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We study information acquisition in a flexible framework with strategic complementarity or substitutability in actions and a rich set of externalities that are responsible for possible wedges between the equilibrium and the efficient acquisition of information. First, we relate the...
Persistent link: https://www.econbiz.de/10010352847
These notes provide an intuitive introduction to dynamic programming. The first two Sections, which can be skipped, present the standard deterministic Ramsey model using the Lagrangian approach. Section 3 reformulates the Ramsey problem by means of a Bellman equation, while Section 4 shows how...
Persistent link: https://www.econbiz.de/10011739624
Abstract 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...
Persistent link: https://www.econbiz.de/10014588442
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...
Persistent link: https://www.econbiz.de/10005504263
Persistent link: https://www.econbiz.de/10005425249
A simple dynamic general-equilibrium model of savings and investment is populated by agents with Kreps-Porteus preferences. Households are heterogeneous in their risk aversion, which explains the negative relationship between aggregate investment and aggregate volatility. Agents trade riskless...
Persistent link: https://www.econbiz.de/10011163093
In a beauty contest framework, we show that a more precise public information is welfare enhancing when increasing the precision of private information is costly. The accuracy of public information is chosen by the public authority taking into account that an increase in the precision of public...
Persistent link: https://www.econbiz.de/10011082069
We study the welfare implications of public information precision in a beauty contest framework allowing for optimal stabilization policies and information obfuscation. When policy makers’ ability to obfuscate information is constrained, increasing public information precision can be welfare...
Persistent link: https://www.econbiz.de/10010906357
We study information acquisition in a exible framework with strategic complementarity or substitutability in actions and a rich set of externalities that are responsible for possible wedges between the equilibrium and the efficient acquisition of information. First, we relate the (in)efficiency...
Persistent link: https://www.econbiz.de/10010583646
Persistent link: https://www.econbiz.de/10006799652