We present a model in which sectoral shocks have aggregate consequences. The model relies on irreversible investment and imperfect information to slow the adjustment of expanding industries. We show that this gradual expansion is sub-optimal.

We extend expected utility theory to situations in which agents experience feelings of anticipation prior to the resolution of uncertainty. We show how these anticipatory feelings may result in time inconsistency. We provide an example from portfolio theory to illustrate the potential impact of anticipation on asset prices.

Standard macroeconomic models of price stickiness assume that each firm leaves its price unchanged for a fixed amount of time. We present an alternative model in which the pricing decision depends on the state of the economy. We find a method of aggregating individual price changes that allows a simple characterization of macroeconomic variables. The model produces a positive money-output correlation and an empirical Phillips curve. In addition, the impact of monetary shocks depends crucially on the current level of output, which points to a natural connection between state-dependent microeconomics and state-dependent macroeconomics.

Why do similar households end up with very different levels of wealth? We show that differences in the attitudes and skills with which they approach finan-cial planning are a significant factor. We use new and unique survey data to assess these differences and to measure each household’s “propensity to plan. ” We show that those with a higher such propensity spend more time developing financial plans, and that this shift in planning is associated with increased wealth. These findings are consistent with broad psychological evidence concern-ing the beneficial impacts of planning on goal pursuit. Those with a high propen-sity to plan may be better able to control their spending, and thereby achieve their goal of wealth accumulation. We find direct evidence supporting this effortful self-control channel in the very strong relationship we uncover between the propensity to plan and budgeting behavior. I.