Researchers have incorporated labor or credit market frictions in isolation within simple neoclassical models to open up a role for institutions, inject realism into their models and examine the impact of these distortions on output and employment. We present an overlapping generations model...

Nonlinear AC Optimal Power Flow (OPF) problems are commonly approximatedby linearized DC OPF problems to obtain real power solutions for restructured wholesalepower markets. We first present a standard DC OPF problem, which has thenumerically desirable form of a strictly convex quadratic...

We explore connections between the certainty equivalent return (CER) functional and theunderlying utility function. Curvature properties of the functional depend upon how utilityfunction attributes relate to Hyperbolic Absolute Risk Aversion (HARA) type utility functions.If the CER functional is...

The “End Racial Profiling Act of 2001” (ERPA) states that “nolaw enforcement agent or law enforcement agency shall engage in racial profiling” andmandates states to “collect detailed data on stops, searches, seizures, and arrests.” Wedevelop a stylized dynamic model of highway...

Over recent years, study on risk management has been prompted by the Basel committee for regular banking supervisory. There are however limitations of some widely-used risk management methods that either calculate risk measures under the Gaussian distributional assumption or involve numerical...

Linear Methods are often used to compute approximate solutions to dynamic models, as these models often cannot be solved analytically. Linear methods are very popular, as they can easily be implemented. Also, they provide a useful starting point for understanding more elaborate numerical...

This paper extends the class of stochastic AK growth models with a closed-formsolution to the case where there are two capital goods in the model. To be precise,we consider the Uzawa-Lucas model of endogenous growth with human and physical capital. The extension holds, even if an external effect...

The trade-off theory on capital structure is tested by modelling the capital structure target asthe solution to a maximization problem. This solution maps asset volatility and loss givendefault to optimal leverage. By applying nonlinear structural equation modelling, theseunobservable variables...

Government-nanced bank restructuring programs, occasionally costing up to 50% of GDP,are commonly used to resolve banking crises. We analyze the Ramsey-optimal paths of bankrecapitalization programs that weigh recapitalization benets and costs under dierent nancingoptions. In our model bank...

In financial and economic policy circles concerned with public debt in developingcountries, a rising debt-GDP ratio is interpreted as a signal of overborrowing, warn-ing of debt defaults if strong fiscal corrections are not adopted in time. This papershows why this interpretation is incorrect by...