83. ‘Financial
Dollarization in Emerging Markets:
Efficient Risk Sharing or Prescription for Disaster? , with Hüsnü Dalgic and Armen Nurbekyan. Online
Appendix. Slides.
with Hüsnü Dalgic and Xiaoming Li, forthcoming, Economica Centenary Anniversary
Issue. Online
Appendix and Replication
files.
81. ‘Financial
Frictions in Macroeconomics,’ Journal of International Money and Finance,
2022.
80. ‘Why
is Unemployment so Countercylical?’, Review of
Economic Dynamics, with Martin Eichenbaum and Mathias Trabandt, 2021
79. Involuntary Unemployment in a Business Cycle Model,
Review of Economic Dynamics, with Mathias Trabandt and Karl Walentin (slides, technical appendix)
78. Thoughts on the Importance of Central Bank Independence, panel discussion at the conference, `The Relevance of Central Bank Independence: Challenges and Outlook’, on the occasion of the celebration of the 25th anniversary of the independence of the Central Bank of Mexico, November 22, 2019.
77. Discussion of Gertler-Kiyotaki-Prestipino, with Husnu Dalgic and Xiaoming Li, given at conference, ‘Frontiers of Macroeconomics with Applications in China,’ December 8-9, 2018 at the Shanghai Advanced Institute of Finance, Shanghai, China.
76. Informal Observations on Deposit and
Credit Dollarization, presented to conference to celebrate the 25th
anniversary of the Armenian Dram, prepared with Husnu Dalgic and Armen
Nurbekyan.
75. Anchoring
Inflation Expectations, (Formerly: Discouraging
Deviant Behavior in Monetary Economics), with Yuta Takahashi. Technical
Appendix. (Slides.)
74. Does the
New Keynesian Model Have a Uniqueness Problem?, with Martin Eichenbaum and
Ben Johannsen.
73. Discussion of Aoki, Benigno
and Kiyotaki, “Monetary and Financial Policies in
Emerging Markets”
72. On DSGE Models, with Martin Eichenbaum and
Mathias Trabandt.
71. Discussion of Cochrane, ““Michelson-Morley,
Fisher and Occam: The Radical Implications of Stable Quiet Inflation at the
Zero Bound” (handout at Macro Annual Conference).
70. Financialization in Commodity Markets, with VV
Chari.
69. Leverage and Social Welfare, AEA Papers and
Proceedings, 2016, with Daisuke Ikeda (code, online appendix).
68. Interview on DSGE models, International Monetary
Fund, summer 2015.
67. Public lecture, National University of Singapore
(published manuscript).
66. Discussion of Acemoglu-Akcigit-Kerr.
65. Discussion of Barsky, Basu
and Lee Macroeconomics Annual Paper.
64. Discussion of “Land-price Dynamics and
Macroeconomic Fluctuations,’’ by Zheng Liu, Pengfei
Wang and Tao Zha (Econometrica, 2013).
63. Understanding the Great Recession, with
Eichenbaum and Trabandt, American Economic Journal: Macroeconomics, 2015
62. Discussion of Boissay-Collard-Smets.
61. Leverage Restrictions in a Business Cycle Model,
With Daisuke Ikeda (technical appendix, slides).
60. Unemployment and Business Cycles with
Eichenbaum and Trabandt.(CEMLA webinar), Econometrica, 2016.
59. Discussion of Giavazzi-McMahon,
“The Household Effects of Government Spending”.
58. Comment on Saki Bigio,
“Financial Risk Capacity”.
57. Risk Shocks, with Roberto Motto and Massimo
Rostagno, American Economic Review, 2014..
56. Notes on Linear
Approximations, Equilibrium Multiplicity and E-learnability in the Analysis of
the Zero Lower Bound, with Martin Eichenbaum.
55. Comment on Cogley,
Sargent and Surico, ‘The Return of the Gibson Paradox’.
54. Discussion and associated slides of Gali, Smets and Wouters,
“Unemployment in an Estimated New Keynesian Model”.
53. Monetary Policy, 1982 to the Present, remarks
presented to conference, “A Return to Jekyll Island: The Origins, History, and
Future of the Federal Reserve”, November 5-6, 2010.
52. Government Policy, Credit Markets and Economic Activity,
with Daisuke Ikeda.
