This note reports part of a larger study of "petty corruption" by government bureaucrats in the process of approving new business projects. Each bureaucrat may demand a bribe as a condition of approval. Entrepreneurs use the services of an intermediary who, for a fee, undertakes to obtain all of...

Conventional wisdom emphasizes supply and demand shocks as the major sources of the business cycle. Yet the most visible, most synchronized, and most frequently encountered supply and demand shocks take place at the seasons. The central question to be addressed in this paper is to what extent...

Necessary conditions for indeterminacy in standard RBC models have been extensively studied, but intuitive understanding of the economic mechanism that generates indeterminacy has yet to be fully explored. Following the permanent income theory, this paper provides an alternative framework for...

This paper investigates the behavior of short-term real and nominal rates of interest by combining consumption-based and production-based models into a single general equilibrium framework. Based on the theoretical nonlinear relationships that link interest rates to both the marginal rates of...

The paper examines the nature of competitive paths in an exhaustible resource model, which allows for growing population. For competitive paths which are equitable in the sense that the per capita consumption level is constant over time, the implicit investment rule is derived. This is seen to...

Due to lack of models that can feature both output- and input-inventories simultaneously, several well known puzzles pertaining to inventory fluctuations and the business cycle have not been well explained by dynamic optimization theory. By presenting a general equilibrium, multi-stage...

The neoclassical effects of permanent technology shocks on employment is re-investigated. Contrary to Jordi Gali's (1999) assertion published in this Review, I show that standard neoclassical theory is fully capable of explaining the stylized fact that positive permanent technology shocks reduce...

The problem in default probability estimation for low-default portfolios is that there is little relevant historical data information. No amount of data processing can fix this problem. More information is required. Incorporating expert opinion formally is an attractive option.

This paper is concerned with the issue of characterizing the situations in which all the literacy indices, consistent with a set of reasonable axioms, would provide the same ranking of societies. It is shown that a theory, analogous to that developed for the Lorenz order in the study of income...