We analyze a dynamic principal-agent model where an infinitely-lived principal faces a sequence of finitely-lived agents who differ in their ability to produce output. The ability of an agent is initially unknown to both him and the principal. An agent's effort affects the information on ability...

This paper examines the prices of basic staples in rural Mexico. We document that nonlinear pricing in the form of quantity discounts is common, that quantity discounts are sizable for basic staples, and that the well‐known conditional cash transfer program Progresa has significantly increased...

The paper studies a learning model in which information about a worker's ability can be acquired symmetrically by the worker and a firm in any period by observing the worker's performance on a given task. Productivity at different tasks is assumed to be differentially sensitive to a worker's...

We develop a framework with rich worker heterogeneity, firm monopsony power, and putty-clay technology to study the distributional impact of the minimum wage in the short and long run. Our production technology is disciplined to be consistent with the small estimated employment effects of the...

Modern business cycle theory focuses on the study of dynamic stochastic general equilibrium models that generate aggregate fluctuations similar to those experienced by actual economies. We discuss how this theory has evolved from its roots in the early real business cycle models of the late...