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Reposted by Jonathan Heathcote

Sergio Ocampo @socampdi.bsky.social · 2h

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Reposted by Jonathan Heathcote

Jonathan Heathcote @heathcote.bsky.social · Feb 11

New working paper with Andy Atkeson and Fabrizio Perri. A thread 1/ www.nber.org/papers/w33459

Reconciling Macroeconomics and Finance for the U.S. Corporate Sector: 1929 to Present

Founded in 1920, the NBER is a private, non-profit, non-partisan organization dedicated to conducting economic research and to disseminating research findings among academics, public policy makers, an...

www.nber.org

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Jonathan Heathcote @heathcote.bsky.social · Apr 6

Longer time series for perspective.

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Jonathan Heathcote @heathcote.bsky.social · Feb 11

Then we ask whether the observed path for investment is consistent with the required return to capital investment being equal, date by date, to the expected return estimated from the finance model. We find that it is, given a plausible path for expected productivity growth. 8/

Jonathan Heathcote @heathcote.bsky.social · Feb 11

We compare the time series for expected returns from our finance model with a series for realized returns to capital estimated from our macro model (given time series for taxes, depreciation, labor’s share of value-added etc). The two track closely. 7/

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Jonathan Heathcote @heathcote.bsky.social · Feb 11

Why do we find this? Part of the explanation is that our macro-model consistent firm income measure — free cash flow — looks quite different to dividends paid. At low frequency, valuations and free cash flow clearly co-move, pointing to a link between the two.6/

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Jonathan Heathcote @heathcote.bsky.social · Feb 11

The paper’s first result is that our estimated asset pricing model interprets fluctuations in valuations quite differently. We find that fluctuations over the past 100 years mostly reflect fluctuations in long run expected free cash flow! (x in the plot below) 5/

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Jonathan Heathcote @heathcote.bsky.social · Feb 11

On top of that, conventional wisdom in finance is that volatility in valuations mostly reflects fluctuations in the expected return that firm owners require (rather than time variation in expected cash flow). If firm owners’ required returns are volatile, why is their capital invested so smooth? 4/

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Jonathan Heathcote @heathcote.bsky.social · Feb 11

Valuations are volatile, while the aggregate capital stock is smooth. That poses a challenge to reconciling macro and finance. 3/

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Jonathan Heathcote @heathcote.bsky.social · Feb 11

We study valuations of US corporations from 1929 onward using 2 models: an asset pricing model, and a stochastic growth model that incorporates factorless income. We fit these models to data from the Integrated Macroeconomic Accounts, focusing on free cash flow as a measure of income. 2/

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Jonathan Heathcote @heathcote.bsky.social · Feb 11

New working paper with Andy Atkeson and Fabrizio Perri. A thread 1/ www.nber.org/papers/w33459

Reconciling Macroeconomics and Finance for the U.S. Corporate Sector: 1929 to Present

Founded in 1920, the NBER is a private, non-profit, non-partisan organization dedicated to conducting economic research and to disseminating research findings among academics, public policy makers, an...

www.nber.org

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Jonathan Heathcote @heathcote.bsky.social · Jan 14

The housing supply is not fixed in the short run. There are lots of people who could rent out second homes, ADUs, or put property on AirBnb, if they felt it would be worthwhile financially.

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Jonathan Heathcote @heathcote.bsky.social · Jan 13

Relatedly:

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Jonathan Heathcote @heathcote.bsky.social · Jan 12

I suspect low US taxes and agglomeration effects are big drivers of US dynamism. With respect specifically to Finland, Nokia screwed up.

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Jonathan Heathcote @heathcote.bsky.social · Jan 12

They did have access to venture capital — ie some other rich people. But that seems to also exist to some extent in Scandinavia (I watched The Playlist!)

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Jonathan Heathcote @heathcote.bsky.social · Jan 12

@fatihguvenen.bsky.social is arguing that entrepreneurs need to have skin in the game (i.e they need wealth so they can have an equity stake). That makes sense But many of the richest Americans are self-made — they built big businesses without much initial wealth.

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Reposted by Jonathan Heathcote

Rohit Lamba @rohitlamba.bsky.social · Jan 10

Week 2: This week's theory paper in focus is a brilliant conceptual puzzle piece by Thomas & Worrall (1990). What are the implications of risk sharing/insurance provision over time when income is private? They have a surprising answer: it necessarily leads to long-term impoverishment.

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Reposted by Jonathan Heathcote

Ben Golub @bengolub.bsky.social · Dec 24

In economics, editors, referees, and authors often behave as if a published paper should reflect some kind of authoritative consensus.

As a result, valuable debate happens in secret, and the resulting paper is an opaque compromise with anonymous co-authors called referees.

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Jonathan Heathcote @heathcote.bsky.social · Dec 22

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Jonathan Heathcote @heathcote.bsky.social · Dec 14

And what is the answer?

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Jonathan Heathcote @heathcote.bsky.social · Dec 10

Macro without macro.

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Reposted by Jonathan Heathcote

Pauline Carry @paulinecarry.bsky.social · Dec 6

Send your labor papers and come present at Princeton!

Deadline is Dec 22.

irs.princeton.edu/news/2024/nl...

Call for Papers: 2025 Northeast Labor Symposium for Early Career Economists

2025 Northeast Labor symposium seeks to build community among junior faculty working on labor economic topics. Deadline to submit proposals is December 22, 2024.

irs.princeton.edu

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Reposted by Jonathan Heathcote

Bhash Mazumder @bhashmazumder.bsky.social · Dec 3

Chicago Fed is hiring in our micro group! The ad is not yet on JOE but see this link. 3+ years of experience. Don't need rec letters but do need to list 3 references: rb.wd5.myworkdayjobs.com/en-US/FRS/jo...

Economist/Senior Economist/Economic Advisor - Microeconomics Team

Company Federal Reserve Bank of Chicago The Economic Research Department of the Federal Reserve Bank of Chicago invites applications for the Economist/Senior Economist/Economic Advisor positions on th...

rb.wd5.myworkdayjobs.com

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Jonathan Heathcote @heathcote.bsky.social · Dec 3

I don’t quite understand the table. If I look at highly selective colleges, enrollment for every sub-group declined by more than enrollment for all. Perhaps there is a ‘did not declare race’ group, whose enrollment rose.

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Reposted by Jonathan Heathcote

Florian Scheuer @florianscheuer.bsky.social · Nov 29

Submit your papers to the next @cepr.org Public Economics Annual Symposium, taking place in Cologne on June 5-6, 2025. Co-organized with @sigginho.bsky.social and Johannes Spinnewijn, keynotes by Cecile Gaubert and @omzidar.bsky.social!

cepr.org/events/cepr-...

CEPR Public Economics Annual Symposium 2025

PDF document / 207.07 KB

cepr.org

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