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Bullard, James; Evans, George W.; Honkapohja, Seppo - 2005

We study how the use of judgement or “add-factors” in macroeconomic forecasting may disturb the set of equilibrium outcomes when agents learn using recursive methods. We isolate conditions under which new phenomena, which we call exuberance equilibria, can exist in standard macroeconomic...

Persistent link: https://www.econbiz.de/10011604601

The Corrective Tax Versus Liability as Solutions to the Problem of Harmful Externalities

Shavell, Steven - 2010

Although the corrective tax has long been viewed by economists as a theoretically desirable remedy for the problem of harmful externalities, its actual use has been limited, mainly to the domain of pollution. Liability, in contrast, has great importance in controlling harmful externalities. I...

Persistent link: https://www.econbiz.de/10013139749

Corrective Taxation Versus Liability

Shavell, Steven - 2010

Taxation and liability are compared here as means of controlling harmful externalities. It is emphasized that liability has an advantage over taxation: inefficiency of incentives arises under taxation when, as would be typical, it would be impractical for a tax to reflect all variables that...

Persistent link: https://www.econbiz.de/10013139750

Optimal Cleanup and Liability after Environmentally Harmful Discharges

Polinsky, A. Mitchell - 2011

This article studies how liability for environmentally harmful discharges affects the incentives of firms to engage in cleanup and invest in precautions, as well as the incentives of consumers to purchase the goods whose production leads to discharges. Our main conclusion is that making firms...

Persistent link: https://www.econbiz.de/10013124354

Costly Litigation and Optimal Damages

Polinsky, A. Mitchell - 2012

A basic principle of law is that damages paid by a liable party should equal the harm caused by that party. However, this principle is not correct when account is taken of litigation costs, because they too are part of the social costs associated with an injury. In this article we examine the...

Persistent link: https://www.econbiz.de/10013096854

A Fundamental Enforcement Cost Advantage of the Negligence Rule Over Regulation

Shavell, Steven - 2012

Regulation and the negligence rule are both designed to obtain compliance with desired standards of behavior, but they differ in a primary respect: compliance with regulation is ordinarily assessed independently of the occurrence of harm, whereas compliance with the negligence rule is evaluated...

Persistent link: https://www.econbiz.de/10013100136

Economic Analysis of Accident Law

Shavell, Steven - 2012

Accident law is the body of legal rules governing the ability of victims of harm to sue and to collect payments from those who injured them. This paper contains the chapters on accident law from a general, forthcoming book, Foundations of Economic Analysis of Law (Harvard University Press,...

Persistent link: https://www.econbiz.de/10013105846

Liquidity Traps and Expectation Dynamics : Fiscal Stimulus or Fiscal Austerity?

Benhabib, Jess - 2012

We examine global dynamics under infinite-horizon learning in New Keynesian models where the interest-rate rule is subject to the zero lower bound. As in Evans, Guse and Honkapohja (2008), the intended steady state is locally but not globally stable. Unstable deflationary paths emerge after...

Persistent link: https://www.econbiz.de/10013106020

Suit Versus Settlement When Parties Seek Nonmonetary Judgements

Shavell, Steven - 2007

This article considers situations in which plaintiffs seek nonmonetary judgments, for instance, custody of a child or an injunction. The primary questions of interest concern when parties will be likely to settle and, if so, what the nature of their settlements will be. The answers to these...

Persistent link: https://www.econbiz.de/10012777109

Mandatory Versus Voluntary Disclosure of Product Risks

Polinsky, A. Mitchell - 2007

We analyze a model in which firms are able to acquire information about product risks and may or may not be required to … disclose this information. We initially study the effect of disclosure rules assuming that firms are not liable for the harm … caused by their products. Although mandatory disclosure obviously is superior to voluntary disclosure given the information …

Persistent link: https://www.econbiz.de/10012778097