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Amador, Manuel; Angeletos, George-Marios; Werning, Ivan - Society for Economic Dynamics - SED - 2004

This paper studies the optimal trade-off between commitment and flexibility in an intertemporal consumption … value for flexibility - but also expect to suffer from temptations - generating a value for commitment. The model combines … the representations of preferences for flexibility introduced by Kreps (1979) with its recent antithesis for commitment …

Persistent link: https://www.econbiz.de/10005090888

Efficient Allocations in a Dynamic Moral Hazard Economy

Williams, Noah - Society for Economic Dynamics - SED - 2006

I analyze the implications of moral hazard in dynamic economy with production. In particular, I add agency frictions to a benchmark stochastic growth model, by assuming that firms observe output but hours worked and productivity are unobservable. I cast the problem as a continuous time principal...

Persistent link: https://www.econbiz.de/10004977904

Moral Hazard and Dynamic Insurance Data

Abbring, Jaap H.; Chiappori, Pierre-Andre - Society for Economic Dynamics - SED - 2004

This paper exhibits dynamic features of insurance contracts in the empirical analysis of moral hazard. We first show that experience rating implies negative occurrence dependence under moral hazard: individual claim intensities decrease with the number of past claims. We then show that dynamic...

Persistent link: https://www.econbiz.de/10005090929

Evolutionary Learning in a Principal-Agent Model

Arifovic, Jasmina; Karaivanov, Alexander - Society for Economic Dynamics - SED - 2006

We introduce learning based on genetic algorithms in a principal-agent model of optimal contracting under moral hazard. Applications of this setting abound in finance (credit under moral hazard), public finance (optimal taxation, information-constrained insurance), development (sharecropping),...

Persistent link: https://www.econbiz.de/10005051212

Moral Hazard and Persistence

Hopenhayn, Hugo; Jarque, Arantxa - Society for Economic Dynamics - SED - 2006

We study a multiperiod principal-agent problem with moral hazard in which the agent is required to exert effort only in the initial period of the contract. The effort choice of the agent in this first period determines the conditional distribution of output in the following periods. The paper...

Persistent link: https://www.econbiz.de/10005069274

Legal Institutions, Sectoral Heterogeneity, and Economic Development

Castro, Rui; Clementi, Gian Luca; MacDonald, Glenn - Society for Economic Dynamics - SED - 2004

The impact of imperfections in financial markets on firm-level investment varies greatly across industries. In particular, it appears that the choices of firms producing capital goods are more likely to be constrained by financial factors. We argue that this is the case because the intrinsic...

Persistent link: https://www.econbiz.de/10005027305

Markovian Optimal Taxation

Ortigueira, Salvador - Society for Economic Dynamics - SED - 2004

two assumptions on the extent of government's intra-period commitment, which in turn define two notions of time … consistency of the Markov policy. Our results show that the extent of government's intra-period commitment has important …, different degrees of government's intra-period commitment. …

Persistent link: https://www.econbiz.de/10005085471

Sovereign Risk: Constitutions Rule

Kohlscheen, Emanuel - Society for Economic Dynamics - SED - 2006

This paper models the executive's choice of whether to reschedule external debt as the outcome of an intra-governmental negotiation process. The executive's necessity of a confidence vote from the legislature is found to provide the rationale for why some democracies may not renegotiate their...

Persistent link: https://www.econbiz.de/10005090753

Does competition for (human) capital discipline governments? The role of commitment

Armenter, Roc; Ortega, Francesc - Society for Economic Dynamics - SED - 2006

We argue that labor mobility does not lead to a ''race to the bottom,'' where countries drastically cut redistributive transfers in order to attract skilled workers. The basis of our argument is that these cuts are not credible policies. We propose a two country model where competition for...

Persistent link: https://www.econbiz.de/10005069270

Optimal Fiscal Policy over the Business Cycle

Occhino, Filippo - Society for Economic Dynamics - SED - 2006

is driven by exogenous technology shocks. We first consider the commitment case, and characterize the Ramsey equilibrium … correlated with production. Then, we relax the commitment assumption, and we show how to determine numerically whether the Ramsey …

Persistent link: https://www.econbiz.de/10005069324