Peter Rupert |

Senior Research Advisor

Peter Rupert was formerly senior economic advisor in the Research Department at the Federal Reserve Bank of Cleveland. His areas of specialization include labor economics and applied econometrics.

Dr. Rupert joined the Bank in 1994. He previously held a variety of teaching positions, including assistant professor of economics at the State University of New York at Buffalo and West Virginia University. He has been a visiting assistant professor at Birkbeck College of the University of London and at the University of Southern California.

A native of New York City, Dr. Rupert grew up in the San Francisco Bay area. He earned his B.S. at Santa Clara University, and his M.A. and Ph.D. from the University of Rochester.

Fed Publications
Other Publications
Work in Progress

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Author(s)

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Crime and the Labor Market: A Search Model With Optimal Contracts	October, 2007	Federal Reserve Bank of Cleveland, Working Paper no. 0715	Peter C Rupert; Bryan Engelhardt; Guillaume Rocheteau;	Working Papers
	Abstract: This paper extends the Pissarides (2000) model of the labor market to include crime and punishment `a la Becker (1968). All workers, irrespective of their labor force status can commit crimes and the employment contract is determined optimally. The model is used to study, analytically and quantitatively, the effects of various labor market and crime policies. For instance, a more generous unemployment insurance system reduces the crime rate of the unemployed but its effect on the crime rate of the employed depends on job duration and jail sentences. When the model is calibrated to U.S. data, the overall effect on crime is positive but quantitatively small. Wage subsidies reduce unemployment and crime rates of employed and unemployed workers, and improve society's welfare. Hiring subsidies reduce unemployment but they can raise the crime rate of employed workers. Crime policies (police technology and jail sentences) affect crime rates signifi cantly but have only negligible effects on the labor market.
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What's Really Going on in Housing Markets?	July 2007	Federal Reserve Bank of Cleveland, Economic Commentary	Peter C Rupert; Morris A Davis; François Ortalo-Magné;	Economic Commentary
	Abstract: Most of the public concern about housing markets is based on claims that house prices have increased at historically anomalous rates and that house prices have outpaced incomes. The first claim is based on inaccurate historical data. The second is linked to relaxed credit constraints. House prices are likely to fall further, but not for the reasons usually proposed.
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The Return to Capital and the Business Cycle	January, 2006	Federal Reserve Bank of Cleveland, Working Paper no. 0603	Peter C Rupert; Paul Gomme; B. Ravikumar;	Working Papers
	Abstract: Real business cycle models have difficulty replicating the volatility of S&P 500 returns. This fact should not be surprising since real business cycle theory suggests that the return to capital should be measured by the return to aggregate market capital, not stock market returns. We construct a quarterly time series of the after-tax return to business capital. Its volatility is considerably smaller than that of S&P 500 returns. Our benchmark model captures almost 40 percent of the volatility in the return to capital (relative to the volatility of output). We consider several departures from the benchmark model; the most promising is one with higher risk aversion, which captures over 60 percent of the relative volatility in the return to capital.
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Understanding the Determinants of Crime	January, 2006	Federal Reserve Bank of Cleveland, Working Paper no. 0602	Peter C Rupert; Ayse Imrohoroglu; Antonio Merlo;	Working Papers
	Abstract: In this paper, we use an overlapping generations model where individuals are allowed to engage in both legitimate market activities and criminal behavior in order to assess the role of certain factors on the property crime rate. In particular, we investigate if any of the following could be capable of generating the large differences in crime rates that are observed across countries: differences in the unemployment rate, the fraction of low-human-capital individuals in an economy, the probability of apprehension, the duration of jail sentences, and income inequality. We find that small differences in the probability of apprehension and in income inequality can generate quantitatively significant differences in the crime rates across similar environments.
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General Equilibrium with Nonconvexities, Sunspots, and Money	December, 2005	Federal Reserve Bank of Cleveland, Working Paper no. 0513	Peter C Rupert; Guillaume Rocheteau; Karl Shell; Randall Wright;	Working Papers
	Abstract: We study general equilibrium with nonconvexities. In these economies there exist sunspot equilibria without the usual assumptions needed in convex economies, and they have good welfare properties. Moreover, in these equilibria, agents act as if they have quasi-linear utility. Hence wealth effects vanish. We use this to construct a new model of monetary exchange. As in Lagos-Wright, trade occurs in both centralized and decentralized markets, but while that model requires quasilinearity, we have general preferences. Given our specification looks much like the textbook Arrow-Debreu model, we think this constitutes progress on the classic problem of integrating money and general equilibrium theory. We also use the model to discuss another classic issue: the relation between inflation and unemployment.
