Mark Bils - Academia.edu (original) (raw)
Papers by Mark Bils
Social Science Research Network, 2001
Social Science Research Network, Feb 1, 2011
We revisit to what extent the increase in income inequality over the last 30 years has been mirro... more We revisit to what extent the increase in income inequality over the last 30 years has been mirrored by consumption inequality. We do so by constructing two alternative measures of consumption expenditure, using data from the Consumer Expenditure Survey (CE). We first use reports of active savings and after tax income to construct the measure of consumption implied by the budget constraint. We find that the consumption inequality implied by savings behavior largely tracks income inequality between 1980 and 2007. Second, we use a demand system to correct for systematic measurement error in the CE's expenditure data. Specifically, we consider trends in the relative expenditure of high income and low income households for different goods with different income (total expenditure) elasticities. Our estimation exploits the difference in the growth rate of luxury consumption inequality versus necessity consumption inequality. This "double-differencing,'' which we implement in a a regression framework, corrects for mis-measurement that can systematically vary over time by good and income group. This second exercise indicates that consumption inequality has closely tracked income inequality over the period 1980-2007. Both of our measures show a significantly greater increase in consumption inequality than what is obtained from the CE's total household expenditure data directly.
Finance and economics discussion series, Mar 1, 2009
A standard state-dependent pricing model implies very limited scope for using active monetary pol... more A standard state-dependent pricing model implies very limited scope for using active monetary policy to stabilize real activity. Two modeling strategies which expand the role of monetary policy are time-dependent pricing and strategic complementarities between pricesetting firms. These mechanisms have telltale implications for the persistence and volatility of "reset price inflation." Reset price inflation is the rate of change of all desired prices (including for goods that have not changed price in the current period). Using the micro data underpinning the CPI, we construct an empirical measure of reset price inflation and use this measure to assess the validity of the modeling approaches. We find that time-dependent models imply unrealistically high persistence and stability of reset price inflation. This discrepancy is exacerbated by adding strategic complementarities, even under statedependent pricing. A state-dependent model with no strategic complementarities aligns most closely with the CPI data. ____________ This research was conducted with restricted access to U.S. Bureau of Labor Statistics (BLS) data. Rob McClelland provided us invaluable assistance and guidance in using BLS data. We thank Jose Mustre Del Rio for excellent research assistance. The views expressed here are those of the authors and do not necessarily reflect the views of the BLS or the Federal Reserve System. We are grateful to Carlos Carvalho, Jon Steinsson, and numerous seminar participants for helpful comments.
![Research paper thumbnail of [Equilibrium Interpretations of Employment and Real Wage Fluctuations]: Comments](https://attachments.academia-assets.com/114494595/thumbnails/1.jpg)
](Nber Macroeconomics Annual, 1988
BILS Comments MARK BILS University of Rochester, Visiting the NBER John Kennan examines implicati... more BILS Comments MARK BILS University of Rochester, Visiting the NBER John Kennan examines implications of a market-clearing view of the behavior of employment and wage rates. Employing data for a half dozen countries, Kennan goes far beyond the narrow question of whether there is a "procyclical real-wage puzzle" or "countercyclical real-wage puzzle" to ask what restrictions on labor supply and demand are implied by the relative variability of wages and employment and the autocorrelations of the two series, as well as their correlation. This is a very useful exercise. I think it can be viewed as augmenting the empirical real business cycle literature (e.g., Prescott, 1986) which typically has ignored matching model predictions to actual behavior of wage rates. Under an assumption that disturbances to labor demand predominate, one conclusion Kennan draws is that for the actual fluctuations to be consistent with market clearing fluctuations a relatively flat labor supply curve (high elasticity of labor supply) is required. Of course, this is not a novel or surprising result, and is not marketed as such. A further result, which I think is an insight of the exercise, is that the data require two separate theoretical sources for strong autocorrelation. This is because the orthogonal components of wage and employment series each show great persistence. Kennan suggests this might be consistent with high adjustment costs to the firm of adjusting labor input, together with very persistent disturbances driving the labor demand process; but this further requires that innovations to the labor supply process be white noise or even negatively serially correlated. Finally, a single framework does not appear applicable across the different countries. Either supply and demand elasticities or the relative variability of demand and supply must vary across countries. One major criticism of Kennan's exercise is that the model he examines-employment and wages continuously varying to equate supply and demand-is very much a strawman. In the aftermath of implicit-contracting theory, one reasonably popular view of the labor market is that while compensation payments are smoothed for insurance, tax, or convenience reasons, firms and workers may exploit other mechanisms to arrive at choices for employment that approximately equate supply and demand. Recently Rhee and Espinosa (1987) have shown that in a repeated game, labor outcomes arbitrarily close to equating supply and demand are
Social Science Research Network, 2020
two referees, and participants at a number of seminars for helpful comments. The views expressed ... more two referees, and participants at a number of seminars for helpful comments. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research, the Federal Reserve Bank of New York, or the Federal Reserve System. A data diskette is available upon request that contains both the raw and filtered data series that are used in our empirical work.
