In an earlier paper, we showed that the value of shadow prices depends on how the government contemplates re- equilibrating the economy to the perturbation associated with any project, except in the extreme case where the government has chosen all policy instruments optimally. Only under...

We propose and study properties of several estimators of variance decomposition in the local-projections framework. We find for empirically relevant sample sizes that, after being bias corrected with bootstrap, our estimators perform well in simulations. We also illustrate the workings of our...

We outline a method to provide advice on optimal monetary policy while taking policymakers' judgment into account. The method constructs Optimal Policy Projections (OPPs) by extracting the judgment terms that allow a model, such as the Federal Reserve Board's FRB/US model, to reproduce a...

Discussions of school accountability focus on two issues: poor test administration and the expense of accountability. Up to this point, researchers have focused on test quality and simply assumed that the programs are expensive enough to crowd out other policies, such as class size reduction or...

This paper investigates whether managers who fail to exploit regulatory loopholes are vulnerable to replacement. We use the U.S. hospital industry in 1985-1996 as a case study. A 1988 change in Medicare rules widened a pre-existing loophole in the Medicare payment system, presenting hospitals...

During project development, costs are endogenously determined through delegated bargaining with counterparties. In surveys, nearly 80% of CFOs report using an elevated hurdle rate, the implications of which we explore in a delegated bargaining model. We show that elevated hurdle rates can convey...

This paper analyzes data on a large sample of research and development (R&D) projects documented in the Defense Department's Independent R&O Data Bank, both to provide some stylized facts about R&O investment at the project level and to test the implications of a control-theoretical model...

This paper develops a general methodology for analyzing shadow wage (and other shadow prices). Our approach is to identify those reduced form relationships describing the economy which are central to the determination of the shadow wage, and use these to obtain simple formulae for the shadow...

This paper develops and applies a model of world trade and exchange rates to analyze dynamic interaction of the current account and exchange rate. The model is designed to concentrate on the determination of trade flows, prices and exchange rates for the OECD member countries but it also covers...

The central thesis of this paper is that the management of portfolios incorporating a variety of investment assets does require the use of time and other scarce resources in searching for, collecting, interpreting, and applying relevant information. Accordingly, the returns on these assets would...