Economic fluctuations and growth.

• Position: Program and Working Group Meetings

The NBER's Program on Economic Fluctuations and Growth met at the Federal Reserve Bank of San Francisco on February 9. NBER Research Associates Andrew Atkeson, University of California, Los Angeles, and Robert King, Boston University, organized the meeting. The following papers were discussed:

David Card and Raj Chetty, University of California, Berkeley and NBER, and Andrea Weber, Institute for Advanced Studies, "Cash-on-Hand and Competing Models of Intertemporal Behavior: New Evidence from the Labor Market"

Discussant: Robert E. Hall, Stanford University and NBER

Jonathan Heathcote, Georgetown University; Kjetil Storesletten, University of Oslo; and Giovanni L. Violante, New York University, "Consumption and Labor Supply with Partial Insurance: An Analytical Framework"

Discussant: Luigi Pistaferri, Stanford University

Steven J. Davis, University of Chicago and NBER; R. Jason Faberman, U.S. Bureau of Labor Statistics; and John C. Haltiwanger, University of Maryland and NBER, "The Establishment-Level Behavior of Vacancies and Hiring"

Discussant: Robert Shimer, University of Chicago and NBER

Andreas Hornstein, Federal Reserve Bank of Richmond; Per Krusell, Princeton University and NBER; and Giovanni Violante, New York University, "Frictional Wage Dispersion in Search Models: A Quantitative Assessment"

Discussant: Dale T. Mortensen, Northwestern University and NBER

Ruediger Bachmann, Yale University; Ricardo J. Caballero, MIT and NBER; and Eduardo M.R.A. Engel, Yale University and NBER, "Lumpy Investment in Dynamic General Equilibrium"

Discussant: Julia Thomas, Federal Reserve Bank of Philadelphia

Dirk Krueger, University of Pennsylvania and NBER, and Hanno Lustig, University of California, Los Angeles and NBER, "The Irrelevance of Market Incompleteness for the Price of Aggregate Risk"

Discussant: John C. Heaton, University of Chicago and NBER

Card, Chetty, and Weber present new tests of the permanent income hypothesis and other widely used models of household behavior using data from the labor market. They estimate the excess sensitivity of job search behavior to cash-on-hand using sharp discontinuities in eligibility for severance pay and extended unemployment insurance (UI) benefits in Austria. Analyzing data for more than half a million job losers, they obtain three empirical results: 1) a lump-sum severance payment equal to two months of earnings reduces the job-finding rate by 8-12 percent on average; 2) an extension of the potential...