51. Remarks on Unconventional Monetary Policy
Presented at International Journal of Central Banking Conference Hosted by Bank
of Japan, September 15, 2010
50. Monetary Policy and Stock Market Booms, with
Cosmin Ilut, Roberto Motto and Massimo Rostagno (revision of paper presented
for August 2010 Jackson Hole symposium).
49. When is the Government Spending Multiplier Large? ,
joint with Martin Eichenbaum and Sergio Rebelo (technical materials).
48. Discussion of Eggertsson, What Fiscal Policy Is
Effective at Zero Interest Rates?
47. Handbook Chapter on Monetary DSGE Models, with
Mathias Trabandt and Karl Walentin (technical appendix).
46. Comment on Gertler and Kiyotaki.
45. Reply to Boston Fed criticism of “FACTS AND MYTHS
ABOUT THE FINANCIAL CRISIS OF 2008”.
44. Introducing Financial Frictions and Unemployment into a
Small Open Economy Model, with Mathias Trabandt and Karl Walentin (appendix).
43. Financial Factors in Business Cycles, with Motto
and Rostagno.
We augment a standard monetary DSGE model to include financial markets, and fit the model to EA and US data. The empirical
results draw attention to a new shock and to an important new nominal rigidity.
The new shock originates in the financial sector and accounts for a significant
portion of business cycle fluctuations. We do a detailed study of the role of
this shock in the boom-bust of the late 1990s and early 2000s. The new nominal
friction corresponds to the fact that lending contracts are typically
denominated in nominal terms. Consistent with Fisher (1933), we show that the
distributional consequences of this nominal rigidity play an important role in
the propagation of shocks. Finally, we exploit the existence of financial
variables in our model to investigate the consequences of adopting a monetary
policy which reacts to the stock market or to a broad monetary aggregate.
42. Rules and Discretion, Remarks at a conference
in honor of John Taylor.
41. Two Reasons Why Money and Credit May be Useful in Monetary
Policy, with Roberto Motto and Massimo Rostagno.
Abstract: We describe two examples which illustrate in different
ways how money and credit may be useful in the conduct of monetary policy. Our
first example shows how monitoring money and credit can play a useful role in
anchoring private sector expectations about inflation. The second example shows
that a monetary policy that focuses too narrowly on inflation may inadvertently
contribute to welfare-reducing boom-bust cycles in real and financial
variables. The example is of some interest because it is based on a monetary
policy rule fit to aggregate data. In the example, a policy of monetary
tightening when credit growth is strong can attenuate this unintended
consequence of stabilizing inflation. Powerpoint presentation.
40. ‘Shocks, Structures or Monetary Policies? The EA and
US After 2001, with Roberto Motto and Massimo Rostagno.
Abstract: We describe a model we have estimated using US and Euro
Area data, and use it to address a recent controversy.
The US Federal Reserve cut interest rates much more vigorously in the recent
recession than the European Central Bank did. By comparison with the Fed, it is
claimed, the ECB stood by passively as the EA economy slumped. According to our
analysis, passivity at the ECB is not useful for understanding the different
experiences of the EA and US in recent years. On the contrary, we find that -
because there is greater inertia in the ECB's policy rule - the policy actions
of the ECB actually had a greater stabilizing effect than did those of the Fed.
The ECB's policy shocks converted what would have been a severe recession in
the EA into what turned out to be only an economic growth slowdown, without
compromising the ECB's inflation objective. Other factors that account for the
different economic outcomes in the EA and US include differences in shocks and
differences in the degree of wage and price flexibility.
39. Work in progress on the behavior of different firms
over the business cycle.
38. Signals: Implications for Business Cycles and Monetary
Policy, with Cosmin Ilut, Roberto Motto and Massimo Rostagno. We fit
a Bayesian DSGE model to US data and find that anticipations about the future
for monetary policy matter a lot in business cycle dynamics. We then also show
that the presence of such signals matter for monetary policy as well. Signals
induce substantial movements in the natural rate of interest, and standard
interest rate targeting rules for monetary policy induce inefficient booms as a
result. An earlier draft of this paper is: Monetary Policy and Stock Market Boom-Bust Cycles,
with Cosmin Ilut, Roberto Motto and Massimo Rostagno.