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Theory, Measurement, and Calibration of Macroeconomic Models	May, 2005	Federal Reserve Bank of Cleveland, Working Paper no. 0505	Peter C Rupert; Paul Gomme;	Working Papers
	Abstract: Calibration has become a standard tool of macroeconomics. This paper extends and refines the calibration methodology along several important dimensions. First, accounting for home production is important both in measuring calibration targets and in organizing the data in a model-consistent fashion. For this reason, thinking about home production is important even if the model under consideration does not include home production. Second, investment-specific technological change is included because of its strong balanced growth parameter restrictions. Third, the measurement strategy is laid out as transparently as possible so that others can easily replicate the underlying calculations. The data and calculations used in this paper are available on the web.
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Measuring Labor's Share of Income	December 2004	Federal Reserve Bank of Cleveland, Policy Discussion Paper, no. 7	Peter C Rupert; Paul Gomme;	Policy Discussion Papers
	Abstract: Recent Bureau of Labor Statistics (BLS) data show labor's share of income at a historic low. This Policy Discussion Paper explores the BLS calculations with an eye to understanding the factors leading to the recent fall in labor's share. While data limitations prohibit replication of the BLS series, alternative measures of labor's share of income, based on either the nonfinancial corporate business sector or the macroeconomy more generally, are near their historic averages, quite unlike the BLS series.
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Per Capita Income Growth and Disparity in the United States, 1929-2003	August 15, 2004	Federal Reserve Bank of Cleveland, Economic Commentary	Peter C Rupert; Paul Gomme;	Economic Commentary
	Abstract: Economic theory says the average income of different regions should grow closer over time. Within the United States and across some of the richer countries, evidence suggests this is true.
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The Business Cycle and the Life Cycle	June, 2004	Federal Reserve Bank of Cleveland Working Paper no. 0404	Peter C Rupert; Paul Gomme; Richard Rogerson; Randall Wright;	Working Papers
	Abstract: The paper documents how cyclical fluctuations in market work vary over the life cycle and then assesses the predictions of a life-cycle version of the growth model for those observations. The analysis yields a simple but striking finding. The main discrepancy between the model and that data lies in the inability of the model to account for fluctuations in hours for individuals in the first half of their life cycle. The predictions for those in the latter half of the life cycle are quite close to the data.
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Wage and Employer Changes over the Life Cycle	April 15, 2004	Federal Reserve Bank of Cleveland, Economic Commentary	Peter C Rupert;	Economic Commentary
	Abstract: Economists have long observed that wages alone do not fully reflect a job’s value-job “amenities” also play a role. Recent empirical studies have confirmed this observation to be the case. Researchers are also finding that workers frequently choose to take lower-paying jobs, which suggests that not only do workers care about the nonwage characteristics of a job, but also that they will change jobs throughout their lives to achieve the best mix of wages and amenities that is right (and obtainable) for them.
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How Amenities Affect Job and Wage Choices over the Life Cycle	January, 2003	Federal Reserve Bank of Cleveland, Working Paper no. 0302	Peter C Rupert; Ed Nosal;	Working Papers
	Abstract: The current wage at a job may not fully reflect the "value" of that job. For example, a job with a low starting wage may be preferred to one with a high starting wage if the growth rate of wages is higher in the former than in the latter. In fact, differences in wage growth can potentially explain why a worker might want to quit a high-paying job for one with a lower starting wage. Job amenities are another important factor that not only influences the value of a job but also provides an independent rationale for why workers change jobs. Including a job's amenities as part of its "value" can also generate a move from high-paying to low-paying jobs (or vice versa) as part of an optimal consumption plan over the life cycle. Both the direction of movement and the timing of a job change depend critically on the relationship between a worker's rate of time preference and the market interest rate.
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A Beautiful Theory	April 15, 2002	Federal Reserve Bank of Cleveland, Economic Commentary	Peter C Rupert; Ed Nosal;	Economic Commentary
	Abstract: It wasn’t A Beautiful Mind—the book or the movie—that made John Forbes Nash, Jr., famous. It was his work in game theory, a theory that models strategic interactions between people as games. Before Nash, the only games theorists could get a handle on were artificial ones with no real-world applications. Nash’s insights enabled economists to expand the use of game theory to interesting practical problems.
