This paper outlines the beginnings of a general theory of critical events. Four types are defined. Two are micro-events each affecting a small number of people and are shown to arise in everyday life. Two are macro-events that affect large numbers of people and are related to ‘shocks’ in...

The herding of expert opinions is often rationalized as the outcome of social learning. However, experts are typically individuals with career concerns. As a result,herding can also arise from the fear of opposing consensus opinion and the potential career consequences of being wrong. We...

In late 2008 and early 2009 the Australian Federal Government introduced a series of economic stimulus packages designed to maintain consumer spending in the early days of the Great Recession. When these packages were initiated the media suggested that the wide-spread availability of electronic...

This paper studies a rational expectations model of trading where strategic traders face information asymmetries and endowment shocks. We show that negative partici- pation externalities arise due to an endogenous interaction between information aggre-gation and multiple trading motives....

The purpose of this paper is to use a large data set comprising individual’s responses to survey questions about future economic conditions, unemployment and prices to explore lay people’s models of the economy and specifically their understanding of the relationship between unemployment and...

Mechanisms according to which private intermediaries or governments charge transaction fees or indirect taxes are prevalent in practice. We consider a setup with multiple buyers and sellers and two-sided independent private information about valuations. We show that any weighted average of...

We study the gains from trade in a model with endogenously variable markups. We show that the pro-competitive gains from trade are large if the economy is characterized by (i) extensive misallocation, i.e., large ineciencies associated with markups, and (ii) a weak pattern of cross-country...

This paper quantifies the taxable income-marginal tax rate elasticities associated with Spanish Personal Income Tax. To that effect, according to Saez (2003), the fiscal drag between 1993 and 1994 was used as an instrument to identify the changes in the taxable income induced by changes in the...

The herding of expert opinions is often rationalized as the outcome of social learning. However,experts are typically individuals with career concerns. As a result, herding can also arise from the fear of opposing consensus opinion and the potential career consequences of being wrong. We...

Sandmo (2009) suggests that the use of environmental taxes to promote the consumption of “clean goods” could have unwanted effects in that it leads to the consumption of “dirty goods”. This would therefore cast doubt on both the efficiency of environmental policy measures that act...