In this paper we examine the role of policy when forming a R&D joint venture is costly. Contrary to previous studies, we document an active role for public policy, since the interests of firms are not necessarily aligned with societal interests. The nature of policy, however, depends on the...

A model of R&D cost sharing between a manufacturer and its component supplier is examined. The manufacturer can pay for a fraction of the supplier's cost-reducing R&D in return for a lower component price, and both firms can improve profits.

This paper examines why unemployed skilled workers are reluctant to accept interim unskilled jobs. We develop a bilateral search model in which workers face a job change cost and firms incur a hiring cost for each vacancy filled. The outcome of the bilateral search displays mismatching where...

This paper tests for nonlinearity in EMS exchange rates using the bispectrum. The early experience of the ERM witnessed numerous realignments. We find that exchange rates follow a linear process over the period 1979-1987, consistent with the predictions of the realignment target zone model,...