This paper documents that at the individual stock level insiders sales peak many months before a large drop in the stock price, while insiders purchases peak only the month before a large jump. We provide a theoretical explanation for this phenomenon based on trading constraints and asymmetric...

Calculating explicit closed form solutions of Cournot models where firms have private information about their costs is, in general, very cumbersome. Most authors consider therefore linear demands and constant marginal costs. However, within this framework, the nonnegativity constraint on prices...

The rst generation models of currency crises have often been criticized because they predict that, in the absence of very large triggering shocks, currency attacks should be predictable and lead to small devaluations. This paper shows that these features of rst generation models are not robust...

The first generation models of currency crises have often been criticized because they predict that, in the absence of very large triggering shocks, currency attacks should be predictable and lead to small devaluations. This paper shows that these features of first generation models are not...

We formally incorporate the option to gather information into a game and thus endogenize the information structure. We ask whether models with exogenous information structures are robust with respect to this endogenization. Any Nash equilibrium of the game with information acquisition induces a...

This paper studies a model of announcements by a privately informed government about the future state of the economic activity in an economy subject to recurrent shocks and with distortions due to income taxation. Although transparent communication would ex ante be desirable, we find that even a...

This paper formalizes in a fully-rational model the popular idea that politicians perceive an electoral cost in adopting costly reforms with future benefits and reconciles it with the evidence that reformist governments are not punished by voters. To do so, it proposes a model of elections where...

We study the optimal mechanism for downsizing the public sector which takes into account different informational constraints (complete versus asymmetric information on each workers efficiency) and political constraints (mandatory versus voluntary downsizing). Under complete information, the...

Obtaining information about changes in market conditions is vital for the survival of the firms operating in a changing environment. In this paper, we offer a theory of information flows in a setting in which the principal faces a project choice and needs to induce the agent, who is responsible...

This paper is the first to present empirical evidence consistent with models of signaling through unemployment and to uncover a new stylized fact using the 1988-2006 DWS, namely that, among white-collar workers, post-displacement earnings fall less rapidly with unemployment spells for layoffs...