L. Rachel Ngai

London School of Economics, CEP and CEPR.

Research Interest: Macroeconomics- Growth and Development, Structural Transformation, Labour Market, Housing

Curriculum Vitae Email: L .Ngai@lse.ac.uk

Downloadable Papers

· Hot and Cold Seasons in the Housing Market (with Silvana Tenreyro). November 2010, CEP DP 922.

Abstract: Every year during the second and third quarters (the "hot season") housing markets in the UK and the US experience systematic above-trend increases in both prices and transactions. During the fourth and first quarters (the "cold season"), house prices and transactions fall below trend. We propose a search-and-matching framework that sheds new light on the mechanisms governing housing market fluctuations. The model has a "thick-market" effect that can generate substantial differences in the volume of transactions and prices across seasons, with the extent of seasonality in prices depending crucially on the bargaining power of sellers. The model can quantitatively mimic the seasonal fluctuations in transactions and prices observed in the UK and the US.

- Featured in Financial Times - FT Weekend Magazine (pdf)

· Taxes, Social Subsidies and the Allocation of Work Time (with Chris Pissarides), American Economic Journal - Macroeconomics, October 2011, 3(4): 1-26.

Previous title: “Welfare Policy and the Sectoral Distribution of hours of Work”.

Abstract: We examine the allocation of hours of work across industrial sectors in OECD countries. We find large disparities across three sector groups, one that produces goods without home substitutes, and two others that have home substitutes but treated differently by welfare policy. We attribute the disparities to the countries' tax and subsidy policies. High taxation substantially reduces hours in sectors that have close home substitutes but less so in other sectors. Subsidies increase hours in the subsidized sectors that have home substitutes. We compute these policy effects for nineteen OECD countries.

· Accounting for Research and Productivity Growth Across Industries (with Roberto Samaniego), Review of Economic Dynamics, July 2011, Volume 14, p. 475-495.

What factors can jointly account for differences in research intensities and productivity growth across industries in a multi-sector endogenous growth model? They are the "technological opportunities": capital intensity of R&D, knowledge spillovers, and diminishing returns to R&D. US industry data implies that diminishing returns to R&D is the dominant factor quantitatively.

· Mapping Prices into Productivity in Multisector Growth Models (with Roberto Samaniego), Journal of Economic Growth, September 2009, Volume 14, p.183-204.

This paper argues that the composition of intermediate goods and the distinction between the productivity indices for value added and for gross output are important when mapping relative prices to relative productivity, and mapping multi-sector model and a reduced-form value-added model. When they are properly taken into account, the investment-specific technical change (ISTC) may well account for more than 90% of post-war US growth, compared to the previous finding of 60% when intermediate goods are ignored.

· Trends in Hours and Economic Growth (with Chris Pissarides), Review of Economic Dynamics, April 2008, Volume 11, p. 239-256.

Two important transformations over the last century: reallocation of hours worked from agriculture to manufacturing then to services (structural transformation), and from home to market (marketization). This paper shows that they are caused by uneven productivity growth across "market and home production" (that produce good substitutes), and across "three types of consumption goods" (which are poor substitutes). The interaction of structural transformation and marketization generates a non-monotonic trend in the aggregate market hours of work along the aggregate balanced growth path.

· Public Enterprises and Labour Market Performance (with Johannes Hörner and Claudia Olivetti), International Economic Review, May 2007, Volume 48, No. 2, p. 363-384.

One possible mechanism of the rise in the European unemployment during 1970s to the 1990s is the presence of public sector employment in Europe: risk-averse workers can search for jobs in public or private sector and the public sector is more able to insure its employees against earning instability ("economic turbulence"). This paper shows that aggregate unemployment increases as a result of rising economic turbulence during the 70s to the 90s.

· Structural Change in a Multisector Model of Growth (with Chris Pissarides), American Economic Review, March 2007, Volume 97, No. 1, p. 429-443.

A longer working paper version: CEPR DP 4763. Previous title: "Balanced Growth with Structural Change".

Over the last century, most of the industrialized economies experience substantial labour reallocation across sectors (structural change/transformation, Kuznets' fact) while their aggregate variables appear to be on a balanced growth path (Kaldor's fact). This paper shows that structural change is explained by non-unitary elasticity of substitution across goods while unitary elasticity of substitution across time can preserve balanced aggregate growth in a multisector model with sector-specific productivity growth.

· Barriers and the Transition to Modern Growth, Journal of Monetary Economics, October 2004, Volume 51, Issue 7, p. 1353-1383.

Cross-country income differences are large: the income ratio between top 5% and bottom 5% increases from less than 2 to over 30 for the last two centuries. The key observation is that the transition from stagnation to modern growth (a sustained growth in per capita income) is different across countries. This paper argues that barriers to technology adoption or capital accumulation affect both the beginning date and the subsequent pace of modern growth. The model matches the observed inverted U-shape of cross-country income differences, which implies that a substantial fraction of current income differences is transitional. Hence, the model requires smaller barriers to account for current income differences relative to models that focus only on steady states. Empirically, it finds that differences in the beginning dates of modern growth explain large differences in incomes.

Last update: October 2011

20-January-2010 ~

Psalm 23:4 ~ Even though I walk through the valley of the shadow of death, I will fear no evil, for You are with me; Your rod and Your staff, they comfort me.