We study an adverse selection problem in which information that is imperfectly correlated with the agent's type becomes public ex post. Unbounded penalties are ruled out by assuming that the agent is wealth constrained. The following conclusions emerge. If the agent's utility is increasing in...

The paper studies the relative merits of direct and representative legislation in a setting where voters are uncertain both with respect to the likely consequences of different policies and with respect to the political preferences of their fellow citizens. Under representative legislation, the...

Human capital theory distinguishes between training in general-usage and firm-specific skills. In his seminal work, Becker (1964) argues that employers will not be willing to invest in general training when labor markets are competitive. However, they are willing to invest in specific training...

Human capital theory distinguishes between training in general-usage and firm-specific skills. In his seminal work, Becker (1964) argues that employers will not be willing to invest in general training when labor markets are competitive. However, they are willing to invest in specific training...

We present a general equilibrium model of imperfect competition to analyze Rosenstein-Rodan's idea of the 'Big Push'. Simultaneous investment of many sectors of the economy can be profitable for everyone although no sector can break even industrializing alone. The mechanism that generates such...

We present a general equilibrium model of imperfect competition to analyze different policy measures in transition economies. Due to strategic complementarities in technology choice and demand spillovers, the possibility of multiple macroeconomic equilibria arises. Those equilibria can be...

Supply constraints hurt the economic recovery and boosted inflation in 2021. We find that in the euro area, manufacturing output and GDP would have been about 6 and 2 percent higher, respectively, and half of the rise in manufacturing producer price inflation would not have occurred in the...