Christopher Phillip Reicher

This is the page where I post current versions of my papers. I am primarily interested in macroeconomics and have secondary interests in monetary economics and time series econometrics. Click on a title to download the paper in pdf format.


Wage Bargaining, Job Matching, and the Great Depression
(Job market paper, March 2008)

Motivated by the findings of Ohanian (2007) and Ebell and Ritschl (2007), this paper estimates a series of shocks to a labor matching model with money and sticky prices, using data on U.S. labor markets from the Great Depression. These shocks consist of shocks to the supply and demand for money, to short-run and long-run productivity, to labor supply, and to labor's share of bargaining surpluses. The estimates suggest that an unexplained rise in labor"s share of surpluses accounts for a 22% fall in employment and a 17% fall in output from 1929 through 1933, and it also accounts for a substantial portion of the slow recovery. Shocks to labor supply explain the rest of the slow recovery but only a small portion of the initial contraction. Shocks to productivity completely fail to explain the behavior of employment during the 1930s. Shocks to the supply and demand for money, taken together, explain some of the contraction but none of the slow recovery. A persistent downward shift in the Beveridge curve and persistently high wages throughout the 1930s suggest that a rise in labor's bargaining power may have kept employment low through the entire period.


Can a Labor Matching Model Match Labor's Share?
(March 2008)

A canonical labor matching model with sticky prices but flexible real wages can match movements in labor's share rather well. However, it cannot explain much of the behavior of employment and vacancies in postwar data without resorting to additional shocks beyond monetary policy and productivity shocks. Showing a similarity with its New Keynesian cousins, the model suggests that monetary policy shocks can account for only a small portion of postwar fluctuations with the exception of the Volcker episode. Depending on how one treats the data, productivity shocks can account for much of the behavior of labor's share and employment during the late 1960s and the early 1980s. The magnitude and timing of these effects depend on the exact manner in which the model and data are made to be compatible with balanced growth, but the conclusion that most recessions have been caused by other shocks is very strong.


Fiscal Policy Rules in the Postwar United States
(November 2007)

Recent research has indicated the importance of understanding how governments set fiscal policy in order to stabilize the debt-GDP ratio, if at all. Fiscal Taylor rules and error correction models have represented two different ways of quantifying the feedbacks from fiscal and economic conditions to fiscal policy decisions. This paper synthesizes these two strands of the literature, formulating and estimating a fiscal Taylor rule as a special case of an error correction model. Using quarterly postwar U.S. data, estimates of a fiscal Taylor rule find that the government sector has sought to stabilize its debt through adjustments to purchases and taxes, in that order. The estimates also show that the government sector has appeared extremely reluctant to adjust transfers in response to fiscal imbalances. In cyclical terms, government spending and transfers rise strongly with unemployment while taxes fall strongly. Furthermore, fiscal policy has not remained constant over time. Since 1981, the feedback from debt into fiscal decisions has almost vanished, while the cyclical behavior of fiscal variables has not changed.