For many countries in the world today and for much of history, investment in ordinary productive capital has been overshadowed by investment in enforcive capital: castles and siege machines; tanks, missiles and army barracks. We introduce a dynamic model which allows for investment in the latter...

Caballero (1991) shows that a larger uncertainty only increases the investment of a perfectly competitive firm with a constant returns to scale technology. We show, however, that the option value generated by a one-time fixed cost can cause the increasing uncertainty to reduce investment from a...

For a perfectly competitive firm with a constant returns to scale techenology, a greater price uncertainty has been shown to increase investment even in the presence of irrecersible investment. We show, however, that the option value generated by a one-time fixed cost can cause increasibg...

This paper examines the possibility of overaccumulation of capital in an overlapping generations economy with land. With zero population growth rate, the steady state equilibrium is dynamically efficient. Imposition of property tax on land, however, distorts the arbitrage condition and can...

A sticky-price model is used to motivate a structural VAR analysis of the current account and the real exchange rate for seven major industrialized countries (the US, Canada, the UK, Japan, Germany, France, and Italy). The analysis is distinguished from previous work in that it adopts minimal...

During the past two decades, an intriguing contrast arose in unemplyments of the US and European countries. Unemployment raets have hovered around two totally different levels across the Atlantic (Bean 1994). From the viewpoint of applied reserach and policy, such differences among countries are...

Does the new information revealed by election outcomes help to explain unexpected fluctuations in foreign exchange rates? To answer this question, we examine the behavior of errors from forecasting future exchange rate surrounding elections.