To be written.

Can a union of sovereign nations efficiently implement fiscal projects, even when members are purely self-interested? We construct a model where forming a union can be beneficial for all members, even though some nations are net contributors to the union budget. In our model, joining the union...

This paper introduces endogenous technical change through basic and applied research in a growth model. Basic research differs from applied research in two significant ways. First, significant advances in technological knowledge come through basic research rather than applied research. Second,...

I study how two different monetary policy regimes characterized by their difference in degrees of credibility (a 'commitment' regime, in which the central bank can credibly commit to future policy and a 'discretion' regime, in which it cannot) affect the term structure of interest rates and...

A number of recent papers point to the importance of distinguishing between the price reaction to micro and macro shocks in order to reconcile the volatility of individual prices with the observed persistence of aggregate inflation. We emphasize instead the importance of distinguishing between...

This paper examines a global games model of speculative attacks in which speculators can choose to attack any one of a number of targets. In the canonical global games model with a single target, it is well known that there exists a unique equilibrium that survives the iterative deletion of...

We propose a simple but general solution method for models with incomplete markets and finitely but arbitrarily many heterogeneous agents. Our method can handle many state and choice variables for each agent and thus an extremely high-dimensional state space. The solution technique is based on...

Recently a market in options based on CPI inflation (inflation caps and floors) has emerged in the US. This paper uses quotes on these derivatives to construct probability densities for inflation. We study how these pdfs respond to news announcments, and ÃÂfind that the implied odds of...

We determine optimal government default policies for a small open economy in which a domestic government can borrow internationally by issuing non-contingent debt contracts. Unlike earlier work, we consider optimal default policies under full government commitment and treat repayment of...

This paper develops a model of the joint determination of production, inventories and pricing of a monopolistically competitive durable good.producer. The model gives rise to time-varying markups that interact with the inventory-sales ratio, even with flexible prices. Maximum likelihood...