We examine the frequency of price changes for 350 categories of goods and services covering about... more We examine the frequency of price changes for 350 categories of goods and services covering about 70% of consumer spending, based on unpublished data from the BLS for 1995 to 1997. Compared with previous studies we find much more frequent price changes, with half of prices lasting less than 4.3 months. The frequency of price changes differs dramatically across categories. We exploit this variation to ask how inflation for "flexible-price goods" (goods with frequent changes in individual prices) differs from inflation for "sticky-price goods" (those displaying infrequent price changes). Compared to the predictions of popular sticky price models, actual inflation rates are far more volatile and transient, particularly for sticky-price goods.
Journal of Labor Economics, Jul 17, 2023
Employment and hours are more cyclical than dictated by productivity and consumption. This intrat... more Employment and hours are more cyclical than dictated by productivity and consumption. This intratemporal labor wedge can arise from product or labor market distortions. Based on employee wages, the literature has attributed the intratemporal wedge almost entirely to labor market distortions. Because wages may be smoothed versions of labor's true cyclical price, we instead examine the self-employed and intermediate inputs, respectively. For recent decades in the United States, we find price markup movements are at least as cyclical as wage markup movements. Thus, countercyclical price markups deserve a central place in business-cycle research, alongside sticky wages and matching frictions.
For helpful comments we are grateful to William Nordhaus, Matt Shapiro, and workshop participants... more For helpful comments we are grateful to William Nordhaus, Matt Shapiro, and workshop participants at Michigan, Columbia, NYU, Duke, the Federal Reserve Banks of Cleveland, Minneapolis, and Richmond, and the NBER Summer Institute and EFG meeting. We thank the BLS for providing unpublished data. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research.
Rogerson, and the discussant, Susanto Basu for helpful suggestions. The views expressed herein ar... more Rogerson, and the discussant, Susanto Basu for helpful suggestions. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research.
National Bureau of Economic Research, 2009
We model worker heterogeneity in the rents from being employed in a Diamond-Mortensen-Pissarides ... more We model worker heterogeneity in the rents from being employed in a Diamond-Mortensen-Pissarides model of matching and unemployment. We show that heterogeneity, reflecting differences in match quality and worker assets, reduces the extent of fluctuations in separations and unemployment. We find that the model faces a trade-off-it cannot produce both realistic dispersion in wage growth across workers and realistic cyclical fluctuations in unemployment.
Rogerson, and the discussant, Susanto Basu for helpful suggestions. The views expressed herein ar... more Rogerson, and the discussant, Susanto Basu for helpful suggestions. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research.
American Economic Journal: Macroeconomics, 2022
We thank Corina Boar for her excellent research assistance. For helpful comments we especially th... more We thank Corina Boar for her excellent research assistance. For helpful comments we especially thank Marianna Kudlyak and Jose Mustre-del-Rio. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
International Economic Journal, Jun 1, 2001
We examine the response of a sticky-wage economy to various real and nominal shocks. In addition ... more We examine the response of a sticky-wage economy to various real and nominal shocks. In addition to variations in hours, we allow for an endogenous response in worker effort per hour. Despite wages being predetermined, the labor market clears through the effort margin. We find that the ability of a sticky-wage model to mimic U.S. business cycles is much improved by allowing for reasonable effort movements. The model also provides a ready explanation for the finding that TFP is negatively affected by nominal shocks. * We thank Jang-Ok Cho, Youngsik Kim, Pete Klenow, and Kwanho Shin for helpful comments.
Journal of Monetary Economics, Mar 1, 2003
We thank Jang-Ok Cho, Pete Klenow, and participants at several workshops for helpful comments. Th... more We thank Jang-Ok Cho, Pete Klenow, and participants at several workshops for helpful comments. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research.
