There has been a considerable amount of work on the relationship between AFDC benefits and family structure in the US The evidence to date which uses cross-state variation in welfare benefits and family structure often with state fixed effects indicates that there is some nonzero effect of those...

This paper is a contribution to the analysis of optimal monetary policy. It begins with a critical assessment of the existing literature, arguing that most work is based on implausible models of inflation-output dynamics. It then suggests that this problem may be solved with some recent...

Economic theory predicts a negative relationship between inventories and the real interest rate, but previous empirical studies (mostly based on the older stock adjustment model) have found little evidence of such a relationship. We derive parametric tests for the role of the interest rate in...

One of the primary challenges to measuring the impact of antitrust policy on collusion is that the cartel population is unobservable; we observe only the population of discovered cartels. To address this challenge, a model of cartel creation and dissolution is developed to endogenously derive the...

The abstract will appear soon

Consider a setting in which firms randomly discover new ideas that affect their products or services and implement only those ideas which increase current profit At the same time that firms are adapting their offerings consumers are searching among firms for the best match It is shown that...

Scientific progress is driven by innovation ?which serves to produce a diversity of ideas ?and imitation through a social network ?which serves to diffuse these ideas. In this paper, we develop an agent-based computational model of this process, in which the agents in the population are...

This paper considers dynamic time series binary choice models. It proves near epoch dependence and strong mixing for the dynamic binary choice model with correlated errors. Using this result, it shows in a time series setting the validity of the dynamic probit likelihood procedure when lags of...

Consider an observed binary regressor D and an unobserved binary variable D*, both of which affect some other variable Y. This paper considers nonparametric identification and estimation of the effect of D on Y, conditioning on D* = 0. For example, suppose Y is a person’s wage, the unobserved...

This paper presents a simple new method for estimating the size of ‘wealth effects?on aggregate consumption. The method exploits the well-documented sluggishness of consumption growth (often interpreted as ‘habits?in the asset pricing literature) to distinguish between short-run and long-run...