Using a small country model with habit-forming consumers and costly investment, we analyze equilibrium dynamics of the economy and derive empirical and welfare implications. The model can mimic some stylized facts: (i) a temporary increase in fiscal spending always deteriorates the current...

This paper develops a model of luxury goods by incorporating weakly non-separable, recursive preferences. In a two-good framework, a quasi-luxury is de ned as a good whose marginal rate of substitution is increasing in wealth. Under certain conditions, it is identical to a luxury good. Consumers...

We examine the current account effect of a terms-of-trade deterioration for a small country model, incorporating weakly nonseparable preference a la Shi (1994) under endogenous time preference.

We examine auction data to determine if bid rigging presents in procurement auctions for paving works in Ibaraki City, Osaka, Japan. We first show that sporadic bidding wars are caused by the participation of potential "outsiders." Assuming that the ring is all-inclusive if the auction is not...