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Jonathan Heathcote

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Reposted by: Jonathan Heathcote, Tore Ellingsen

rohitlamba.bsky.social
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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by Jonathan Heathcote

heathcote.bsky.social
Longer time series for perspective.
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by Jonathan Heathcote

heathcote.bsky.social
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/

by Jonathan Heathcote

heathcote.bsky.social
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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by Jonathan Heathcote

heathcote.bsky.social
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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by Jonathan Heathcote

heathcote.bsky.social
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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by Jonathan Heathcote

heathcote.bsky.social
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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by Jonathan Heathcote

heathcote.bsky.social
Valuations are volatile, while the aggregate capital stock is smooth. That poses a challenge to reconciling macro and finance. 3/
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by Jonathan Heathcote

heathcote.bsky.social
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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by Jonathan Heathcote — Reposted by: Jonathan Heathcote

heathcote.bsky.social
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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by Jonathan Heathcote

heathcote.bsky.social
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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by Jonathan Heathcote

heathcote.bsky.social
Relatedly:
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by Jonathan Heathcote

heathcote.bsky.social
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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by Jonathan Heathcote

heathcote.bsky.social
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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by Jonathan Heathcote

heathcote.bsky.social
@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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by Ben H. Ansell — Reposted by: Jonathan Heathcote, Catherine C. Eckel, Matthias Doepke , and 10 more

bengolub.bsky.social
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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by Jonathan Heathcote

heathcote.bsky.social
And what is the answer?
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by Jonathan Heathcote

heathcote.bsky.social
Macro without macro.
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Reposted by: Jonathan Heathcote

paulinecarry.bsky.social
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, Randi Hjalmarsson

bhashmazumder.bsky.social
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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by Jonathan Heathcote

heathcote.bsky.social
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, Micaël Castanheira, Pierre Boyer

florianscheuer.bsky.social
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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by Jonathan Heathcote — Reposted by: Mariacristina De Nardi

heathcote.bsky.social
I will continue to update this -- let me know if you want in! (or out!)
heathcote.bsky.social
Jonathan Heathcote @heathcote.bsky.social · Nov 21
Minnesota Economics Starter Pack! go.bsky.app/SJCFzaU
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Reposted by: Jonathan Heathcote, Alan S. Goldman, Roger Mac Ginty , and 3 more

wutangforchildren.bsky.social
Remember when "Ferris Bueller's Day Off" tried to teach us about tariffs and no one was paying attention
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Reposted by: Jonathan Heathcote

briancalbrecht.bsky.social
A little more context on my tariff argument, including why "success" is hard to measure www.economicforces.xyz/p/some-tarif...
Some tariffs are worse than others
My piece in the Financial Times and more thoughts on tariffs
www.economicforces.xyz
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Reposted by: Jonathan Heathcote

ggenicot.bsky.social
📢 Call for Papers open: Nov 1 – Feb 1, 2025 for the annual ThReD Conference, hosted by @MonashUni

📍 Monash Prato Centre, Prato, Italy🇮🇹
📅 June 25-26, 2025
Submit your research thred.devecon.org/conferences/...

#EconSky #DevelopmentEconomics
thred.devecon.org
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by Jonathan Heathcote

heathcote.bsky.social
I believe these subsidies are for operating costs. The one-time cost of building the line was a different pot of public money.

by Jonathan Heathcote

heathcote.bsky.social
DOGE will find increasing government efficiency is easier said than done. But showing that you are at least trying not to waste taxpayer money is important. My county is raising property taxes sharply while subsidizing local rail to the tune of $116 per ride. www.startribune.com/what-is-nort...
What is Northstar rail’s fate? Likely more of the same, for now
This month marked the 15th year of the commuter rail service between Minneapolis and Big Lake. But ridership numbers haven’t rebounded to pre-pandemic levels, and a St. Cloud connection is uncertain.
www.startribune.com
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by Jonathan Heathcote

heathcote.bsky.social
Reforms are likely desirable, but these are super nice states to live in, so strong housing demand is supporting high prices in addition to limited supply. How many houses would we need to build in Hawaii to drive prices there down to Mississippi ($171k) or West Virginia ($155k) levels?
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by Jonathan Heathcote

heathcote.bsky.social
Let me know if you identify as a Minnesotan economist and want in!
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