37. Two Flaws in Business Cycle Accounting, with
Joshua Davis (December, 2005 version)
Abstract:
Using ‘business cycle accounting’ (BCA), Chari, Kehoe and
McGrattan (2006) (CKM) conclude that models of financial frictions which create
a wedge in the intertemporal Euler equation are not promising avenues for
modeling business cycle dynamics. There are two reasons that this conclusion is
not warranted. First, small changes in the implementation of BCA overturn CKM’s
conclusions. Second, one way that shocks to the intertemporal wedge impact on
the economy is by their spillover effects onto other wedges. This potentially
important mechanism for the transmission of intertemporal wedge shocks is not
identified under BCA. CKM potentially understate the importance of these shocks
by adopting the extreme position that spillover effects are zero.
36. Discussion of ‘On the Fit of New-Keynesian
Models’, by Marco Del Negro, Frank Schorfheide,
Frank Smets and Raf Wouters.
35. The Optimal Monetary Response to a Financial Crisis,
with Fabio Braggion and Jorge Roldos.
Abstract:
We describe a model in which the optimal monetary policy response
to a financial crisis is to raise the interest rate immediately, and then
reduce it sharply. This pattern is consistent with what actually happened in
the Asian crisis episodes.
34. VARs as a Guide to Estimating Dynamic General Equilibrium
Models, with Martin Eichenbau and
Rob Vigfusson.
33. Firm-Specific Capital, Nominal Rigidities and the Business
Cycle, with David Altig,
Martin Eichenbaum and Jesper Linde.
Abstract
Macroeconomic and microeconomic data paint conflicting pictures of
price behavior. Macroeconomic data suggest that inflation is inertial.
Microeconomic data indicate that firms change prices frequently. We formulate
and estimate a model which resolves this apparent micro - macro conflict. Our
model is consistent with post-war U.S. evidence on inflation inertia even
though firms re-optimize prices on average once every 1.5 quarters. The key
feature of our model is that capital is firm-specific and pre-determined within
a period.
32. Firm-Specific Capital and Aggregate Inflation Dynamics in
Woodford's Model. This note exposits Woodford’s method for computing
the reduced form coefficients governing aggregate inflation dynamics in
Woodford’s, Interest and Prices, Chapter 5. The MATLAB code, inflation.m, implements the calculations. To run this
software using an example, execute computegamma.m in
the software found here.
31. Discussion of Chari, Kehoe and McGrattan, ‘Are Structural
VARs Useful Guides for Developing Business Cycle Theories?’. Presented at ‘3rd Banco de Portugal Conference on
Monetary Policy’, Lisbon, June 2004.
30. Abstract
I consider the example analyzed in Eggertsson and
Woodford (2003a,b), which shows that the zero lower
bound on the nominal rate of interest, in conjunction with a low-inflation
policy by the central bank, can cause output to collapse in response to certain
shocks. I show that with investment, the problem is less severe, though not
ruled out under the parameter values suggested by Woodford (2003). However, the
parameters in Woodford (2003) imply a very high Frisch elasticity of labor
supply. When I use a more standard elasticity, the lower bound no longer binds,
even for very large shocks.
The Zero-Bound, Low
Inflation, and Output Collapse (under revision).
29. Abstract:
We evaluate the Friedman-Schwartz hypothesis that a more
accommodative monetary policy could have greatly reduced the severity of the
Great Depression. To do this, we first estimate a dynamic, general equilibrium
model using data from the 1920s and 1930s. Although the model includes eight
shocks, the story it tells about the Great Depression turns out to be a simple
and familiar one. The contraction phase was primarily a consequence of a shock
that induced a shift away from privately intermediated liabilities, such as
demand deposits and liabilities that resemble equity, and towards currency. The
slowness of the recovery from the Depression was due to a shock that increased
the market power of workers.
We identify a monetary base rule which responds only to the money
demand shocks in the model. We solve the model with this counterfactual
monetary policy rule. We then simulate the dynamic response of this model to
all the estimated shocks. Based on the model analysis, we conclude that if the
counterfactual policy rule had been in place in the 1930s, the Great Depression
would have been relatively mild.
The Great Depression and the
Friedman-Schwartz Hypothesis, joint with Roberto Motto and
Massimo Rostagno .
28. Abstract:
We investigate what happens to hours worked after a positive shock
to technology, using the aggregate technology series computed in Basu, Fernald, and Kimball (1999). We conclude that hours
worked rise after such a shock.
