The recent literature on economic growth and business cycles, such as Helpman and Trajtenberg (1996), Hornstein and Krusell (1996), Jovanovic and Lack (1997), and Andolfatto and MacDonald (1998), shows that the diffusion of new technology is important in accounting for some features of aggregate...

Effective monitoring of a minimum wage, requires that establishments potentially paying low wages are effectively identified. This paper investigates the identification of establishments paying low wages prior to the introduction of the British National Minimum Wage in 1999, through the...

Risk aversion is one of the most commonly cited properties of human decision making (e.g., Kahneman & Tversky, 1979). This finding is at odds with traditional expected value theory, but not with more recent theories of rational choice (e.g., von Neumann & Morgenstern, 1944). Since Bernoulli?s...

In this paper we present a large scale computable general equilibrium model derived from GEM-E3 model for European Union with three geographical areas and 18 different sectors. We do simulations with GAMS-PATH software algorithm which is based on mix complementarity (FOC and shadow prices). This...

Financial planning involves asset allocation and risk management. Asset allocation problem decides the percentage of the overall portfolio value allocated to each portfolio component. Risk management measures the risk of different investment instruments and creates or maintains portfolios with...

This paper describes the behavior of tax policies under incomplete financial markets. The government finances a stochastic stream of expenditures by collecting the capital income and the labor income taxes, and issuing a one-period bond which pays state-contingent returns. We show that putting...

This paper presents an efficient methodology for the discrete Asian options consistent with different types of underlying densities, especially non-normal returns as suggested by the empirical literature (Mandelbrot (1963) and Fama (1964)). The interest of this method is its flexibility compared...

The parametric path method applies projection methods to compute the equilibrium path of economic variables in infinite-horizon dynamic models. We exploit the special structure of economic time paths common in such models. This structure drastically reduces dimensionality and reduces computing...

\tThe assumption that production in an economic system may be described by an aggregate neoclassical production function is at the foundation of most modern equilibrium neoclassical business cycles and growth models. Its validity requires stringent assumptions on individual production functions...

The purpose of the paper is to derive and illustrate a new suboptimal-consistent feedback solution for infinite-horizon linear-quadratic dynamic Stackelberg games which is in the same solution space as the infinite-horizon dynamic programming feedback solution, but which puts the leader in a...