Using data for the G7 countries, I estimate conditional correlations of employment and productivity, based on a decomposition of the two series into technology and non-technology components. The picture that emerges is hard to reconcile with the predictions of the standard Real Business Cycle...

We modify the standard real business cycle model by assuming that wages are set by a monopoly union at the firm level. In the context of such a model, we introduce a measure of unemployment and analyze its equilibrium behavior. We show that a calibrated version of the model is capable of...

In this paper we analyze the interaction of income and preference heterogeneity in a political economy framework. We ask whether the presence of preference heterogeneity (arising, for example, from different ethnic groups or geographic locations) affects the ability of the poor to extract...

Despite the well-known gains from trade, trade liberalization is politically one of the most contentious actions that a government can take. We propose and formalize a new argument, having to do with uncertainty, which is complementary to the usual explanations for why that is the case: many...

Standard models of public education provision predict an implicit transfer of resources from higher income individuals toward lower income individuals. Many studies have documented that public higher education involves a transfer in the reverse direction. We show that this pattern of...

The past decade has witnessed a renewed interest in regional trade agreements, with many policymakers and academics seeming to believe that these provide more than the traditional gains from trade. This article examines several possible benefits that regional trade agreements may confer on their...

This paper examines a process of debt renegotiation in which banks possess divergent interests and there is asymmetric information. The authors assume that large banks must exert pressure on small banks in order to obtain participation of these in the provision of new money and in debt...

This paper examines a two-sector small open economy that is subject to shocks in its terms-of-trade. Risk-neutral entrepreneurs use implicit contracts to insure risk-averse workers against fluctuations in their income. The characteristics of these contracts are examined within a general...