This paper describes the equilibrium of a discrete-time exchange economy in which consumers with arbitrary subjective discount factors and quasi-homothetic period utility functions follow linear Markov consumption and portfolio strategies. Explicit expressions are given for state prices and...

This paper quantifies welfare costs and resource shifts that would occur if US quantitative restrictions in textiles, steel and autos were removed. Estimates are derived from a static ten-sector general the equilibrium model of the US economy. The welfare loss from the quantitative restrictions...

We report on six large-scale financial markets experiments that were designed to test two of the most basic propositions of modern asset pricing theory, namely, that the interaction between risk averse agents in a competitive market leads to equilibration, and that, in equilibrium, risk premia...

We consider a pure exchange economy, where for each good several trading institutions are available, only one of which is market-clearing. The other feasible trading institutions lead to rationing. To learn on which trading institutions to coordinate, traders follow behavioural rules of thumb...

We examine the effects of extracting monetary policy disturbances with semi-structural and structural VARs, using data generated by a limited participation model under partial accommodative and feedback rules. We find that, in general, misspecification is substantial: short run coefficients...

In a closed competitive general equilibrium constant returns economy, consumer taxes separate consumer and producer prices of goods. Shadow prices appropriate for the evaluation of public sector projects are derived on alternative assumptions about what happens to taxes as public production...

This article develops a multi-period production model to examine the optimal dynamic behaviour of a large monopolistic value-maximizing firm that manipulates its valuation as well as the price of its output. In the pre-commitment equilibrium the firm’s output and labour demand are decreased,...

We look for a theoretical justification of nominal wage contracts in household diversification of risk. We assume it is more costly for households than for firms to use financial markets for this purpose. In a calibrated general equilibrium model we find from stochastic simulation that where...

Incorporating space in economic models has two important consequences. First, the hypothesis of perfect competition becomes untenable, and second, the distinction between private and public goods becomes blurred. We review arguments that lead to these conclusions and summarize recent work...

This essay presents a rigorous theory of involuntary unemployment in less developed countries based on the observation that at low consumption levels a person's overall ability to work is impaired. The theory links the incidence of involuntary unemployment in a market economy to the incidence of...