This paper proposes a measure of financial fragility that is based on economic welfare in a general equilibrium model calibrated against UK data. The model comprises a household sector, three active heterogeneous banks, a central bank/regulator, incomplete markets, and endogenous default. We...

This paper extends the model proposed by Goodhart, Sunirand, and Tsomocos (2003, 2004a,b) to an infinite horizon setting. Thus, we are able to assess how the model conforms with the time series data of the U.K. banking system. We conclude that, since the model performs satisfactorily, it can be...

The objective of this paper is to propose a model to assess risk for banks. Its main innovation is to incorporate endogenous interaction between banks, recognising that the actual risk to which an individual bank is exposed also depends on its interaction with other banks and other private...

There is widespread concern that an international agreement on stringent climate policies will not be reached because it would imply too high costs for fast growing economies like China.  To quantify these costs we develop a general equilibrium model with fully endogenous growth.  The...

Donors who try to impose policy conditionality on countries receiving their aid commonly face confflicting incentives between using aid to induce income-increasing reforms and using aid to assist low-income countries: this confflict can lead to a time-consistency problem. This paper o¤ers a...

We show that a combination of temporariness and spending pressure is intrinsic to the aid relationship.  In our analysis, recipients rationally discount the pronouncements of donors about the duration of their commitments because in equilibrium they know that some donors will honor those...

This paper tests the external validity of a simple Dictator Game as a laboratory analogue for a naturally occurring policy-relevant decision-making context.  In Uganda, where teacher absenteeism is a problem, primary school teachers' allocations to parents in a Dictator Game are positively but...

This paper examines the motivation for intergenerational transfers between adult children and their parents, and the nature of preferences for such giving behaviour, in an experimental setting.  Participants in our experiment play a series of dictator games with parents and strangers, in which...

Using a South African data set, the paper poses six questions about the determinants of subjective well-being. Much of the paper is concerned with the role of relative concepts. We find that comparator income – measured as average income of others in the local residential cluster - enters the...

The paper uses an appropriate survey from rural China to answer the question: Is happiness infectious, i.e. does the happiness of an individual depend positively on the happiness of their reference group?  The evidence is consistent with this hypothesis, but the challenge is to solve the...