The authors estimate a dynamic two-country model in which economic fluctuations are driven by a worldwide supply shock; country-specific supply shocks; and relative fiscal, money, and preference shocks. Identification is achieved using only long-run restrictions based on a theoretical model. The...

Many complex organizations, such as planned Soviet enterprises and the U.S. military, routinely transfer employees between jobs. Since this sacrifices job-specific human capital, the practice is puzzling. This article shows that regular job transfers may be part of an optimal incentive scheme in...