We give two procedures for determining whether efficient Pareto improving local changes are possible. When they are, the procedures compute for them. Any procedure generating efficient and Pareto improving changes can be replicated by these procedures. The two programs form a striking duality....

Motivated by the slow diffusion of generic drugs and the increase in prices of brand-name drugs after generic entry, I incorporate consumer learning and consumer heterogeneity into an empirical dynamic oligopoly model. In the model, firms choose prices to maximize their expected total discounted...

Price caps are a popular form of monopoly price regulation. One of its disadvantages is the perverse incentives that regulated firms might have to scamp on cost reducing effort during the last years before a price review. In order to avoid this problem a “rolling cap†contract was...

The paper analyses how barriers to communication across social groups affect economy-wide productivity and factor accumulation. Using a dynamic model of an economy that includes a reproducible capital stock (physical or human) and effective labour, social barriers to communication are shown to...

We study the underlying structure of the two-dimensional dynamical system generated by a class of dynamic optimization models, which allow for intertemporal complementarily between adjacent periods, but which preserve the time additively separable framework of Ramsey models. Specifically, we...

This paper explores the link between an environmental policy and economic growth employing an extension of the Neoclassical Growth Model. We include a state equation to renewable natural resources, and consider natural resources as a component of the aggregate productivity. It is assumed that...

The paper explores the implications of means of payment substitutability and capital mobility on the properties of the money demand, using the Thomas (1985) stochastic dynamic optimising model, where the specific role of money is explicitly accounted for. Extending the model to a case in which...

This paper explores the quantitative impact of the Baby Boom on stock and bond returns. It constructs a neoclassical growth model with overlapping generations, in which agents make a portfolio decision over risky capital and safe bonds in zero net supply. The model has exogenous technology and...

This paper investigates the uncertainty in variance and covariance of asset returns. It is commonly believed that these second moments can be estimated very accurately. However, time varying volatility and nonnormality of asset returns can lead to imprecise variance estimates. Using CRSP value...

I develop a Markov model of samrt money chasing past winning funds while taking into account associated costs. The model also allows market capital entry and exit. The steady-state capital allocations re derived using constant transition probabilities. The results sugget that down side risk is...