The paper generalizes a costly state verification model along two dimensions: 1) diversity of opinions, and 2) endogenous formation of a financial intermediary, modeled as a multilender coalition. In contrast with previous contributions (e.g. [35] and [36]), our model can account for the...

We contrast two potential explanations of the substantial di¤erences in entrepreneurial activity observed across geographical areas: entry costs and external effects. We extend the Lucas model of entrepreneurship to allow for heterogeneous entry costs and for externalities that shift the...

Since the writing of David Hume, in the eighteenth century, there has been a general agreement amogst economists that an increase in the stock of money leads, initially, to an increase in economic activity. Most writer have attributed the real effects of money, in the short run, to mistaken...

Using vector autoregressions on U.S. time series, we find that technology shocks induce an ‘S’- shaped cross-correlation function for the trade balance and the terms of trade (S-curve). In calibrating a prototypical international business cycle model to match the S-curve under complete and...

This paper compares two alternative theories of Aggregate supply, both with a "New Keynesian Flavor". The first assumes that prices are rigis due to the existence of menu costs of the kind advanced by Mankiw [38] and Akerlof and Yellen [2]. The second derives price stickiness endogenously as one...

This paper delovers the solution to an optimal search problem with learning where the searcher has distinguishable search opportunities. The optimal sampling strategy is characterized by simple reservation prices that determine which of the search alternatives to sample and when to stop search.

In this paper the authors study the determinants of the long term yield spread between Italian and German government bonds using daily observations for a period 1 January 1995- 28 October 1997.

Dynamic models with inequality constraints pose a challenging problem for two major reasons: Dynamic Programming techniques often necessitate a non established differentiability of the value function, while Euler equation based techniques have problematic or unknown convergence properties. This...