RePEc: Research Papers in Economics, Feb 1, 2020
We are grateful to seminar participants and, especially, Joel David for comments. Any opinions an... more We are grateful to seminar participants and, especially, Joel David for comments. Any opinions and conclusions expressed herein are those of the author(s) and do not necessarily represent the views of the U.S. Census Bureau, the IMF, its Executive Board, or its management. This research was performed at a Federal Statistical Research Data Center under FSRDC Project 1440. All results have been reviewed to ensure that no confidential information is disclosed. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
Social Science Research Network, 2001
Social Science Research Network, Feb 1, 2011
We revisit to what extent the increase in income inequality over the last 30 years has been mirro... more We revisit to what extent the increase in income inequality over the last 30 years has been mirrored by consumption inequality. We do so by constructing two alternative measures of consumption expenditure, using data from the Consumer Expenditure Survey (CE). We first use reports of active savings and after tax income to construct the measure of consumption implied by the budget constraint. We find that the consumption inequality implied by savings behavior largely tracks income inequality between 1980 and 2007. Second, we use a demand system to correct for systematic measurement error in the CE's expenditure data. Specifically, we consider trends in the relative expenditure of high income and low income households for different goods with different income (total expenditure) elasticities. Our estimation exploits the difference in the growth rate of luxury consumption inequality versus necessity consumption inequality. This "double-differencing,'' which we implement in a a regression framework, corrects for mis-measurement that can systematically vary over time by good and income group. This second exercise indicates that consumption inequality has closely tracked income inequality over the period 1980-2007. Both of our measures show a significantly greater increase in consumption inequality than what is obtained from the CE's total household expenditure data directly.
Finance and economics discussion series, Mar 1, 2009
A standard state-dependent pricing model implies very limited scope for using active monetary pol... more A standard state-dependent pricing model implies very limited scope for using active monetary policy to stabilize real activity. Two modeling strategies which expand the role of monetary policy are time-dependent pricing and strategic complementarities between pricesetting firms. These mechanisms have telltale implications for the persistence and volatility of "reset price inflation." Reset price inflation is the rate of change of all desired prices (including for goods that have not changed price in the current period). Using the micro data underpinning the CPI, we construct an empirical measure of reset price inflation and use this measure to assess the validity of the modeling approaches. We find that time-dependent models imply unrealistically high persistence and stability of reset price inflation. This discrepancy is exacerbated by adding strategic complementarities, even under statedependent pricing. A state-dependent model with no strategic complementarities aligns most closely with the CPI data. ____________ This research was conducted with restricted access to U.S. Bureau of Labor Statistics (BLS) data. Rob McClelland provided us invaluable assistance and guidance in using BLS data. We thank Jose Mustre Del Rio for excellent research assistance. The views expressed here are those of the authors and do not necessarily reflect the views of the BLS or the Federal Reserve System. We are grateful to Carlos Carvalho, Jon Steinsson, and numerous seminar participants for helpful comments.
Nber Macroeconomics Annual, 1988
BILS Comments MARK BILS University of Rochester, Visiting the NBER John Kennan examines implicati... more BILS Comments MARK BILS University of Rochester, Visiting the NBER John Kennan examines implications of a market-clearing view of the behavior of employment and wage rates. Employing data for a half dozen countries, Kennan goes far beyond the narrow question of whether there is a "procyclical real-wage puzzle" or "countercyclical real-wage puzzle" to ask what restrictions on labor supply and demand are implied by the relative variability of wages and employment and the autocorrelations of the two series, as well as their correlation. This is a very useful exercise. I think it can be viewed as augmenting the empirical real business cycle literature (e.g., Prescott, 1986) which typically has ignored matching model predictions to actual behavior of wage rates. Under an assumption that disturbances to labor demand predominate, one conclusion Kennan draws is that for the actual fluctuations to be consistent with market clearing fluctuations a relatively flat labor supply curve (high elasticity of labor supply) is required. Of course, this is not a novel or surprising result, and is not marketed as such. A further result, which I think is an insight of the exercise, is that the data require two separate theoretical sources for strong autocorrelation. This is because the orthogonal components of wage and employment series each show great persistence. Kennan suggests this might be consistent with high adjustment costs to the firm of adjusting labor input, together with very persistent disturbances driving the labor demand process; but this further requires that innovations to the labor supply process be white noise or even negatively serially correlated. Finally, a single framework does not appear applicable across the different countries. Either supply and demand elasticities or the relative variability of demand and supply must vary across countries. One major criticism of Kennan's exercise is that the model he examines-employment and wages continuously varying to equate supply and demand-is very much a strawman. In the aftermath of implicit-contracting theory, one reasonably popular view of the labor market is that while compensation payments are smoothed for insurance, tax, or convenience reasons, firms and workers may exploit other mechanisms to arrive at choices for employment that approximately equate supply and demand. Recently Rhee and Espinosa (1987) have shown that in a repeated game, labor outcomes arbitrarily close to equating supply and demand are
Social Science Research Network, 2020
two referees, and participants at a number of seminars for helpful comments. The views expressed ... more two referees, and participants at a number of seminars for helpful comments. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research, the Federal Reserve Bank of New York, or the Federal Reserve System. A data diskette is available upon request that contains both the raw and filtered data series that are used in our empirical work.
