We consider a country where a king assigns benefits in accordance with privilege determined by the population’s proximity to the throne. People have different relative advantages in seeking privilege and in productive activity. The nature of the contest for privilege determines whether, in...

Governments have rarely been successful in adhering to intended consequences of temporary guest-worker policies. The conduit for legal entry of workers has resulted in a population of illegal workers, as the initially legal workers make the move to illegal employment. In this paper we examine...

This Paper surveys the ways in which departures from free trade have been treated in economic analysis. Normative theories linked to classical arguments have shown how departure from free trade can enhance efficiency and increase social welfare. Positive perspectives with links to...

The social contract of the welfare state can be strained by the arrival of immigrants who receive welfare payments financed by citizens' taxes. We show, however, that the presence of unemployed immigrants receiving welfare payments is consistent with social harmony. The social harmony, which is...

In this paper we introduce the notion of herd effects or information cascades into models of migration-related phenomena. We consider individuals making sequential decisions regarding emigration. Each individual receives a signal which conveys private information regarding preferred locations...

The economic theory of defense has traditionally described public safety as achieved through investments that deter adversaries. Deterrence is however ineffective, and preemptive defense is required, when a population of intended victims confronts supreme-value suicide terror. A moral dilemma...

This paper employs cohort technique and Consumer Expenditure Survey data to construct average age-profiles of consumption and income over the working lives of typical households across different education and occupation groups. Using these profiles, we estimate a structural model of optimal...

We offer a duality-based methodology for incorporating multi-sector effects of international trade into open economy macroeconomic models, developing the concepts of the dynamic factor price equalization set and the integrated intertemporal equilibrium. Under this approach, the aggregate...

The paper shows that the conversion from national currency bank notes to hard-ECU notes is promoted by the provision of an implicit and free currency call option. This wealth effect is caused by the devaluation-proof definition of this currency. Nevertheless, additional transactions and...

This paper is intended to make four main points that are relevant for previously planned economies in transition to a market economy. First, national output can be increased by reducing or eliminating relative price distortions through price reform and free trade and by thus enhancing...