We consider a simple dynamic model of environmental taxation that exhibits time inconsistency. There are two categories of firms, Believers, who take the tax announcements made by the Regulator to face value, and Non-Believers, who perfectly anticipate the Regulator's decisions, albeit at a...

In this paper we analyze dynamic incentives of a firm to invest in production facilities in a less developed country with lower wage costs and lower productivity. Foreign investment induces that, due to technological spillovers, productivity of local firms in the foreign country increases. Firms...

In this paper we examine how far the availability of venture capital influences the speed of technological progress in an industrial agglomeration. We consider a model where R\&D efforts of an incumbent firm generates technological know-how embodied in key R\&D employees, who might use this...

Recent policy proposals call for setting up a benchmark indexed bond market to prevent "Sudden Stops". This paper analyzes the macroeconomic implications of these bonds using a general equilibrium model of a small open economy with financial frictions. In the absence of indexed bonds, negative...

In our paper we investigate how network effects influence the dynamics of oligopoly on mature telecommunication markets. The model covers four categories of agents: telecommunication operators, customers joined into housholds and market regulator. The market state aware firms use reinforcement...

This paper sets out first, to quantify the stabilization gains from commitment in terms of household welfare and second, to examine how commitment to an optimal or approximately optimal rule can be sustained as an equilibrium in which reneging hardly ever occurs. We utilize an influential...

Efficient algorithms for diagnosing influential data points are investigated. Techniques examining potentially influential subsets are considered. Given a list of candidate observations, a new row-dropping algorithm (RDA) computes all possible observation-subset regression models. It employs a...

Population aging threatens to severely destabilize the public finances of a majority of European countries. This unfavorable demographic prospect is usually reinforced by a widespread tendency to anticipate retirement. Reversing this tendency has been identified as a crucial factor to improve...

Base rate neglect has been shown to be a very robust bias in human information processing. It has also been show to be ecologically rational in some environments. However, when arguing about base rate neglect usually isolated individuals are considered. I complement these results by showing that...

In this paper we show that if all agents are equipped with well-behaved discrete concave production functions, then a feasible price allocation pair is a market equilibrium if and only if it solves a linear programming problem. Using this result we are able to obtain a necessary and sufficient...