Maximisation of utility by a single consumer subject to a linear budget constraint is well known to imply strong restrictions on the properties of demand functions. Empirical applications to data on households however frequently reject these restrictions. In particular such data frequently show...

We show, in the Choquet expected utility model, that preference for diversification, that is, convex preferences, is equivalent to a concave utility index and a convex capacity. We then introduce a weaker notion of diversification, namely ``sure diversification.'' We show that this implies that...

Using a two-country model of monetary union where policymakers minimize the continuous-time equivalent of a Barro-Gordon-type loss function, we examine the value of the option of monetary break-up when the national preference parameters associated with an inflationary surprise follow correlated...

Over the past two decades married women's labor force participation has shown a considerable increase in the US. In particular, both the cross sectional and the life cycle behavior of married women's hours worked has undergone a substantial change. I show that a key factor underlying this trend...

Why do host-country governments offer tax holidays to foreign multinational firms that establish local subsidiaries? This paper shows that a tax holiday has the effect of preventing the foreign firm from monopolizing the local market. This pro-competitive effect stems paradoxically because a tax...

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This paper presents a dynamic model of the joint labor/leisure and consumption/saving decision over the life cycle. Such a dynamic model provides a framework for considering the important policy experiments related to the reforms in Social Security. We address the role of labor supply in a life...

This paper studies a simple OLG model with production under the assumption that capital investment is completely irreversible: installed capital cannot be transformed back into consumption good nor transferred from one firm to another. Since firms cannot be dismantled at each generational change...

I evaluate in this paper the effects of Free-Trade Areas (FTAs) on the incentives for further multilateral liberalization (ML) using a model that emphasizes the role of oligopolistic industries in creating both reasons for strategic trade policies and political pressures aimed to affect trade...