In economic models, it is usually assumed that agents aggregate their private and all available public information correctly and completely. In this experiment, we identify subjects' updating procedures and analyze the consequences for the aggregation process. Decisions can be based on private...

The neoclassical growth model is extended to allow for mobile labor. Following a negative shock to a small economy's capital stock, capital and labor frictions effect an equilibrium transition path during which wages remain below their steady-state level. Outmigration directly contributes to...

Missing observations in dependent variables is a common feature of many financial applications. Standard ad hoc missing value imputation methods invariably fail to deliver efficient and unbiased parameter estimates. A number of recently developed classical and Bayesian iterative methods are...

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That econometric methodology remains in dispute partly reflects the lack of clear evidence on alternative approaches. This paper reconsiders econometric model selection from a computer-automation perspective, focusing on general-to-specific reduction approaches, as embodied in the program PcGets...

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We explore the role of monetary policy in the aftermath of a financial crisis. We develop a small open economy model with limited participation of households in a financial intermediary that provides liquidity to satisfy firms' working capital needs. Firms require two forms of working capital:...

Successful individuals were frequently found to be overly optimistic. This is puzzling because it might be thought that optimistic individuals who consistently overestimate their eventual payoffs will not do as well as realists who see the situation as it truly is and hence will not survive...

This paper looks at the linkages between growth and business cycles by bringing together two strands of literature. We incorporate a quality ladders engine of growth into an otherwise standard real business cycle model. We are interested in whether the process which leads to technological...

Many economic and econometric applications require the integration of functions lacking a closed form antiderivative, which is therefore a task that can only be solved by numerical methods. We propose a new family of probability densities that can be used as substitutes and have the property of...