A key feature of OECD economic growth since the early 1970s has been the secular decline in manufacturing’s share of GDP and the secular rise of service sectors. This paper examines the role played by relative prices, technology, factor endowments, and labour market institutions in the process...

In this paper we introduce concepts that build a theoretical notion of reputation risk and establish the need to extend our approach to managing such risk.. The existing literature on reputation risk has tended to be reactive and focus on immediate business threats rather than trying to...

It is typically less profitable for an opportunistic borrower to divert inputs than to divert cash. Suppliers, therefore, may lend more liberally than banks. This simple argument is at the core of our contract theoretic model of trade credit in competitive markets. The model implies that trade...

This paper investigates a negative externality of new business creation. When being perceived as a good manager is a necessary condition to establish a firm in the future, we show that a priori talented managers may indulge in undertaking risky projects now. Indeed, such a choice renders more...

This paper studies growth and inequality in China and India – two economies that account for a third of the world’s population. By modelling growth and inequality as components in a joint stochastic process, the paper calibrates the impact each has on different welfare indicators and on the...

This paper introduces a tractable, structural model of subjective beliefs. Since agents that plan for the future care about expected future utility flows, current felicity can be increased by believing that better outcomes are more likely. On the other hand, expectations that are biased towards...

This CASEbrief summarises findings from CASEpaper 40, Constraint and opportunity: Identifying voluntary non-employment by Tania Burchardt and Julian Le Grand

In recent years, the third or voluntary sector has become more important for ‘Europe’, as indicated by the 1997 Communication of the European Commission and various Declarations attached to the EU Treaties. These official statements not only suggest greater political interest in the third...