The NBER's 26th Annual International Seminar on Macroeconomics (ISOM), organized by Zvi Eckstein, Boston University, and Kenneth West, NBER and University of Madison, Wisconsin, was held on June 13-14 at the Universitat Pompeu Fabra in Barcelona. Jeffrey A. Frankel, NBER and Harvard University, and Francesco Giavazzi, NBER and Bocconi University, serve as co-chairs of ISOM. The following papers were discussed at the conference:
Richard Blundell and Ian Preston, University College London, and Luigi Pistaferri, Stanford University, "Consumption Inequality and Partial Insurance" Discussants: John Kennan, NBER and University of Wisconsin, and Jose-Victor Rios-Rull, NBER and University of Pennsylvania
Andreas Hornstein, Federal Reserve Bank of Richmond; Per Krusell, University of Rochester; and Giovanni L. Violante, New York University, "Upgrading Vintage Capital"
Discussants: Philippe Aghion, NBER and Harvard University, and Lars Ljungqvist, Stockholm School of Economics
Danny Quah, London School of Economics, and Helen Simpson, Institute for Fiscal Studies, "Spatial Cluster Empirics"
Discussants: Albert Marcet, Universitat Pompeu Fabra
Adi Brender, Bank of Israel, and Allan Drazen, NBER and Tel Aviv University, "Where Does the Political Fiscal Cycle Really Come From?"
Discussants: Alessandra Casella, NBER and Columbia University, and Kenneth S. Rogoff, International Monetary Fund
Kosuke Aoki, Universitat Pompeu Fabra, and Kalin Nikolov, Bank of England, "Rule-Based Monetary Policy under Central Bank Learning"
Discussants: Fabio Canova, Universitat Pompeu Fabra, and V.V. Chari, NBER and University of Minnesota
James H. Stock, NBER and Harvard University, and Mark W. Watson, NBER and Princeton University, "Understanding Changes in International Business Cycle Dynamics"
Discussants: Denise Osborn, University of Manchester, and Lucrezia Reichlin, Universite Libre de Bruxelles
Neville Francis, Lehigh University, and Valerie A. Ramey, NBER and University of California, San Diego, "The Source of Historical Economic Fluctuations: An Analysis using Long-Run Restrictions"
Discussants: Susanto Basu, NBER and University of Michigan, and Harald Uhlig, Humboldt University
Andrew B. Abel, NBER and University of Pennsylvania, and Janice C. Eberly, NBER and Northwestern University, "Investment and Firm Valuation with Growth Options"
Discussants: John V. Leahy, NBER and New York University, and Plutarchos Sakellaris, University of Maryland
Blundell, Pistaferri, and Preston use panel data on household consumption and income inequality to evaluate the degree of insurance against income shocks. They aim to describe the transmission of income inequality into consumption inequality. Their framework nests the special cases of self-insurance and the complete markets assumption. The authors assess the degree of insurance, over and above self-insurance through savings, by contrasting shifts in the distribution of income growth with shifts in the distribution of consumption growth, and analyzing the way these two measures of household welfare correlate over time. Combining panel data on income with consumption data, they find some partial insurance but reject the complete markets restriction. They also find a greater degree of insurance for transitory shocks and differences in the degree of insurance over time. Finally, they document the importance of durables and of taxes and transfers as a means of insurance.
Hornstein, Krusell, and Violante argue that certain ingredients are likely to be important for understanding how wage distributions and employment respond to technology. First, it matters whether there are labor market frictions. Matching frictions, and associated departures from marginal-product wage determination, are important. Second, the form of technological change matters. …