The Response of Hours to a
Technology Shock: Evidence Based on Direct Measures of Technology, joint
with Martin Eichenbaum and Robert Vigfusson.
27. Abstract:
This paper examines the economic impact of permanent shocks to
technology. We argue that a positive technology shock drives hours worked up.
This contrasts sharply with results in the literature. The evidence suggests
that those results are an artifact of specification error.
More generally, we find that positive technology shocks have qualitative effects that students of real
business cycle models would anticipate: in addition to
driving hours worked up, they also lead to increases in productivity, output,
consumption and investment, while generating a decline in inflation. Nevertheless,
we find that technology shocks play a relatively small role in business
fluctuations. Their importance is greater in the lower frequency components of
the data.
What Happens After a
Technology Shock? joint with Martin Eichenbaum and Rob
Vigfusson.
26. Abstract:
We characterize the change in the nature of the money
growth-inflation and unemployment-inflation relationships between the first and
second halves of the 20th century. The changes are substantial, and we discuss
some of the implications for modeling inflation dynamics.
Inflation and Monetary Policy
in the 20th Century, joint with Terry Fitzgerald.
25. Abstract:
What are the economic effects of an interest rate cut when an
economy is in the midst of a financial crisis? Under what conditions will a cut
stimulate output and employment, and raise welfare? Under what conditions will
a cut have the opposite effects? We answer these questions in a general class
of open economy models, where a financial crisis is modeled as a time when
collateral constraints are suddenly binding. We find that when there are
frictions in adjusting the level of output in the traded good sector and in
adjusting the rate at which that output can be used in other parts of the
economy, then a cut in the interest rate is most likely to result in a
welfare-reducing fall in output and employment. When these frictions are
absent, a cut in the interest rate improves asset positions and promotes a
welfare-increasing economic expansion.
Monetary Policy in a
Financial Crisis, joint with Christopher Gust and Jorge Roldos.
24. Abstract:
Using a series of examples, we review the various ways in which a
monetary policy characterized by the Taylor rule can inject volatility into the
economy. In the examples, a particular modification to the Taylor rule can
reduce or even entirely eliminate the problems. Under the modified policy, the
central bank monitors the money growth rate and commits to abandoning the
Taylor rule in favor of a money growth rule in case money growth passes outside
a particular monitoring range.
Money Growth Monitoring and
the Taylor Rule, joint with Massimo Rostagno.
23. Abstract:
We present a model embodying moderate amounts of nominal
rigidities which accounts for the observed inertia in inflation and persistence
in output.
Nominal Rigidities and the
Dynamic Effects of a Shock to Monetary Policy, joint
with Martin Eichenbaum and Charles Evans.
22. Abstract: We analyze two monetary economies - a cash-credit
good model and a limited participation model. In our models, monetary policy is
made by a benevolent policymaker who cannot commit to future policies. We
define and analyze Markov equilibrium in these economies. We show that there is
no time inconsistency problem for a wide range of parameter values.
How Severe is the
Time Inconsistency Problem in Monetary Policy?, with
Stefania Albanesi and V.V. Chari.
21. Abstract: Why is it that inflation is persistently high in
some periods and persistently low in other periods? We argue that lack of
commitment in monetary policy may bear a large part of the blame. We show that,
in a standard equilibrium model, absence of commitment leads to
multiple equilibria, or expectation traps, even in the absence of trigger
strategies. In these traps, expectations of high or low inflation lead the public to take defensive actions which then make it
optimal for the monetary authority to validate those expectations.
Expectation Traps and
Monetary Policy, with Stefania Albanesi
and V.V. Chari.
20. Abstract: 'No'. So says one model
that is broadly consistent with postwar US seasonal and business cycle data.
The Conventional Treatment of Seasonality in
Business Cycle Analysis: Does it Create Distortions?, with
Richard Todd.
19. Abstract:
We review the fiscal theory of the price level. We place special
emphasis on the theory's implications for the feasibility and desirability of
price stability.
Understanding the Fiscal
Theory of the Price Level, with Terry J. Fitzgerald.
18. Abstract:
We explore a hypothesis about the take-off in inflation that
occurred in the early 1970s. According to the expectations trap hypothesis, the
Fed was pushed into producing the high inflation out of a fear of violating the
public’s inflation expectations. We compare this hypothesis with the Phillips
curve hypothesis, according to which the Fed produced the high inflation as an
unfortunate by-product of a conscious decision to jump-start a weak economy.
