In the standard moral hazard model, withholding of effort by the agent is not observable to the principal. We argue that this assumption has to be changed in applications that study corruption. The overwhelming majority of cases where corrupt politicians have been punished involve the detection...

This paper evaluates the trade-off between the advantages of risk sharing and the perils of common pool problems in federal fiscal arrangements. Under the assumption of asymmetric information we evaluate two alternative regimes of intergovernmental transfers. In one regime, the central...

The traditional principal-agent model assumes that the principal offers an exclusive contract to the agent. This paper shows that the standard results are not robust to the introduction of additional contracting opportunities for the agent. We analyze equilibria of an extended game with the...

This paper proposes new simple testing procedures for the joint null hypothesis of absence of persistent e®ects in the form of random e®ects and ¯rst order serial correlation in the error component model. The fact that the presence of random effects is clearly of a one-sided nature, together...

We analyze the emergence of large-scale education systems in a framework where growth is associated with changes in the conguration of the economy. We model the incentives that the economic elite could have (collectively) to accept taxation destined to nance the education of credit-constrained...

We present methods to estimate marginal utility and marginal product functions that are nonadditive in the unobservable random terms, using observations from a single hedonic equilibrium market. We show that nonadditive marginal utility and nonadditive marginal product functions are capable of...

This paper presents a simple model of debt contracts in order to analyze the conditions under which domestic residents would choose to currency denomination of debt. In the model, borrowers are producers of non-traded goods and subject to real exchange rate shocks, that constitute the source of...

Most practitioners add the country risk to the discount rate when valuing projects in Emerging Markets. This practice does not account for the fact that the default risk term structure can be nonflat. The mismatch between the duration of the project under valuation and the duration of the most...