, and Labor Costs: General --- Informal Economy --- Underground Econom --- Illegal Behavior and the Enforcement of Law --- Demand and Supply of Labor: General --- National Government Expenditures and Related Policies: General --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Crime & criminology --- Labour --- income economics --- Public finance & taxation --- Crime --- Labor markets --- Public expenditure review --- Expenditure --- Crime--Economic aspects --- Labor market --- Expenditures, Public --- Economic theory --- El Salvador

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This paper develops and estimates a general equilibrium rational expectations model with search and multiple equilibria where aggregate shocks have a permanent effect on the unemployment rate. If agents' wealth decreases, the unemployment rate increases for a potentially indefinite period. This makes unemployment rate dynamics path dependent as in Blanchard and Summers (1987). I argue that this feature explains the persistence of the unemployment rate in the U.S. after the Great Recession and over the entire postwar period.

Unemployment. --- Business cycles. --- Hysteresis (Economics) --- Economics --- Economic cycles --- Economic fluctuations --- Cycles --- Joblessness --- Employment (Economic theory) --- Full employment policies --- Labor supply --- Manpower policy --- Underemployment --- Labor --- Macroeconomics --- Macroeconomics: Consumption, Saving, Production, Employment, and Investment: General (includes Measurement and Data) --- Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) --- Business Fluctuations --- Unemployment: Models, Duration, Incidence, and Job Search --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Macroeconomics: Consumption --- Saving --- Wealth --- Wages, Compensation, and Labor Costs: General --- Labor Economics: General --- Labour --- income economics --- Unemployment rate --- Consumption --- Real wages --- National accounts --- Economic theory --- Labor economics --- United States

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This paper uses the old-Keynesian representative agent model developed in Farmer (2010b) to answer two questions: 1) do increased government purchases crowd out private consumption? 2) do increased government purchases reduce unemployment? Farmer compared permanent tax financed expenditure paths and showed that the answer to 1) was yes and the answer to 2) was no. We generalize his result to temporary bond-financed paths of government purchases that are similar to the actual path that occurred during WWII. We find that a temporary increase in government purchases does crowd out private consumption expenditure as in Farmer (2010b). However, in contrast to Farmer's experiment we find that a temporary increase in government purchases can also reduce unemployment.

Zonder onderwerpscode: economie

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This article documents recent developments in emerging markets in the context of the COVID-19 pandemic, assesses their prospects and challenges, and discusses appropriate policy settings for the medium term. It argues that EM policymakers’ ability to grapple with an incomplete and uneven recovery will be constrained by high public debt and uncertain inflation prospects as well as external risks surrounding capital flows and exchange rate developments. The paper also discusses potential impact of a tightening in global financial conditions and appreciation of the US dollar that could be triggered by a general increase in risk aversion or a reassessment of the likely path of US monetary policy.

Macroeconomics --- Economics: General --- Finance: General --- Inflation --- Diseases: Contagious --- Foreign Exchange --- Public Finance --- Global Outlook --- Monetary Policy --- Central Banks and Their Policies --- General Financial Markets: General (includes Measurement and Data) --- Price Level --- Deflation --- Health Behavior --- Debt --- Debt Management --- Sovereign Debt --- Economic & financial crises & disasters --- Economics of specific sectors --- Finance --- Infectious & contagious diseases --- Currency --- Foreign exchange --- Public finance & taxation --- Emerging and frontier financial markets --- Financial markets --- Prices --- COVID-19 --- Health --- Exchange rates --- Public debt --- Currency crises --- Informal sector --- Economics --- Financial services industry --- Communicable diseases --- Debts, Public --- China, People's Republic of

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This article documents recent developments in emerging markets in the context of the COVID-19 pandemic, assesses their prospects and challenges, and discusses appropriate policy settings for the medium term. It argues that EM policymakers’ ability to grapple with an incomplete and uneven recovery will be constrained by high public debt and uncertain inflation prospects as well as external risks surrounding capital flows and exchange rate developments. The paper also discusses potential impact of a tightening in global financial conditions and appreciation of the US dollar that could be triggered by a general increase in risk aversion or a reassessment of the likely path of US monetary policy.

China, People's Republic of --- Macroeconomics --- Economics: General --- Finance: General --- Inflation --- Diseases: Contagious --- Foreign Exchange --- Public Finance --- Global Outlook --- Monetary Policy --- Central Banks and Their Policies --- General Financial Markets: General (includes Measurement and Data) --- Price Level --- Deflation --- Health Behavior --- Debt --- Debt Management --- Sovereign Debt --- Economic & financial crises & disasters --- Economics of specific sectors --- Finance --- Infectious & contagious diseases --- Currency --- Foreign exchange --- Public finance & taxation --- Emerging and frontier financial markets --- Financial markets --- Prices --- COVID-19 --- Health --- Exchange rates --- Public debt --- Currency crises --- Informal sector --- Economics --- Financial services industry --- Communicable diseases --- Debts, Public