This paper provides a novel justification for a declining time profile of unemployment benefits that does not rely on moral hazard or consumption-smoothing considerations. We consider a simple search environment with homogeneous workers and low- and high-productivity firms. By introducing a...

This paper analyzes the impact of demographic aging on capital accumulation and welfare in economies with unfunded pensions. Using a two-period overlapping generation model with potentially endogenous retirement decisions, it shows that both the type of aging, i.e. declining fertility or...

This paper develops a model with multiple market locations in which the quality of intangible assets of firms, provided by management, determines the firms. performance. Despite an ex ante symmetry of potential entrants, the equilibrium assignment of heterogeneous managerial skills to firms...

This paper develops a quality-ladder model of endogenous growth to study the interplay between in-house R&D and marketing expenditure. Although promotional activity is modelled as purely wasteful competition among firms for attention, it unambiguously fosters innovation activity of firms, and...

A positive relationship between firm size and product diversification is a long-standing stylized fact. However, so far there is no appropriate theoretical model to explain the underlying forces of this observation. This paper analyzes an oligopoly model with asymmetric multiproduct frms, which...

It is often argued that implicit taxation on continued activity of elderly workers is responsible for the widely observed trend towards early retirement. In a world of laissez-faire or of first-best efficiency, there would be no such implicit taxation. The point of this paper is that when...

A vast literature analyzes the real effects of price-adjustment costs assuming that quantity adjustments are costless. In this paper, we analyze whether the presence of quantity-adjustments costs, which presumably are significant, change the traditional results on the impact of inflation. In...

The traditional criticism notwithstanding, we show that social mobility can, in principle, explain political income redistributions. Nonetheless, the social-mobility argument for redistribution is not satisfactory, as actual transition probabilities are not consistent with order-preserving...

Empirical evidence suggests that positive externalities from R&D exceed negative ones. According to conventional wisdom, this calls for R&D subsidies. This paper develops a quality-ladder growth model with overlapping generations which evaluates the positive and normative implications of R&D...

We develop a dynamic two-party political economy framework, in which parties seek to maximize vote share and face the trade-off between catering to their respective core constituencies on the one hand and "middle of the road" voters with no partisan affiliation on the other hand. In contrast to...