This paper analyzes pricing decisions and competition in network markets, assuming that groups of consumers can coordinate their choices when it is in their interest, if coordination does not require communication. It is shown that multiple asymmetric networks can coexist in equilibrium. A...

This paper compares the New Keynesian Phillips curve with the hybrid Phillips curve for its ability to reproduce observed in.ation and output dynamics. The analysis is based on impulse responses of a miniature general equilibrium model incorporating price and in.ation inertia as the only...

Firms use a rich set of incentives including fixed wages, bonuses, threat of firing and promise of promotion. Yet, we do not have a theoretical understanding of how such a mix of incentives can arise. This paper aims to build a theoretical model which describes the incentive mix as the solution...

This paper develops a flexible price, two-sector nominal growth model, in order to study the nominal aspects of capital accumulation (convergence). We adopt a classical model of a small open economy with traded and nontraded goods, and enrich its structure with gradual investment and a...

In this paper, we analyze the equilibrium incentive schemes offered to an agent by two principals who can only observe correlated noisy signals of the one-dimensional action taken by the agent. We look at both cases when the two principals can or cannot cooperate in setting the terms of their...

In this paper we describe a theoretical model of optimal investment of various types of financially constrained firms. We show that the resulting relationship between internal funds and investment is non-monotonic. In particular, the magnitude of the cash flow sensitivity of the investment is...

This paper provides a search theoretic model with endogenous job creation, and homogenous workers and firms. The model introduces bidding costs and allows the current employer to make a counteroffer with probability q when the worker receives an outside offer. In equilibrium, a higher level of...

Most studies of optimal monetary policy under learning rely on optimality conditions derived for the case when agents have rational expectations. In this paper, we derive optimal monetary policy in an economy where the Central Bank knows, and makes active use of, the learning algorithm agents...

Measuring risk can be axiomatized by the concept of coherent measures of risk. A risk environment specifies some individual portfolios' realization vectors and a coherent measure of risk. We consider sharing the risk of the aggregate portfolio by studying transferable utility cooperative games:...

This paper develops a multi-period extension of the Lucas (1972) overlapping generations "island" model with endogenous monetary policy (based on the minimization of a loss function over inflation and output deviations) and stochastic realization of the "allocation" of the young people across...