In applied work in macroeconomics and finance, nonoptimal infinite horizon economies are often studied in which the state space is unbounded. Important examples of such economies are single sector growth models with production externalities, valued fiat money, monopolistic competition, and/or...

This paper analyzes the effect of market power in a model with dynamic and biological externalities. When several countries harvest fish in international waters the evolution of fish population is affected by their joint action, thus, generating a biological and a dynamic externality. If there...

FOMC meeting days provide a natural laboratory for exploring the effects of policy uncertainty and learning on exchange rate determination. Intradaily mark/dollar exchange rates are employed for 10 FOMC meetings. The meetings examined are the first 10 following the February 1994 change in policy...

The amount of wealth allocated to a particular risky asset depends on the riskiness of the asset. When an insurance policy against losses from holding the asset is made available, then this allocation can also depend on the form and the price of the insurance. The purpose of this research is to...

We examine bequest-sharing rules where wasteful competition for bequests is possible by children. We show that equal division minimizes rent-seeking expenditures by siblings. Finally, we employ a theory of rational social norms in order to discuss the evolution of bequest norms in the Middle...

This note reestimates Grossman and Krueger’s (1993) SO2 emissions regression including regressors to capture the effects of scale, trade and trade policy. Several new results are obtained. Increases in economic activity have a negative effect on the environment separate from changes in per...

This paper analyzes the optimal allocation problem of a small country facing an uncertain technology and trading. It is involved in production of many commodities. Differentiability cannot be guaranteed, hence, the Ramsey-Euler condition of optimality needs to be modified. From the optimality...

We introduce the possibility of trade in dynamic models with externalities and evaluate the consequences on the capital accumulation process, the market-clearing prices and policy making. We consider mixed economies characterized by a blend of strategic and nonstrategic sectors. An equilibrium...

In an intertemporal general equilibrium framework, we compare a Cournot equilibrium to the Walras equilibrium. The Cournot agents trade and invest less than the Walras agents. This generates an ineffciency which does not vanish as the number of Cournot agents tends to infinity. A larger number...

This paper analyzes dynamic movement of outputs and market- clearing when mutually interdependent economies trade. The equilibrium evolution of stocks admit the possibility of monotonic or cyclical behavior, even in the long run. However, the prices eventually reach a steady-state but may...