Two widely used methods of decomposing GDP into trend and cycle yield starkly different results. The unobserved component approach implies smooth trend with large, persistent cycle. In contrast, the Beveridge and Nelson (1981) approach implies most of the variation is attributable to trend. This...

In empirical analysis of economic games, researchers frequently wish to estimate quantities describing group outcomes, such as the expected revenue in an auction or the mean allocative efficiency in a market experiment. For such applications, we propose an improved statistical estimation...

Scoring rules are compared by the equilibria that they generate for simple elections with three candidates and voters drawn from large Poisson distributions. A calculus for comparing pivot probabilities in Poisson voting games is applied. For a symmetric Condorcet cycle, nonsymmetric...

In this paper we apply the statistical framework developed by Imbens (1998) and Lechner (1999) to identify and to estimate the causal effects of multiple treatments under the conditional independence assumption. The example concerns youth employment programs which were set up in France during...

We investigate several aspects of GARCH models which are relevant for empirical applications. In particular, we note that the inclusion of a dummy variable as regressor can lead to multimodality in the GARCH likelihood. This makes standard inference on the estimated coefficient impossible. Next,...

This paper investigates individual motives to participate in rotating savings and credit associations (roscas). Detailed evidence of roscas in a Kenyan slum (Nairobi) shows that most roscas are predominantly composed of women. To explain this phenomenon, we propose an argument based on...

Many advertisements inform the consumer about product characteristics, while others give price information with very little product information, and some provide both types of information. We propose a framework to analyze the incentives for firms to provide various types of information. We...

Several authors have postulated econometric models for exchange rates restricted to lie within known target zones. However, it is not uncommon to observe exchange rate data with known limits that are not fully 'credible'; that is, where some of the observations fall outside the stated range. An...

We construct the optimal regulation contract between a risk-averse principal, such as a small municipality, and a risk-neutral private ''public service'' operator, such as a large multinational firm. With adverse selection, moral hazard and socially costly transfers, we show that the more...

This paper identifies a novel connection between the banking sector and economic growth. I consider strategic competition among banks in an economic growth model with externalities. The allocation delivered by the banking sector is proven to be different from that in the Walrasian equilibrium...