This paper examines micro-level channels of how financial development can affect macroeconomic outcomes like the level of income and export intensity. We investigate theoretically and empirically how financial constraints affect a firm's innovation and export activities, using unique firm survey...

We analyze government interventions to recapitalize a banking sector that restricts lending to firms because of debt overhang. We find that the efficient recapitalization program injects capital against preferred stock plus warrants and conditions implementation on sufficient bank participation....

This paper aims to examine the productivity change of the Japanese economy using the data pertaining to the 47 prefectures during the period 1981-2000. The decomposition analysis of the Hicks-Moorsteen-Bjurek productivity index is conducted to explore the sources of the productivity change. In...

Consider two heterogenous populations of agents who, when matched, jointly produce an output, `Y`. For example, teachers and classrooms of students together produce achievement, parents raise children, whose life outcomes vary in adulthood, assembly plant managers and workers produce a certain...

Rules often are complex in order to distinguish different types of behavior that may have different consequences. Greater complexity thus allows better control of behavior. But individuals may need to incur costs ex ante to determine how more complex rules apply to their contemplated conduct....

This paper formulates a model of retirement behavior based on the solution to a stochastic dynamic programming problem. The workers objective is to maximize expected discounted utility over his remaining lifetime. At each time period the worker chooses how much to consume and whether to work...

The goal of this paper is to study the problem of optimal dynamic policy formulation with competing political parties. We study a general class of problems, in which the two competing political parties have quadratic intertemporal objective functions, and in which the economy has a linear...

We study the optimal pattern of outlays for a single firm pursuing an R&D program over time. In the deterministic case, (a) the amount of progress required to complete the project is known, and (b) the relationship between outlays and progress is known. In this case, it is optimal to increase...

A new algorithm for the group minimization problem (GP) is proposed. The algorithm can be broadly described as follows. A suitable relaxation of(GP) is defined, in which any feasible point satisfies the group equation but may have negative components. The feasible points of the relaxation are...

The problem of simultaneously identifying and controlling a time-varying, perfectly-observed linear system is posed. The parameters are assumed to obey a Markov structure and are estimated with a Kalman filter. The problem can be solved conceptually by dynamic programming, but even with a...