We extend the Carlstrom and Fuerst (American Economic Review,1997, 87, pp. 893–910) agency cost model of business cycles by includingtime-varying uncertainty in the technology shocks that affectcapital production. We first demonstrate that standard linearizationmethods can be used to solve the...

There is a large body of evidence supporting the notion that a) those who grow up to be patient(forward-looking) do better in life compared to those who do not, and b) parents can inculcatethe virtue of delayed gratification in their children by taking the right sort of actions. We studya...

Taking location as given, we study imperfect competition on a circular city. In Bertrandoligopoly, we identify price harmonics as a function of firm unit costs and locations. The sumof oligopoly profits is larger when costs and/or locations are more dispersed in the ‘dihedralmajorization’...

In an equilibrium model of the labor market, workers and firms enter intodynamic contracts that can potentially last forever, but are subject to optimalterminations. Upon termination, the firm hires a new worker, and the workerwho is terminated receives a termination contract from the firm and...

When adjustment costs are present, cyclical preference and technology heterogeneities in aproduct’s markets induce cycles in production. We exploit cyclic and dihedral groupinvariances in an industry’s cost technology to describe these patterns. We show whenequilibrium cyclical pricing and...

We document the recent phenomenon of uphill flows of capital from nonindustrial toindustrial countries and analyze whether this pattern of capital flows has hurt growth innonindustrial economies that export capital. Surprisingly, we find that there is a positivecorrelation between current...