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Infrastructure and the Wealth of Nations	January 15, 2002	Federal Reserve Bank of Cleveland, Economic Commentary	Peter C Rupert; Ed Nosal;	Economic Commentary
	Abstract: Economies can’t grow without a sufficiently developed infrastructure, but how deep does the infrastructure have to be to make a difference? The authors take a look at some research from the Fraser Institute that examines the relationship between economic growth and economic infrastructure across 123 countries. They find that infrastructure is a bit of an all-or-nothing proposition.
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Life cycle wage and job changes	January, 2002	Federal Reserve Bank of Cleveland, Working Paper no. 0212	Peter C Rupert; Ed Nosal;	Working Papers
	Abstract: Evidence from the Panel Study of Income Dynamics shows that while the majority of job changers who state they were not fired or laid off choose jobs with wages that are higher than their previous jobs, a substantial proportion of these job changers choose jobs that have lower wages. A model is constructed that is consistent with workers choosing a career path that entails a job change to either a higher paying or lower paying job. In the model, a job consists of a tied wage and amenity package. Due to compensating wage differentials, higher wages are paid where other job amenities are unattractive. Given this, a worker chooses a career path that leads to a job change where the wage in the new job may be higher or lower than in the previous job, with the actual choice being determined by the rate of time preference.
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Life-Cycle Income and Consumption Variability	March 1, 2001	Federal Reserve Bank of Cleveland, Economic Commentary	Peter C Rupert; Chris Telmer;	Economic Commentary
	Abstract: By all accounts, economic inequality is growing-the rich are getting richer, and the poor are getting poorer. This Economic Commentary explores inequality in income and consumption and asks whether inequality is determined early in life, before individuals enter the labor market, or whether it becomes manifest during the working years
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The search-theoretic approach to monetary economics: a primer	December 2000	Federal Reserve Bank of Cleveland, Economic Review, vol. 36, no. 4, pp. 10-28	Peter C Rupert; Martin Schindler; Andrei Shevchenko; Randall Wright;	Economic Review
	Abstract: The authors present simple versions of models used in the search-theoretic approach to monetary economics. They discuss results on the existence of monetary equilibria, the potential for multiple equilibria, and welfare. Using bilateral bargaining theory, they consider models where prices are fixed as well as those where prices are determined endogenously. After describing the frictions necessary to construct a model where money has an essential role, they conclude by reviewing many extensions and applications in the related literature
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What accounts for the decline in crime?	January, 2000	Federal Reserve Bank of Cleveland, Working Paper no. 0008	Peter C Rupert; Ayse Imrohoroglu; Antonio Merlo;	Working Papers
	Abstract: The authors' dynamic equilibrium model guides their quantitative investigation of the major determinants of property-crime patterns in the U.S. The model is capable of reproducing the drop in property crime that occurred between 1980 and 1996. The most important influences on the decline are a higher probability of apprehension, a stronger economy, and the aging of the population. The effect of unemployment on crime is negligible. Increased inequality in earnings prevented an even larger decline in crime. The authors' analysis can account for the behavior of the time series of property crime rates over the past quarter-century.
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Home production meets time-to-build	January, 2000	Federal Reserve Bank of Cleveland, Working Paper no. 0007R	Peter C Rupert; Paul Gomme; Finn Kydland;	Working Papers
	Abstract: An innovation in this paper is to introduce a time-to-build technology for the production of market capital into a model with home production. The paper's main finding is that the two anomalies that have plagued all household production models-the positive correlation between business and household investment, and household investment leading business investment over the business cycle-are resolved when time-to-build is added.
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Generalized Search-Theoretic Models of Monetary Exchange	January, 2000	Federal Reserve Bank of Cleveland, Working Paper no. 0005	Peter C Rupert; Martin Schindler; Randall Wright;	Working Papers
	Abstract: We present new results on existence, the number of equilibria, and welfare for search-theoretic models of money that extend the literature in several ways. For example, we provide results for general bargaining parameters while previous papers consider only special cases. Also, we present two version of the model: in one agents holding money cannot produce, in the other they can. The former model has been used in essentially all the previous literature, although the latter seems more natural for some purposes, and avoids several undesirable implications. Since very little is known about this version, we analyze it in detail.
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Growth and the Internet: Surfing to Prosperity?	September 1, 1999	Federal Reserve Bank of Cleveland, Economic Commentary	Peter C Rupert; David E Altig;	Economic Commentary
	Abstract: Do countries that inhibit the quick integration of new technologies pay a price in slower economic growth? This Commentary suggests they do. Focusing on the level of Internet use to indicate the absorption rate of emerging computer technologies, the authors argue that faster technology absorption leads to increased economic growth.
