By distinguishing between discretionary and non-discretionary fiscal policy, this paper analyses the stability of fiscal rules for EMU countries before and after the Maastricht Treaty. Using both Instrumental Variables and GMM techniques, it turns out that discretionary fiscal policy has...

Recent empirical work shows that ongoing international financial integration facilitatescross-country consumption risk sharing. While these studies employ absolute measures toaccount for a country''s integration in international capital markets, we devise a relativemeasure that captures the...

The present paper extends the standard model of pairwise communication among Bayesianagents to cases where the structure of the communication protocol is not commonly known.We show that, even under strict conditions on the structure of the protocols and the nature of the transmitted signals, a...

This paper develops new methods for determining the cointegration rank in a nonstationary fractionally integrated system, extending univariate optimal methods for testing the degree of integration. We propose a simple Wald test based on the singular value decompositionof the unrestricted...

We examine product-games, which are n-player stochastic games satisfying: (1) the state space is a product S(1)×…×S(n); (2) the action space of any player i only depends of the i-th coordinate of the state; (3) the transition probability of moving from s(i) ∈ S(i) to t(i) ∈S(i), on the...

We introduce a new class of bankruptcy problems in which the value of the estate is endogenous and depends on agents'' investment decisions. There are two investment alternatives: investing in a company and becoming a shareholder (risky asset) and depositing money into a savings account...

In this paper we consider the issue of unit root testing in cross-sectionally dependent panels. We consider panels that may be characterized by various forms of cross-sectionaldependence including (but not exclusive to) the popular common factor framework. Weconsider block bootstrap versions of...

While they use the language of game theory known measures of a priory voting power are hardly more than statistical expectations assuming the random behaviour of the players. Focusing on normalised indices we show that rational players would behave differently from the indices predictions and...

We present sucient conditions for the implementation of the (pessimistic) recursive core (Kóczy, 2007) in discrete partition function form games using a modified version of the sequential coalition formation game by Bloch (1996) extending the results of Kóczy (2008) and - in a slightly...

We present a model of adaptive economic agents that are k periods forward looking. Agents in our model are randomly matched to interact in finitely repeated games. They form beliefs by relying on their past experience in the same situation (after the same recent history) and then best respond to...