Which hypothesis is more plausible has important implications for what needs to
be done to prevent other inflation flare-ups.
The Expectations Trap
Hypothesis, with Christopher Gust.
17. Abstract:
There is a worry that low interest rates interfere with a central
bank's ability to conduct stabilization policy. With rates low, the fed cannot
cut them further in the case of a bad shock. McCallum argues that these
concerns are overblown on the grounds that a central bank has a second tool for
stabilizing the economy: it can manipulate the exchange rate. According to
McCallum this is possible even if the central bank has lost control over the
interest rate because it has hit its zero lower bound. I offer a critical
assessment of this proposition. I go on to describe another worry
about low interest rates - that they prevent the central bank from fighting
'confidence crises'. These possibilities are ruled out from McCallum's model. But, they need to be addressed too, in an overall evaluation
of the policy implications of a low interest rate. I sketch a model that
incorporates these concerns.
Comment on
McCallum's 'Theoretical Analysis Regarding a Zero Lower Bound on Nominal
Interest Rates'.
16. Abstract:
We explore two models of the take-off in inflation in the early
1970s: a sticky price model and a limited participation model. The latter has
the virtue that it also accounts for the weak economic conditions (i.e.,
stagflation) of the early 1970s.
Our limited participation model incorporates the monetary policy
rule estimated for the 1970s by Clarida, Gali and Gertler.
The model has an equilibrium in which a bad technology shock drives up expected
inflation which the Fed accommodates with higher money growth. The Fed also
raises the interest rate, which has the effect of exacerbating the depressive
effects of the bad technology shock. We argue that the model provides a useful
stylized representation of the events of the early 1970s. We explore the
implications of our analysis for the policy changes needed to ensure that a
1970s-style stagflation does not happen again.
The Great Inflation of the
1970s (very preliminary!), with Christopher Gust.
15. Abstract:
We introduce two modifications into the standard real business
cycle model: habit persistence preferences and limitations
on intersectoral factor mobility. The resulting model is consistent
with the observed mean equity premium, mean risk free rate and Sharpe ratio on
equity. With respect to the conventional measures of business cycle volatility
and comovement, the model does roughly as well as the standard real business
cycle model. On four other dimensions its business cycle implications represent
a substantial improvement. It accounts for (i)
persistence in output, (ii) the observation that employment across different
sectors moves together over the business cycle, (iii) the evidence of `excess
sensitivity' of consumption growth to output growth, and (iv) the `inverted
leading indicator property of interest rates,' that high interest rates are
negatively correlated with future output.
Habit Persistence, Asset
Returns and the Business Cycle, joint with Michele Boldrin and Jonas Fisher.
14. Abstract:
We consider a real business cycle model with an externality in
production. Depending on parameter values, the model
has sunspot equilibria, cyclical and chaotic equilibria,
and equilibria with deterministic or stochastic regime switching. We
study the implications of this model environment for automatic stabilizer tax
systems.
Chaos, Sunspots and
Automatic Stabilizers, joint with Sharon Harrison.
13. Abstract:
We construct a model that can account for the observed procylical behavior of stock prices and
countercyclical behavior of investment good prices. We then examine the model's
business cycle and asset pricing implications. It does as well as previous
business cycle models on asset prices and standard business cycle statistics.
It makes significant progress on two aspects of business cycles that have
traditionally received less attention. In particular, our model accounts for
the observed comovement across sectors in employment, output and investment. In
addition, the model accounts for the so-called inverted leading indicator
property of interest rates: interest rates (real or nominal) lead low output.
The latter observation is often interpreted as reflecting the business cycle
role of monetary policy shocks. Since ours is a model in which there are only
real shocks, our analysis suggests that observations conventionally attributed
to monetary policy shocks may, to some extent at least, also reflect the
effects of real shocks.
Stock Market and Investment
Good Prices: Implications for Macroeconomics, joint
with Jonas Fisher.
12. Abstract:
Would the 1930s have looked very different if the collapse in M1
had been avoided? 'No', according to a model of Chris Sims.
Discussion of Christopher
Sims, `The Role of Interest Rate Policy in the Generation and
Propagation of Business Cycles: What Has Changed Since the 30s?'
