This paper studies a Cournot duopoly in international trade so that the firms are exposed to exchange rate risk. A hedging opportunity is introduced by a forward market where the foreign currency can be traded on. We investigate two settings: First we assume that hedging and output decisions are...

Political connections between firms and autocratic regimes are not secret and often even publicly displayed in many developing economies. We argue that tying a firm's available rent to a regime's survival acts as a credible commitment forcing entrepreneurs to support the government and to exert...

The "red herring" hypothesis contends that the high health care expenditure in old age is caused by proximity to death rather than calendar age. Dissenters point to longitudinal data and claim that health care expenditure age profiles tend to steepen over time. The present paper tests the...

We explore the impact of the age structure of human capital on average regional productivity by applying a spatial econometric analysis based on an augmented Lucas-type production function. We also apply a new definition of regional human capital focusing on its availability. The estimates...

The birth of children often shifts the power balance within a family. If family decisions are made according to the spouses' welfare function, this shift in power may lead to a time consistency problem. The allocation of resources after the birth of children may differ from the ex-ante optimal...

This paper analyzes sovereign risk contagion in the Eurozone using an extension to the canonical model for contagion proposed by Pesaran and Pick (2007) and Metiu (2012) to allow for time-varying coefficients. This becomes necessary due to changes in the risk pricing of sovereign bonds since the...

International and national investors are often exposed to real wealth risks, stemming from volatile asset prices and inflation uncertainty, making it difficult to stabilize consumption patterns. However, investors can enter futures markets to hedge against these risks. The paper develops a...

Until recently decelerationʺ has been little recognized as a technical term, or as an idea. However, it seems to be getting more attention now. For example the German magazine STERN dedicated a cover story to deceleration, in the Anglo-American world the Quiet Life Hypothesisʺ is gaining...

Rare and randomly occurring events are important features of the economic world. In continuous time they can easily be modeled by Poisson processes. Analyzing optimal behavior in such a setup requires the appropriate version of the change of variables formula and the Hamilton-Jacobi-Bellman...

This paper provides a textbook example of integration between commodity markets, and the subsequent price convergence or absence thereof. We analyze price relations between spot markets for natural gas in Europe. We apply time-varying coefficient estimation applying the Kalman filter, to test...