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Accounting for Capital Consumption and TEchnological Progress	April 1999	Federal Reserve Bank of Cleveland, Economic Review, vol. 35, no .2	Peter C Rupert; Michael Gort;	Economic Review
	Abstract: Methods currently used to calculate capital consumption, the capital stock, and the sources of economic growth do not adequately measure the underlying growth in inputs due to technological advance. This lack affects tax policy as well as programs targeting potential areas of economic growth. The authors present a model designed to surmount the deficiencies of current calculation methods.
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Defining Capital in Growth Models	April 1999	Federal Reserve Bank of Cleveland, Economic Review, vol. 35, no. 2	Peter C Rupert; Michael Gort; Saqib Jafarey;	Economic Review
	Abstract: The authors analyze the measurement of the capital stock when technological advance is embodied in capital. The source of the problem is that capital is not homogeneous across vintages. Which measure of the capital stock to use is dictated by the question being addressed.
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How Much of Economic Growth is Fueled by Investment-Specific Technological Progress?	March 1, 1999	Federal Reserve Bank of Cleveland, Economic Commentary	Peter C Rupert; Michael Gort; Jeremy Greenwood;	Economic Commentary
	Abstract: Discovering how economies grow is vitally important for economists and policymakers alike. This Commentary shows that more than half of U.S. economic growth can be attributed to technological advance in equipment and structures.
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Measuring the rate of technological progress in structures	January, 1998	Federal Reserve Bank of Cleveland, Working Paper no. 9806	Peter C Rupert; Michael Gort; Jeremy Greenwood;	Working Papers
	Abstract: An effort to measure technological progress in structures by using panel data on the age and rents of buildings in a vintage capital model, where buildings are replaced at some chosen periodicity. It finds that there has been significant technological advance in structures, which accounts for a major part of economic growth.
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Okun's law revisited: should we worry about low unemployment?	May 15, 1997	Federal Reserve Bank of Cleveland, Economic Commentary	Peter C Rupert; David E Altig; Terry J Fitzgerald;	Economic Commentary
	Abstract: A review of the connection between labor resource utilization and the growth&endash;unemployment correlation summarized by Okun’s law, showing that the instability of that relationship, particularly over short time horizons, has important implications for monetary policy.
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Is noninflationary growth an oxymoron?	May 1, 1997	Federal Reserve Bank of Cleveland, Economic Commentary	Peter C Rupert; David E Altig; Terry J Fitzgerald;	Economic Commentary
	Abstract: A review of the theoretical and empirical case for disinflationary economic growth, showing that, contrary to popular wisdom, it is quite possible to have a booming economy without an acceleration in the price level.
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Earnings, Education and Experience	October 1996	Federal Reserve Bank of Cleveland, Economic Review, vol 32, no. 4	Peter C Rupert; Mark E Schweitzer; Eric K Severance-Lossin; Erin Turner;	Economic Review
	Abstract: The value of additional education is typically measured by the increase in earnings that results. The largest gains are realized on completion of a degree, whether high school, college, or post-graduate. Failure to correctly specify an empirical earnings function can lead to substantial bias. In this article, the authors show that a common misspecification-combining college graduates with post-graduates-may bias the returns to a college education upward by as much as 12 percent.
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Mortgage interest deductibility and housing prices	February 1, 1996	Federal Reserve Bank of Cleveland, Economic Commentary	Peter C Rupert; Stephen Cecchetti;	Economic Commentary
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On the Political Economy of Income Redistribution and Crime	January, 1996	Federal Reserve Bank of Cleveland, Working Paper no. 9609	Peter C Rupert; Ayse Imrohoroglu; Antonio Merlo;	Working Papers
	Abstract: In this paper, we consider a general equilibrium model in which heterogeneous agents specialize either in legitimate market activities or in criminal activities, and majority rule determines the share of income redistributed and the expenditures devoted to the apprehension of criminals.
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Marriage and earnings	December 1995	Federal Reserve Bank of Cleveland, Economic Review, vol. 31, no. 4, pp. 10-20	Peter C Rupert; Christopher Cornwell;	Economic Review
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The myth of the overworked American	January 15, 1995	Federal Reserve Bank of Cleveland, Economic Commentary	Peter C Rupert; Kristin M Roberts;	Economic Commentary
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Author(s)

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How Amenities Affect Job and Wage Choices over the Life Cycle	forthcoming	Review of Economic Dynamics	Peter C Rupert; Ed Nosal;	Journal Article
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General Equilibrium with Nonconvexities and Money	forthcoming	Journal of Economic Theory	Peter C Rupert; Guillaume Rocheteau; Karl Shell; Randall Wright;	Journal Article
	Abstract: In general equilibrium with nonconvexities, there exist sunspot equilibria with good welfare properties, where sunspots ameliorate the nonconvexities. In these equilibria, we show agents act as if they have quasi-linear utility. We use this result to construct a new model of monetary exchange along the lines of the one by Lagos and Wright, where trade occurs in both centralized and decentralized markets, but we replace quasi-linearity with general preferences and indivisible labor. This suggests that modern monetary theory is ore robust than one might have thought, and cmonstitutes progress on the classic problem of integrating money and general equilibrium theory.
