The common interpretation of the customer-market model of Phelps and Winter (in Phelps et al. (eds), Microeconomic Foundations of Employment and Inflation Theory, New York, Norton, 1970) is that firms will charge a price lower than the static monopoly mark-up because monopolistic pricing policy...

Credit access is limited in rural areas, especially in developing economies. Using a novel two-stage experimental design in Pakistan, first, we document that bank lending only serves a small fraction of rural credit demand. Second, we test the importance of information and enforcement technology...

The important contribution by Basu and Fernald (2002) shows that, in practice, there is a statistically significant gap between aggregate productivity and technology that can be attributed to inefficient product and labour markets. This is important, as it implies that the Solow residual is an...

In a turnover-training model, where firms fix high wages to lower worker turnover, we find that high risk-aversion in firms speeds up the adjustment process of unemployment to its natural levels when employers face either temporary or permanent shocks. Therefore, risk aversion has a stabilizing...

We exploit exogenous variation in the amount of public information available to banks about a firm to empirically evaluate the importance of adverse selection in the credit market. A 2006 reform introduced by the State Bank of Pakistan (SBP) reduced the amount of public information available to...

We exploit exogenous variation in the amount of public information available to banks about a firm to empirically evaluate the importance of adverse selection in the credit market. A 2006 reform introduced by the State Bank of Pakistan (SBP) reduced the amount of public information available to...

In business-cycle research, smoothing data is an essential first step to evaluate the extent to which model-generated moments stand up to their empirical counterparts. We put to test McDermott's (1997) modified version of Hodrick and Prescott's (1997) smoothing filter. On the one hand, our...