Implicit contract theory has been successful in explaining wage rigidity but not unemployment. We argue that the theory has paid insufficient attention to (i) the general equilibrium aspects and (ii) constraints limiting the set of feasible contracts. Implicit, as opposed to explicit contracts,...

Dynamic inconsistency provides a theoretical basis for discussions of policy credibility: when the government cannot commit its future policies, the incentive to deviate from the 'optimal' plan renders it incredible. We derive the best policy in the absence of precommitment as the feedback Nash...

Using an intertemporal, two-country general equilibrium model, I demonstrate that international asymmetries in expenditure patterns determine the real exchange rate effects of capital controls. Capital import taxes lower world interest rates but raise home interest rates. These changes in...

What determines how integrated a firm is? We emphasize the benefits of "control" when there are difficulties in writing complete contracts. We define the firm as being composed of its assets. We present a theory of costly contracts which emphasizes that contractual rights can be of two types:...

Recent concern about the inadequacies of econometric models has led not only to the search for causes, but also to the proposal of constructive remedies for these difficulties. In this paper we analyse the links between econometric modelling methodologies and the performance of econometric...

We use an intertemporal model incorporating short-run labour and goods markets disequilibrium to analyse the consequences of oil price shocks for unemployment, investment and the current account. A dominant transfer element leads to Keynesian unemployment now and deterioration tomorrow in the...

The purpose of this paper is to measure the impact of the 1979 oil price "hike" on a selected group of developing countries. The model used for this exercise is an adaptation of a straightforward income-determination model in which domestic oil revenues are treated as a "tax" revenue from oil...

This paper reassesses the pattern of unemployment in interwar Britain from a microeconomic perspective. A 10 per cent sample of some 27,000 case record cards completed in 1929-31 as part of the New Survey of London Life and Labour is used as a basis for cross-section analysis of unemployment...

Most model builders continue to treat their models as deterministic when forecasting, despite the fact that these models are composed of equations which are stochastic in nature. Deterministic solution methods ignore the stochastic information on the model structure and in addition produce...

The substantial rise in the proportion of elderly (65+) people in the British population over the last hundred years has been matched by a dramatic fall in labour-force participation rates among the elderly. Some commentators see the reduction in work opportunities for the eldery and their...