Due to the use of distortionary taxation, many believe that real-world economies should attain a lower level of public expenditures than one might suspect from the analysis of artificial models where lump-sum taxes are assumed to be available. The paper examines this popular hypothesis by means...

We study endogenous currency substitution in a decentralized trade environment. Sellers maximize profits from sales of imperfectly substitutable goods by posting prices in either one of two currencies. A unique symmetric equilibrium exists where goods are priced only in the local currency. This...

We study games with strategic complementarities, arbitrary numbers of players and actions, and slightly noisy payoff signals. We prove limit uniqueness: as the signal noise vanishes, the incomplete information game has a unique strategy profile that survives iterative dominance. This generalizes...

This paper examines conditions which guarantee that the excess demand function of an exchange economy will satisfy the weak axiom in an open neighborhood of a given equilibrium price. This property ensures that the equilibrium is locally stable with respect to Walras' tatonnement. A related...

In this paper we analyze GMM estimators for time series models as advocated by Hayashi and Sims, and Hansen and Singleton. It is well known that these estimators achieve efficiency bounds if the number of lagged observations in the instrument set goes to infinity. <br> A new version of the GMM...

With credence goods consumers cannot judge the quality they receive compared to the quality they need. The needed quality can only be observed by an expert seller who may exploit the information asymmetry by cheating. In recent years various contributions have analyzed the credence goods problem...