We build a model of social capital in networks based on repeated interactions. The strength of a relationship in part derives from the value of transactions it enables in the future. We show that shocks can be amplified through a network multiplier, because trust withdrawal that constrains...

This paper investigates self-enforcing risk-sharing agreements in a society, if only binary transfers are allowed, among agents connected by social links. A social link between two agents represents another activity they are involved in together. It also serves as a collateral, to enforce...

What is the effect of imports on productivity? To answer this question, we estimate a structural model of producers using product-level import data for a panel of Hungarian manufacturing firms from 1992 to 2001. In our model with heterogenous firms, producers choose to import or purchase...

This paper studies portfolio choice and asset prices in a model with two consumption goods, one of which involves a commitment in that its consumption can only be adjusted at a cost. Commitments effectively make investors more risk averse: they invest less in risky assets and smooth total...

We build a model of social capital in networks based on repeated interactions. The strength of a relationship in part derives from the value of transactions it enables in the future. We show that shocks can be amplified through a network multiplier, because trust withdrawal that constrains...

double-counting.

We present a theory of individual choice in which the decisionmaker focuses more on, and hence weights more heavily, attributes on which the options in her consideration set are more different. Consistent with evidence on salience in monetary choices, our model predicts that the decisionmaker is...

effect.

While neoclassical theory emphasizes the impact of trade on wage inequality between occupations and industries, more recent theories of firm heterogeneity point to the impact of trade on wage dispersion within occupations and industries. Using linked employer-employee data for Brazil, we show...