We examine the frequency of price changes for 350 categories of goods and services covering about... more We examine the frequency of price changes for 350 categories of goods and services covering about 70% of consumer spending, based on unpublished data from the BLS for 1995 to 1997. Compared with previous studies we find much more frequent price changes, with half of prices lasting less than 4.3 months. The frequency of price changes differs dramatically across categories. We exploit this variation to ask how inflation for "flexible-price goods" (goods with frequent changes in individual prices) differs from inflation for "sticky-price goods" (those displaying infrequent price changes). Compared to the predictions of popular sticky price models, actual inflation rates are far more volatile and transient, particularly for sticky-price goods.
Journal of Labor Economics, Jul 17, 2023
Employment and hours are more cyclical than dictated by productivity and consumption. This intrat... more Employment and hours are more cyclical than dictated by productivity and consumption. This intratemporal labor wedge can arise from product or labor market distortions. Based on employee wages, the literature has attributed the intratemporal wedge almost entirely to labor market distortions. Because wages may be smoothed versions of labor's true cyclical price, we instead examine the self-employed and intermediate inputs, respectively. For recent decades in the United States, we find price markup movements are at least as cyclical as wage markup movements. Thus, countercyclical price markups deserve a central place in business-cycle research, alongside sticky wages and matching frictions.
For helpful comments we are grateful to William Nordhaus, Matt Shapiro, and workshop participants... more For helpful comments we are grateful to William Nordhaus, Matt Shapiro, and workshop participants at Michigan, Columbia, NYU, Duke, the Federal Reserve Banks of Cleveland, Minneapolis, and Richmond, and the NBER Summer Institute and EFG meeting. We thank the BLS for providing unpublished data. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research.
Rogerson, and the discussant, Susanto Basu for helpful suggestions. The views expressed herein ar... more Rogerson, and the discussant, Susanto Basu for helpful suggestions. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research.
National Bureau of Economic Research, 2009
We model worker heterogeneity in the rents from being employed in a Diamond-Mortensen-Pissarides ... more We model worker heterogeneity in the rents from being employed in a Diamond-Mortensen-Pissarides model of matching and unemployment. We show that heterogeneity, reflecting differences in match quality and worker assets, reduces the extent of fluctuations in separations and unemployment. We find that the model faces a trade-off-it cannot produce both realistic dispersion in wage growth across workers and realistic cyclical fluctuations in unemployment.
Rogerson, and the discussant, Susanto Basu for helpful suggestions. The views expressed herein ar... more Rogerson, and the discussant, Susanto Basu for helpful suggestions. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research.
American Economic Journal: Macroeconomics, 2022
We thank Corina Boar for her excellent research assistance. For helpful comments we especially th... more We thank Corina Boar for her excellent research assistance. For helpful comments we especially thank Marianna Kudlyak and Jose Mustre-del-Rio. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
International Economic Journal, Jun 1, 2001
We examine the response of a sticky-wage economy to various real and nominal shocks. In addition ... more We examine the response of a sticky-wage economy to various real and nominal shocks. In addition to variations in hours, we allow for an endogenous response in worker effort per hour. Despite wages being predetermined, the labor market clears through the effort margin. We find that the ability of a sticky-wage model to mimic U.S. business cycles is much improved by allowing for reasonable effort movements. The model also provides a ready explanation for the finding that TFP is negatively affected by nominal shocks. * We thank Jang-Ok Cho, Youngsik Kim, Pete Klenow, and Kwanho Shin for helpful comments.
Journal of Monetary Economics, Mar 1, 2003
We thank Jang-Ok Cho, Pete Klenow, and participants at several workshops for helpful comments. Th... more We thank Jang-Ok Cho, Pete Klenow, and participants at several workshops for helpful comments. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research.
RePEc: Research Papers in Economics, Feb 1, 2020
We are grateful to seminar participants and, especially, Joel David for comments. Any opinions an... more We are grateful to seminar participants and, especially, Joel David for comments. Any opinions and conclusions expressed herein are those of the author(s) and do not necessarily represent the views of the U.S. Census Bureau, the IMF, its Executive Board, or its management. This research was performed at a Federal Statistical Research Data Center under FSRDC Project 1440. All results have been reviewed to ensure that no confidential information is disclosed. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.