Research Interests

My research as an economist has two components. On the technical side I have developed and integrated recursive methods for analyzing dynamic models of individual behavior. Because their relatively simple structure facilitates theoretical, empirical and computational analysis, recursive models are widely used in microeconomic models to describe the individual behavior of households and firms. That same simple structure makes recursive models useful in macroeconomics, for studying aggregate behavior when a large number of individual agents interact, through markets or in other ways. On the substantive side much of my work has focused on positive and normative issues of fiscal policy. One important question is the appropriate use of government debt to smooth the financing of large expenditures--wars being a leading example. Both the size and the maturity structure of the debt must be carefully chosen to take advantage of tax smoothing. Another issue is the quantitative importance of tax policy for the rate of long run economic growth. Both theory and evidence suggest that while the welfare effects of bad fiscal policy are substantial, the growth effects are probably modest.

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Section 54: Economic Sciences