Calvo nominal rigidities are well known to enhance the monetary transmission mechanism in dynamic stochastic general equilibrium (DSGE) models. However, this class of models gives rise to certain anomalies, including excessively high volatilities and countercyclical productivity. In addition,...

We examine welfare effects of the entry of a single well-informed insurance firm into a competitive insurance market. We show that the effect depends on the structure of the market. If competitive insurers rely on the standard self-selection mechanism of a menu of contracts, then the entry of a...