11. Abstract :
I present an undetermined coefficients method for obtaining a
linear approximating to the solution of a class of dynamic, rational
expectations models. The method is illustrated using several examples. I also
show how the solution can be used to compute a model's implications for impulse
response functions and for second moments.
Solving Dynamic Equilibrium Models by a Method of Undetermined
Coefficients (manuscript, computer code)
10. Abstract:
The Levin-Wieland-Williams paper finds that a Taylor-style
monetary policy for setting short-term interest rates works well in several large scale macroeconomic models. We examine the robustness
of their results in a small, limited participation macroeconomic model with
money. Our analysis underscores several reasons to be cautious in designing an
interest rate targetting rule. If not tuned
carefully, such a rule could be counterproductive and lead to excessive
volatility.
Discussion of
Andrew Levin, Volker Wieland and John C. Williams, `Are Simple Monetary Policy
Rules Robust to Model Uncertainty.', joint with Christopher Gust.
9. Abstract:
This paper reviews recent research that grapples with the
question: What happens after an exogenous shock to monetary policy? We argue
that this question is interesting because it lies at the center of a particular
approach to assessing the empirical plausibility of structural economic models
that can be used to think about systematic changes in monetary policy
institutions and rules. The literature has not yet converged on a particular
set of assumptions for identifying the effects of an exogenous shock to
monetary policy. Nevertheless, there is considerable agreement about the
qualitative effects of a monetary policy shock in the sense that inference is
robust across a large subset of the identification schemes that have been
considered in the literature. We document the nature of this agreement as it
pertains to key economic aggregates.
Monetary Policy Shocks: What
Have We Learned and to What End?, joint with Martin Eichenbaum and
Charles Evans.
8. Abstract:
We develop a dynamic model with optimizing private agents and a
benevolent, optimizing monetary authority who cannot commit to future policies.
We characterize the set of sustainable equilibria and discuss the
implications for institutional reform. We show that there
are equilibria in which the monetary authority pursues inflationary
policies, because that is what private agents expect. We call
such equilibria expectation traps. Alternative institutional
arrangements for the conduct of monetary policy which impose limited forms of
commitment on the policymaker can eliminate expectations traps.
Expectation Traps and
Discretion, with V.V. Chari and Martin Eichenbaum.
7. Abstract:
We describe and compare several algorithms for approximating the
solution to a model in which inequality constraints occasionally bind. Their
performance is evaluated and compared using various parameterizations of the
one sector growth model with irreversible investment. We develop parameterized
expectation algorithms which, on the basis of speed, accuracy and convenience
of implementation, appear to dominate the other algorithms.
Algorithms for Solving
Dynamic Models with Occasionally Binding Constraints, with
Jonas Fisher.
6. Abstract:
The 'ideal' band pass filter can be used to isolate the component
of a time series that lies within a particular band of frequencies. However,
applying this filter requires a dataset of infinite length. In practice, some
sort of approximation is needed. Using projections, we derive approximations
that are optimal when the time series representations underlying the raw data
have a unit root, or are stationary about a trend. We
identify one approximation which, though it is only optimal for one particular
time series representation, nevertheless works well for standard macroeconomic
time series.
To illustrate the use of this approximation, we use it to
characterize the change in the nature of the Phillips curve and the
money-inflation relation before and after the 1960s. We find that there is
surprisingly little change in the Phillips curve and substantial change in
money growth-inflation relation.
The Band Pass Filter (Technical Manuscript, Tables and Figures, Computer
Code), with Terry Fitzgerald.
5. The Business Cycle: It's Still a Puzzle, with
Terry Fitzgerald.
4. Abstract:
We illustrate the use of various frequency domain tools for
estimating and testing dynamic, stochastic general equilibrium models. Our
substantive results confirm other findings which suggest that time-to-plan in
the investment technology has a potentially useful role to play in
business cycle models.
Maximum Likelihood in the
Frequency Domain: The Importance of Time-to-Plan, with Rob Vigfusson.
3. Understanding Japan's Saving Rate: The Reconstruction
Hypothesis.
2. Technical Appendix to Modeling Money, with
Eichenbaum and Evans.
1. The Effects of Monetary Policy Shocks: Evidence from the Flow of Funds, with Martin Eichenbaum and Charles Evans.