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Aside from the equilibrium that Hotelling (1931) displayed, his model of non-renewable resources also contains a continuum of bubble equilibria. In all the equilibria the price of the resource rises at the rate of interest. In a bubble equilibrium, however, the consumption of the resource peters...
Persistent link: https://www.econbiz.de/10012776202
Stock-market crashes tend to follow run-ups in prices. These episodes look like bubbles that gradually inflate and then suddenly burst. We show that such bubbles can form in a Zeira-Rob type of model in which demand size is uncertain. Two conditions are sufficient for this to happen: A declining...
Persistent link: https://www.econbiz.de/10012785164
The Q-theory of investment says that a firm's investment rate should rise with its Q. We argue here that this theory …
Persistent link: https://www.econbiz.de/10012787364
We study 114 years of U.S. stock market data and find That there are large cohort effects in stock prices, effects that we label 'organization capital,' That cohort effects grew at a rate of 1.75% per year, That the debt-equity ratio of all vintages declined, That three big technological waves...
Persistent link: https://www.econbiz.de/10012787778
We ask what level of migration would maximize world welfare. We find that skill-neutral policies are never optimal. An egalitarian welfare function induces a policy that entails moving mainly unskilled immigrants into the rich countries, whereas a welfare function skewed highly towards the rich...
Persistent link: https://www.econbiz.de/10012760411
neoclassical theory predicts …
Persistent link: https://www.econbiz.de/10012762663
Our paper reports the following two findings: 1) In monthly data, bond purchases by the Fed raise bond prices and reduce bond yields. The residual bond-supply to traders is not fully predictable, and this supply-risk adds between 10 and 40 basis points to the standard deviation of the real...
Persistent link: https://www.econbiz.de/10012763097
If machines are indivisible, a vintage capital model must give rise to income inequality. If new machines are always better than old ones and if society cannot provide everyone with a new machine all of the time, inequality will result. I explore this mechanism in detail. If technology resides...
Persistent link: https://www.econbiz.de/10012763619
form. This is not a contribution to the theory of aggregation generally. Instead it is a microfoundation for a specific but … theory, the utility function when there is household production, human capital theory, and the concept of the aggregate …
Persistent link: https://www.econbiz.de/10013220428
We analyze the contractual relation between workers and their employers when there is nominal risk. The key feature of the problem is that the consumption deflator is random and observed sometime after the effort is exerted. The worker's effort is not observable, and to induce the agent to work,...
Persistent link: https://www.econbiz.de/10013226072