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...

This paper examines the operation of an emissions trading scheme (ETS) in a Cournot oligopoly.  We study the impact of the ETS on industry output, price, costs, emissions, and profits.  In particular, we develop formulae for the number of emissions permits that have to be freely allocated to...

Regular use of effective health-products such as insecticide-treated mosquito nets (ITN) by a household benefits its neighbors by (a) reducing chances of infection and (b) raising awareness about product-effectiveness, thereby increasing product-use.  Due to their potential social benefits and...

Trade unions have been successful in compressing the wage distribution but not in influencing the share of national income going to labour. This paper claims that a compressed wage distribution provides insurance in the same way that the tax and benefit system does and thus may be...

Carbon leakage is a major concern for policymakers involved with environmental initiatives such as the European Union's emissions trading scheme and similar cap-and-trade proposals in the United States, Australia, and elsewhere.  This paper provides a framework for understanding the drives...

This paper examines the amount of grandfathering needed for an emissions trading scheme (ETS) to have a neutral impact on firm profits. We provide a simple formula to calculate profit-neutral grandfathering in a Cournot model with firms of different sizes and a general demand function. Using...

We analyze the relationship between the family and the Welfare State when intra-family transfers are governed by risk-sharing considerations (i.e. not by altruism). For the benchmarl case, the classic neutrality result is obtained: more generous unemployment benefits, provided by the State,...