This paper assesses the merits of countercyclical bank balance sheet regulation for the stabilization of financial and economic cycles and examines its interaction with monetary policy. The framework used is a dynamic stochastic general equilibrium modelwith banks and bank capital, in which bank...

This paper analyzes abuse of authority in a principal-supervisor-agent hierarchy under moral hazard. We characterize the optimal contracts when the supervisor takes advantage of his authority by blackmailing the agent. We show that the optimal policy for the principal is to deter abuse of...

This paper looks at the dynamic properties of insurance contracts when insurers have better technology at preventing catastrophic losses than the insured. The prevention technology is owned by the insurers and is permanent. If long-term contracts are not possible, the insured is faced with a...

We characterize the distortions in environmental liability sharing between firms and banks that the imperfect implementation of government policies implies. These distortions stem from three factors: the presence of moral hazard, the use of objective functions by firms and banks that differs...

This paper examines the pattern of intertemporal trade between countries with different distribution of wealth. We also examine the consequences of redistribution policies in this framework. The driving force of our model are risk aversion, capital market imperfections, and costs associated with...

We analyze a two-task work environment with risk-neutral but inequality averse individuals. For the agent employed in task 2 effort is verifiable, while in task 1 it is not. Accordingly, agent 1 receives an incentive contract which, due to his wealth constraint, leads to a rent that the other...

This paper considers the information systems induced by auditing policies in a principal-agent model with moral hazard. We point out that two such information systems A and B are seldom comparable using the customary mean-preserving spread relation between their respective likelihood ratio...

Using a structural model of the interactions between governments, firms and insurance companies, we characterise the distortions in environmental liability sharing between firms and insurance companies that the imperfect implementation of government policies implies. These distortions stem from...

This paper studies a principal-agent relationship in a contractual crime setting. Suppose an agent and a principal sign a contract stipulating some transfer of funds from one player (say the agent) to the next (the principal) contingent on the state of the world announced by the first player. In...

This paper provides evidence that workers' compensation (WC) and unemployment insurance (UI)could affect not only the occurence of workplace accident claims, but also the composition of these reported accidents. Our theoretical framework predicts that, under plausible assumptions, an increase in...