We study the welfare effects of earnings testing flat-rate old-age benefits in a quantitative overlapping generations model with idiosyncratic labor income risk. In our model economy, even a moderate earnings testing reduces individuals' expected lifetime utility. Moreover, it also lowers the...

The draft treaty establishing a constitution for the European Union states that each member state may withdraw from the European Union following its own constitutional requirements. We argue that such a rule could lead into an increased use of threat of withdrawal to extract concessions in...

We incorporate a renewable resource into an overlapping generations model with standard, well-behaved utility and constant returns production functions. Besides being a factor of production the resource serves as a store of value. We characterize dynamics, efficiency and stability of steady...

We use a vertical product differentiation model under partial market coverage to study the social welfare optimum and duopoly equilibrium when convex costs of quality provision are either fixed or variable in terms of production. We show that, under fixed costs, at the social welfare optimum...

A three-stage game including investments, environmental quality provision and price competition is developed to study the impact of green technology investment (ecolabeling), in a duopoly model of vertical product differentiation. The firms’ incentives to invest in green technologies depend on...

According to conventional wisdom internationally mobile capital should not be taxed or should be taxed at a lower rate than labour. An important underlying assumption behind this view is that there are no market imperfections, in particular that labour markets clear competitively. At least for...

We offer a unified framework to analyze the determination of employment, employee effort, wages and profit sharing when firms face stochastic revenue shocks. We apply a generalized Nash bargaining solution, which extends the wage bargaining literature by incorporating efficiency wage...

This paper develops a model of the relationship between public sector employment, total output and aggregate real demand in market prices, where public employment has a positive productivity effect on private output. Public employment crowds out private employment and output because its increase...

This paper provides a theoretical framework to study the behavioral and welfare effects of forest conservation, which leads to a binding harvesting constraint for landowners. The economy is modeled as a three-stage game by the interaction of the government’s conservation policy, with...

This paper studies optimal forest policies in an overlapping generations forest economy with one-sided altruism, where timber and monetary bequests can be made across generations and forest amenities are a public good. We extend the existing economics literature by demonstrating that timber...