We prove that for any incomplete market and any concave utilityfunction the marginal propensities to consume and to save are alwayspositive. Furthermore, we introduce a class of incomplete markets thatincludes almost all well known examples of market incompleteness infinance and macroeconomics....

The question of whether two drugs - namely alcohol and tobacco - are used as complements or substitutes is of crucial interest if side-effects of anti-smoking policies are considered. Numerous papers have empirically addressed this issue by estimating demand systems for alcohol and tobacco and...

Instituting an initial round of centralized wage setting before an ultimate round ofdecentralized wage bargaining may raise actually raise employment. A general multiequilibriummodel is presented with strategic complementarities in theimplementation of a new technology through aggregate demand...

We investigate the theoretical and empirical difference between thestandard convexity adjustment and Forward Libor Model in a particular case oftwo-period Constant Maturity Swaps. Using daily data from 1991 to 1997, wesimulate the difference (spread) between the two-period CMS swap rates...

Auf Anleihemärkten versuchen Investoren mit aktiven Handelsstrategien eine über der risikoadäquaten Marktverzinsung liegende Rendite zu erwirtschaften. Dabei kommen prognoseorientierte Strategien wie auch Anlagepolitiken zur Verwendung, die zeitweilige Marktungleichgewichte zu nutzen...

The pricing kernel puzzle is the observation that the pricing kernelmight be increasing in some range of the market returns. This paperanalyzes the pricing kernel in a nancial market equilibrium. If mar-kets are complete and investors are risk-averse and have common andtrue beliefs, the pricing...

An industry is modeled in which entrepreneurs, who are heterogeneous in ability, may produce formally or informally. It is shown how the formal-informal mix depends on the distribution of ability, product demand and various parameter values...

In this paper we address the issue of finding efficient partial equilibria in markets with nonconvexities.This is a problem that has intrigued generation of economists. Beside its theoreticalimportance this issue is fundamental in energy markets which do not give the right price signalsand...

We analyze the equilibrium and the optimal resource allocations in a monocentric city undermonopolistic competition. Unlike the constant elasticity of substitution (CES) case, wherethe equilibrium markups are independent of the city size, we present a variable elasticity ofsubstitution (VES)...