Joe Haslag, Kenneth Lay Chair in Economics
Department of Economics
118 Professional Bldg.
University of Missouri-Columbia
Columbia, MO 65211
Areas of specialization:
Missouri Economic Conference 2004 Photographs
- Cyclical Co-movement between
Output, the Price Level, and Inflation (with Yu-Chin Hsu)
- Over time, there has been a dramatic change in our understanding of the relationship
between the price level and output over the business cycle. For several
decades, the conventional wisdom maintained that the price level are procyclical.
Arguably, the biggest development in our understanding came about because
Lucas (1977) offered a transformative elegant definition of the business cycle
itself. Armed with the definition that business cycles are deviations in output
from trend, researchers applied new econometric techniques to re-consider key
business-cycle facts. In this paper, we concentrate on two related sets of business-cycle facts. More specifically, we consider the contemporaneous correlation between the price level and output and between the inflation rate and output. Of course, the relationship
between the price level and inflation is tautological; the inflation rate is the time derivative of the log of the price level. The existing evidence indicates a very interesting pair of observations; namely, that the price level is countercyclical and the inflation rate procyclical.
- Money and internal specialization (with James Dolmas)
- In this paper, we demonstrate that money is not necessarily benign in terms
of trade patterns and specialization within the household. In this paper, we
examine model economies in which households consist of vendor-shopper pairs.
There is a distance-related transaction cost between traders. We derive the
equilibrium range of goods that will be traded in a symmetric equilibrium under
two alternative means of payment: (i) goods for goods and (ii) money for goods.
Our key finding is that in the money-for-goods economies, we show that the
incidence of the transaction cost matters. Money creates incentives for household
members to specialize. This intra-household specialization is identified along the
extensive margin of consumption. Shoppers specialize in acquiring a greater
variety of goods when they bear the transaction cost. In contrast, in the vendorpays
setting, the cost-minimizing allocation is to trade along the intensive margin for a single consumption good.
- Unconventional Optimal Repurchase Agreements (with Chao Gu)
- We build a model in which verifiability of private debts, timing mismatch in debt settlements and borrowing leverage lead to liquidity crisis in the financial market. Central bank can respond to the liquidity crisis by adopting an unconventional monetary policy that resembles repurchase agreements between the central bank and the lenders. This policy is effective if the timing mismatch is nominal (i.e., a settlement participation risk). It is ineffective if the timing mismatch is driven by a real shock (i.e., preference shock).