In this paper, we highlight the possibility of dynamically inefficient equilibria in a model with strictly convex production function at the firm’s level. Decreasing returns imply the existence of some pure profit and hence of an asset market. We endogenise the number of firms by introducing a...

We consider a dynamic stochastic model of currency attacks, characterised by imperfect information about the fundamental. Agents, who imperfectly know the state of the economy, not only decide whether to attack the peg, but also formulate expectations concerning the probability of future...

In a recent contribution Villieu [1992] extends the Sidrauski-Fischer model, considering various degrees of substitution between consumption and real money balances. He is able to characterise analytically the portions of the parameters space that imply an "anti-Tobin" effect. This paper shows,...

We emphasise the importance of the market structure to determine whether dynamic inefficiency is possible in a closed economy. We analyse alternative monopolistic competition frameworks where the existence of some pure profit involves the presence of an asset market. When entry is blockaded,...

We present a simple multiple equilibria model that incorporates the functioning of crony capitalism. We find that a government which is keen to support the interests of the élite is ready to stand the risk of a bank run since this is part of an equilibrium where investments are heavily...

In a recent article Hosoda analyzes the relation between per capita consumption and growth rate in a Sraffian scheme where capitalists and workers have different patterns of consumption. He claims that this relation can be increasing and that this "anomaly does not disappear even if we choose...

We present a simple model where bank runs are possible and we analyse the role of subsidization of future investment in this setting. We find that such a policy exacerbates the short-run liquidity problem for banks. Moreover, we highlight that a ‘shift in expectations’ about the keeping of...

We develop a dynamic duopoly, in which firms have to take into account a technological externality, which reduces their innovation costs over time, and an inter-firm spillover, which lowers only the second comer’s R&D costs. This spillover exerts its effect after a disclosure lag. We identify...