We propose a simple model of trade outside the law preyed on by robbers and possiblyprotected by private cops. We establish the conditions for trade collapse, secure trade andinsecure trade. Endogenous predation and enforcement can explain both puzzling failures ofcommonly observed state...

This paper extends a New Keynesian model to include roles for currency and depositsas competing sources of liquidity services demanded by households. It showsthat, both qualitatively and quantitatively, the Barnett critique applies: While a Divisiaaggregate of monetary services tracks the true...

This paper demonstrates the extensive scope of an alternative to standardinstrumental variables methods, namely covariate-based methods, for identifying and es-timating effects of interest in general structural systems. As we show, commonly usedeconometric methods, speci…cally parametric,...

We give two new approaches to testing a conditional form of exogeneity. This conditionensures unconfoundedness and identication of eects of interest in structural systems. Asthese approaches do not rely on the absence of causal eects of treatment under the null,they complement earlier methods of...

The high trade costs inferred from gravity are rarely used in thewide class of trade models. Two related problems explain this omis-sion of a key explanatory variable. First, national seller and buyer re-sponses to trade costs depend on their incidence rather than on the fullcost. Second, the...

The fact that raising taxes can increase taxed labor supply through income effects is frequently used to justify greater public good provision than indicated by traditional, compensated analyses. We develop a model including multiple public goods and taxes and derive consistent measures of the...

The paper investigates whether the presence and tenure of Private Equity (PE) investmentin European companies improves their performance. Previous studies documentedthe unambiguous merit of a buyout during the 1980s and 1990s for listedfirms in the US and UK markets. This study analyzes such...

We prove that in a closed economy without distortionary taxation, the welfare of a representativeconsumer is summarized to a …rst order by the current and expected future values of the Solowproductivity residual in level and by the initial endowment of capital. The equivalence holds if...