Indonesia has been severely hurt by the recent economic crisis, which has been accompanied by social tensions. Still, there are reasons to be optimistic about Indonesia's future. The economic crisis may have bottomed out and the difficult transition to democracy has started. For a sustainable...

This paper examines the effects of search costs on prices in a Bertrand duopoly. It is shown that if the search cost is lowered, the expected price goes down in a single play of the stage game. However, if the game is repeated it may be easier to sustain collusion the lower the search cost. In...

This paper considers the opitmal incentives for motivating a risk neutral, wealth constrained agent. In particular, monitoring and pay are shown to be complementary instruments under very general conditions, extending earlier results by Allgulin and Ellingsen (1998). The paper also proves that...

One of the main objections to applying contingent claims analysis outside the area of derivatives pricing, such as to the pricing of corporate (or sovereign) debt, has been that it is not possible to trade in the relevant state variable, e.g. the assets of a firm. Consequently, replicating...

This paper analyzes policies for regulating polluting firms under imperfect monitoring. The main finding is that a certain emission target is always more costly to enforce if there exists a market for emission permits than if there is none. The intuition is that a market restricts the regulatory...

Modelling multivariate failure times in a competing risks setting is often performed by assuming independence between risks. However, by wrongly assuming independence, seriously biased parameter estimates may result. The aim of this paper is to evaluate a test for independence previously...

The Phillips curve has generally been estimated in a linear framework which implies a constant relationship between inflation and unemployment. Lately there have been several studies which claim that the slope of the Phillips curve is a function of macroeconomic conditions and that the...

This paper analyses how optimal policy responses to productivity shocks change when the government loses the exchange rate as a policy tool after entering a monetary union. It is shown that over the business cycle (generated as cyclical changes in productivity), both deficit and inflation will...

The implementation of the 1950 Swedish comprehensive school reform was preceded by a unique social experiment. During this experiment between 1949 and 1962 the new school system was implemented in stages. This allows us to study the same cohort of individuals going through two different school...