Assuming deterministic demand Liski and Montero (2006) show that forward trading is able to facilitate collusion. We present a more concise model incorporating the main reason for forward trading: Uncertainty. In general, fl uctuations make collusion harder to sustain (Rotemberg and Saloner,...

Initiating a conflict is an investment in social, political or economic change. The decision to attack is sequential in time, irreversible and, more important, includes highly uncertain and erratic threats and opportunities yet completely disregarded in confict theory. In this dynamic model of...

We examine welfare effects of real-time pricing in electricity markets. Before stochastic energy demand is known, competitive retailers contract with final consumers who exogenously do not have real-time meters. After demand is realized, two electricity generators compete in a uniform price...

We identify the causal effect of lump-sum severance payments on non-employment duration in Norway by exploiting a discontinuity in eligibility at age 50. We find that a severance payment worth 1.2 months' earnings at the median lowers the fraction re-employed after a year by six percentage...

The paper examines the stabilizing properties of fiscal policy for current account imbalances under alternative exchange rate regimes. Using a small open economy DSGE model with fiscal feedback rules, we investigate the dynamic responses of different shocks to macroeconomic variables and their...

In this paper I investigate the causal returns to education for different educational groups in Germany. I circumvent potential drawbacks of IV by employing a new method by Klein and Vella (2010). In this approach identification is not based on instruments but on the presence of...

Using comprehensive data for West Germany, this paper investigates the determinants of establishment exit. We find that between 1975 and 2006 the average exit rate has risen considerably. In order to test various "liabilities" of establishment survival identified in the literature, we analyze...

One explanation of the recent real estate bubble might point to homeowners' artificially restricting housing supply. While empirical work has not found unequivocal evidence in support of this hypothesis, homeowners may well be restricting supply nonetheless, and without this restriction...

We study the Medicare Part D prescription drug insurance program as a bellwether for designs of private, non-mandatory health insurance markets that control adverse selection and assure adequate access and coverage. The value that Part D or other prescription drug coverage has for an individual...

Policy makers are interested in fostering economic growth and employment. Therefore, it is important to know how to boost innovation in an effective way. This paper investigates whether entrepreneurs with technical education are more innovative in high-tech industries than economists. The main...