The notion of common cause closedness of a classical, Kolmogorovian probability space with respect to a causal independence relation between the random events is defined, and propositions are presented that characterize common cause closedness for specific probability spaces. It is proved in...

Recently Kifer introduced the concept of an Israeli (or Game) option. That is a general American-type option with the added possibility that the writer may terminate the contract early inducing a payment not less than the holder's claim had they exercised at that moment. Kifer shows that pricing...

This paper sets out a general algorithm for calculating true cost-of-living indices or true producer price indices when demand is not homothetic, i.e. when not all expenditure elasticities are equal to one. In principle, economic theory tells us how we should calculate a true cost-of-living...

Aimed at energy organizations adapting to the competitive demands associated with liberalization, transaction and risk management software “A-Trade” was part of the shift from a traditional engineer-led culture of risk cognition to market-oriented financial risk management. The story of...

Recent insights from the philosopher Larry Temkin have suggested a new basis for the measurement of income inequality, founded on the notion of individual “complaints” about income distribution. Under certain specifications of the relationship between complaints and personal incomes it can...

Market participants' risk attitudes, wealth and portfolio composition in°uence their positions in a pegged foreign currency and, therefore, may have important e®ects on the sustainability of currency pegs. We analyze such e®ects in a global game model of currency crises with continuous action...

We examine the qualitative and quantitative predictions of a heterogeneous firm model à la Melitz (2003) in the context of the Canada - US Free Trade Agreement (CUSFTA) of 1989. We calibrate our model to the pre-trade liberalization stage, simulate the trade liberalization, and compute the...

This essay reviews progress in empirical economics since Leamer’s (1983) critique. Leamer highlighted the benefits of sensitivity analysis, a procedure in which researchers show how their results change with changes in specification or functional form. Sensitivity analysis has had a salutary...

We investigate urban GDP per capita growth across the EU12 using data for functionally defined cities—rather than administrative regions. We test hypotheses on the role of human capital, EU integration and fragmentation of urban government and explore spatial dependence and mechanisms of...

If participation in the labor market helps to secure women’s outside options in the case of divorce/separation, an increase in the perceived risk of marital dissolution may accelerate the increase in female labor supply. This simple prediction has been tested in the literature using time...