We study how the internal organization of firms — specifically, the allocation of ownership of assets and the distribution of profit among the firm’s managers — is determined in a competitive market. We ask how scarcity of assets, skills or liquidity in the market translates into ownership...

“My own behavior baffles me. For I find myself not doing what I really want to do but doing what I really loathe.” Saint Paul What behavior can be explained using the hypothesis that the agent faces temptation but is otherwise a “standard rational agent”? In earlier work,...

In our theoretical model some firms do not offer health insurance to their employees because of large between-firm heterogeneity in expected employee health care costs. Because job turnover rates for healthier employees reduce by less than those for sicker employees when firms offer health...

We estimate the distribution dynamics of city income and size in China during 1984-2003 using stochastic kernel. Our results show that intra-distribution mobility are significant in both income and size and provide evidences on China experienced internal brain drain.

Saikkonen (1991) developed an asymptotic optimality theory for the estimation of cointegrated regressions. He proposed the dynamic OLS estimator obtained by augmenting the static cointegrating regression with leads and lags of the first differences of the I(1) regressors. However, the...

In summary, the effects of decentralization on corruption and government accountability are complex and cannot be summarized by simple, unconditional statements. This applies equally to theoretical analyses, cross-country regression results and more detailed empirical studies of specific...

Regional inequality is severe in China since regional development is uneven due to various initial conditions and government policies. We employ unit root tests allowing for structural breaks to alternative inequality measures from 1952 to 2000. Empirical results indicate that (1) the regional...

This paper considers various asymptotic approximations to the finite sample distribution of the estimate of the break date in a simple one-break model for a linear trend function that exhibits a change in slope, with or without a concurrent change in intercept. The noise component is either...

In a financial market where agents trade for short-term profit and where news can increase the uncertainty of the public belief, there are strategic complementarities in the acquisition of private information and if the cost of information is sufficient small, a continuum of equilibrium...

I derive a production-based asset pricing formula to infer aggregate stock market returns from macroeconomic time series when the technology is putty-clay. Capital heterogeneity leads to variation in the aggregate stock market value through a new compositional effect. The asset pricing formula,...