We study the Ramsey (1928) model under the assumption that households act strategically. We compute the Markov perfect equilib- rium for this model and compare it to the original, competitive equi- librium and to a strategic open-loop equilibrium proposed by Sorger (2002, 2005b). We show that,...

A large variety of markets, such as retail markets for gasoline or mortgage markets, are characterized by a small number of firms offering a fairly homogenous product at virtually the same cost, while consumers, being uninformed about this cost, sequentially search for low prices. The present...

This paper evaluates the performances of Perturbation Methods, the Parameterized Expectations Algorithm and Projection Methods in finding approximate decision rules of the basic neoclassical stochastic growth model. In contrast to the existing literature, we focus on comparing numerical methods...

In this paper we study the e®ects of nonlinearities on the forecast- ing performance of a dynamic stochastic general equilibrium model. We compute ¯rst and second-order approximations to a New Keyne- sian monetary model, and use arti¯cial data to estimate the model's structural parameters...

We consider quasi-orderings of infinite utility streams satisfying the strong Pareto axiom (i.e., Paretian quasi-orderings) and study the question of how strong a notion of intergenerational equity one can impose on these quasi-orderings without generating an impossibility theorem. Building on a...

We consider situations in which a principal tries to induce an agent to spend e®ort on accumulating a state variable that a®ects the well-being of both parties. The only incentive mechanism that the principal can use is a state-dependent transfer of her own utility to the agent. Formally, the...

We develop a model that incorporates salient features of growth in modern economies. We combine the expanding-variety growth model through horizontal innovations with a hierarchy of basic and applied research. The former extends the knowledge base, while the latter commercializes it. Two-way...

We modify the growth model with horizontal innovations from Romer (1990) and Jones (1995) by assuming that researchers can determine the quality of the products they invent. Because research effort increases with product quality, the researchers face a tradeoff between the quantity and the...