This paper studies the relation between multi-period discrete-time and continuous-time principal-agent models. We explicitly derive the continuous-time model as a limit of discrete-time models with ever shorter periods and show that the optimal incentive scheme in the continuous model, which is...

This paper studies the impact of wage growth on the evolution of employment in an intertemporal general-equilibrium model with endogenous productivity growth. For real wage growth above laissez-faire levels, we obtain steady-state equilibria in which productivity grows at the same rate as wages,...

The paper studies insurance with asymmetric information in a system of contingent-claims markets with a finite number of risk averse agents. If the informed trader is a price taker, equilibrium prices disclose his information and, conditional on this information, equilibrium outcomes are...

We develop a model of endogenous growth in an economy with competitive markets. Technical change arises from the intentional actions of entrepreneurs looking for profits. Opportunities for such profits stem from inframarginal rents. This provides a counterexample to the widespread view that...

The paper reviews and assesses our understanding of the relation between cor-porate finance and corporate control. It questions the significance of the notion that entrepreneurs or managers give up significant powers of control in order to obtain external finance, arguing instead that (a)...

The paper discusses criteria for comparing risk aversion of decision makers when outcomes are multidimensional. A weak concept, �commodity specific greater risk aversion�, is based on the comparison of risk premia paid in a specified commodity. A stronger concept, �uniformly greater risk...

For financial contracting with costly state verification, it is shown that arrangements involving an ex ante commitment to monitoring regardless of returns tend to dominate if the borrower's initial wealth is small and the investment outlay is large, arrangements involving conditioning of...

The paper develops an integrated model of optimal nonlinear income taxation, public-goods provision and pricing in a large economy. With asymmetric information about labour productivities and publicgoods preferences, the multidimensional mechanism design problem becomes tractable by requiring...

This paper studies the relation between discrete-time and continuous-time principal-agent models. We derive the continuous-time model as a limit of discrete-time models with ever shorter periods and show that optimal incentive schemes in the discrete-time models approximate the optimal incentive...