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Generalized Search-Theoretic Models of Monetary Exchange	December 1, 2001	Journal of Monetary Economics, vol. 48, no. 3, December 2001, pp. 605-22	Peter C Rupert; Martin Schindler; Randall Wright;	Journal Article
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Home Production Meets Time to Build	October 1, 2001	Journal of Political Economy, vol. 109, no. 5, October 2001, pp. 1115-31	Peter C Rupert; Paul Gomme; Finn Kydland;	Journal Article
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Limited Commitment, Money, and Credit	2001	Journal of Economic Theory, vol. 99, pp. 22-58, 2001	Peter C Rupert; Saqib Jafarey;	Journal Article
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Homework in Labor Economics: Household Production and Intertemporal Substitution	December 1, 2000	Journal of Monetary Economics, vol. 46, no. 3, December 2000, pp. 557-79	Peter C Rupert; Richard Rogerson; Randall Wright;	Journal Article
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Estimating the Intertemporal Elasticity of Substitution in a Model with Household Production: Implications for Macroeconomics	2000	In: Panel Data and Structural Labour Market Models, Contributions to Economic Analysis, Amsterdam; New York and Oxford: Elsevier Science, North-Holland, edited by H. Bunzel, vol. 243, 2000, pp. 171-95.	Peter C Rupert; Richard Rogerson; Randall Wright;	Article in Book
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On the Political Economy of Income Redistribution and Crime	2000	International Economic Review, vol. 41, no. 1, February 2000, pp. 1-25	Peter C Rupert; Ayse Imrohoroglu; Antonio Merlo;	Journal Article
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Measuring the Rate of Technological Progress in Structures	1999	Review of Economic Dynamics, vol. 2, no. 1, January 1999, pp. 207-30	Peter C Rupert; Michael Gort; Jeremy Greenwood;	Journal Article
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New Estimates of Intertemporal Substitution: The Effect of Corner Solutions for Year-Round Workers	1999	In The legacy of Robert Lucas, Jr., edited by Kevin Hoover, vol. 1, 1999, pp. 348-62 Elgar Reference Collection. Intellectual Legacies in Modern Economics, vol. 3. Cheltenham, U.K. and Northampton, Mass.: Edward Elgar, 1999.	Peter C Rupert; Richard Rogerson;	Article in Book
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Unobservable Individual Effects, Marriage, and the Earnings of Young Men	April 1, 1997	Economic Inquiry, vol. 35, no. 2, April 1997, pp. 285-94	Peter C Rupert; Christopher Cornwell;	Journal Article
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Estimating Substitution Elasticities in Models with Home Production	June 1, 1995	Economic Theory, vol. 6, no. 1, June 1995, pp. 179-93	Peter C Rupert; Richard Rogerson; Randall Wright;	Journal Article
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On Testing the Intertemporal Substitution Theory of Labor Supply	1993	Journal of Economic Dynamics and Control, vol. 17, no. 1-2, Jan.-March 1993, pp. 37-50	Peter C Rupert; Richard Rogerson;	Journal Article
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Bonuses and Pay Flexibility in Japan	October 1, 1991	International Economic Journal, vol. 5, no. 3, Autumn 1991, pp. 31-38	Peter C Rupert;	Journal Article
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New Estimates of Intertemporal Substitution: The Effect of Corner Solutions for Year-Round Workers	April 1, 1991	Journal of Monetary Economics, vol. 27, no. 2, April 1991, pp. 255-69	Peter C Rupert;	Journal Article
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Efficient Estimation with Panel Data: An Empirical Comparison of Instrumental Variables Estimators	April 1, 1988	Journal of Applied Econometrics, vol. 3, no. 2, April 1988, pp. 149-55	Peter C Rupert; Christopher Cornwell;	Journal Article
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Crime and the Labor Market: Policy Implications	April, 2007	Unpublished manuscript	Peter C Rupert; Bryan Engelhardt; Guillaume Rocheteau;	Unpublished manuscript
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