The Research Department of the Federal Reserve Bank of Atlanta publishes a working paper series to convey the research of staff economists and visiting scholars and stimulate professional discussion and exploration of economic and financial subjects.
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Why Did So Many People Make So Many Ex Post Bad Decisions? The Causes of the Foreclosure Crisis
Christopher L. Foote, Kristopher S. Gerardi, and Paul S. Willen
Working Paper 2012-7 (May)
The choices made by homeowners and financial institutions prior to the financial crisis didn't seem so bad at the time, but in hindsight they proved disastrous. New Atlanta Fed research looks at what led to some of these decisions and how policymakers should address them in the future.
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Estimating a Semiparametric Asymmetric Stochastic Volatility Model with a Dirichlet Process Mixture
Mark J. Jensen and John M. Maheu
Working Paper 2012-6 (April)
The authors develop a novel way to model the correlation between returns and volatility, enabling them to examine how volatility responds to unexpected market movement.
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Some Unpleasant Properties of Log-Linearized Solutions When the Nominal Rate Is Zero
R. Anton Braun, Lena Mareen Körber, and Yuichiro Waki
Working Paper 2012-5 (March)
The authors examine the nonlinearity created by a zero lower bound on the nominal interest rate. They demonstrate that the log-linearized equilibrium conditions can give an incorrect classification of the types of zero-bound equilibria that can arise in the true economy.
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The Wage Impact of Undocumented Workers
Julie L. Hotchkiss, Myriam Quispe-Agnoli, and Fernando Rios-Avila
Working Paper 2012-4 (March)
Using data from Georgia, the authors find that earnings of a documented worker employed by a firm that hires undocumented workers are marginally lower than if he or she were employed by a firm that does not hire undocumented workers.
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Human Capital Portfolios
Pedro Silos and Eric Smith
Working Paper 2012-3 (February)
The authors assess the trade-off between diversification and specialization in portfolios of skills when there is uncertainty about occupational fit. Forced specialization decreases income growth but also decreases inequality.
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Does Employing Undocumented Workers Give Firms a Competitive Advantage?
J. David Brown, Julie L. Hotchkiss, and Myriam Quispe-Agnoli
Working Paper 2012-2 (February)
The authors find that a firm not employing undocumented workers is at a competitive disadvantage, especially if its rivals do. However, they also determine that the impact of employing undocumented workers varies across sectors and with the skill level of the workers, among other factors.
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Making the Case for a Low Intertemporal Elasticity of Substitution
R. Anton Braun and Tomoyuki Nakajima
Working Paper 2012-1 (January)
The responsiveness of consumption growth to changes in expected interest rates plays a central role in dynamic decision making. The authors provide some new evidence that this elasticity is small.
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