Third, there is no general way to Pareto rank the equlibria.

We develop a model in which innovations in an economy's growth potential are an important driving force of the business cycle. The framework shares the emphasis of the recent "new shock" literature on revisions of beliefs about the future as a source of fluctuations, but differs by tieing these...

model developed by Klette and Kortum (2004) and an equilibrium search model of the labor market with job to job flows introduced by Mortensen (2003). In the construction, a continuum of intermediate product and service varieties are produced with labor that serve as inputs in the production of a...

the problem of general vs. firm-specific human capital investments.

When bids do not represent binding commitments, the use of a first price sealed bid auction favors those bidders who are less penalized from reneging on their bids. These bidders are the most likely to win but also the most likely to default on their bid. In this paper I study theoretically two...

This paper investigates whether the secular process of Structural Change - i.e. the broad shift away from manufacturing and towards services during the post war period - can simultaneously account for the Great Moderation and provide a mechanism for its unraveling. Based on detailed US sectoral...

value exists and displays more severely in smaller samples.

This paper sets up and computes a stochastic neoclassical growth model where agents face uninsurable idiosyncratic labor income risk and heterogenous discount factors. Households value government purchases which are financed by income taxes. The government cannot commit to future streams of...

much.

of the noise distribution, utility function and reservation utility.