Do mandatory spending programs such as Medicare improve efficiency? We analyze a model with two parties allocating a fixed budget to a public good and private transfers each period over an infinite horizon. We compare two institutions that differ in whether public good spending is discretionary...

We analyze a legislative bargaining game over an ideological and a distributive issue. Legislators are privately informed about their ideological positions. Communication takes place before a proposal is offered and majority rule voting determines the outcome. We compare the outcome of the...

We study a model of sequential bargaining in which, in each period before an agreement is reached, the proposer’s identity (and whether there is a proposer) are randomly determined; the proposer suggests a division of a pie of size one; each other agent either approves or rejects the proposal;...

Several authors have argued that if the labor share of income is used as the proxy for real marginal cost, then the sticky-price version of the New Keynesian Phillips Curve does a good job of approximating US inflation dynamics. However, this paper argues that the labor share is an inappropriate...

This paper investigates determinacy of equilibrium in a canonical New Keynesian model under different monetary and fiscal policy rules. It is shown that a simple monetary rule that responds aggressively to inflation is a necessary condition for equilibrium determinacy, when fiscal policy is...

In the setting of non-cooperative game theory strategic negligibility of individual agents or diffuseness of information has been modelled as a non-atomic measure space typically the unit interval endowed with Lebesgue measure However recent work has shown that with uncountable action sets as...

The standard approach to modelling consumption/saving problems is to assume that the decisionmaker is solving a dynamic stochastic optimization problem However under realistic descriptions of utility and uncertainty the optimal consumption/saving decision is so difficult that only recently...

We present a unified mathematical framework within which pure exchange economies with a finite set of agents as well as those with a continuum of traders as mathematically modelled by Aumann (1964) can be analyzed simultaneously We prove that the number of equilibrium price vectors of our...

A foundational assumption in economics is that people are rational -- they choose optimal plans of action given their predictions about future states of the world In games of strategy this means that each players?strategy should be optimal given his or her prediction of the opponents?strategies...

We examine the effects of durability on equilibrium producer behavior in the car market In this setting forward-looking producers take into account the effect that their current production decisions have on their current and future profits due to the existence of a secondary market First we...