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’ choices of investment influence the probability distributions of their output. Using a normative approach we derive the … criterion which leads to a second-best choice of investment which, in examples, is found to be close to the first best. …
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can be removed by an investment subsidy without making the current or future generations worse off only if coupled with …
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This paper studies the efficiency of equilibria in a productive OLG economy where the process of financial intermediation is characterized by costly state verification. Both competitive equilibria and Constrained Pareto Optimal allocations are characterized. It is shown that market outcomes can...
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