In this paper, a likelihood ratio approach is taken to derive a test of the economic convergence hypothesis in the context of the linear deterministic trend model. The test is designed to directly address the nonstandard nature of the hypothesis, and is a systematic improvement over existing...

An important lesson from the incentive literature is that explicit incentives may elicit dysfunctional and unintended responses, also known as gaming responses. The existence of these responses, however, is difficult to demonstrate in practice because this behavior is typically hidden from the...

A model linking macroeconomic equilibrium and income distribution in balanced growth equilibria is developed as a variant to the Kaldor model of factor shares. It departs from the original Kaldor model in assuming equal saving rates and production determined by a matching process between workers...

This paper re-examines the welfare magnet hypothesis in the context of welfare reform by redefining both migration and generosity. Due to the intrastate variation in program parameters, migration is defined at the county, rather than state level, and the typical definition of generosity is...

This paper studies the interaction between time preference heterogeneity and precautionary saving in generating both persistent current account imbalance and a stationary equilibrium distribution of wealth across countries. We use numerical techniques to present two sets of results. First, when...

The purpose of this paper is to develop a detailed dynamic model of firm behavior in order to see whether financial constraints are important propagation mechanisms. In addition, I consider whether the environments of individual firms affect the way in which financial constraints operate at the...

This paper proposes powerful and serial correlation robust test statistics that can be used to test for the presence of structural change in the trend function of a univariate time series. Four models are analyzed, each model corresponding to a different way in which a trend break might occur....

This paper studies a particular kind of gaming responses to explicit incentives in a large government organization. The gaming responses we consider occur when agents strategically report their performance outcomes to maximize their awards. An important contribution of this work is to examine...

The paper furthers the neoclassical theory of earnings inequality. The inequality multiplier is derived as the amount by which inequality in skills must be multiplied to yield earnings inequality. Neutral technological change and the real interest rate affect inequality by changing capital per...