An average machine lags in terms of productivity and technological advancement behind a cutting-edge machine. This lag was first defined by Cummins and Violante (2002) as the technology gap. Using the vector error correction model, I show that the technology gap is cointegrated with human...

Without sacrificing tractability, we analyze the effect of fat-tailed events such as catastrophes on the optimal compensation contract between a principal and an agent. The optimal contract depends on all the moments and not just the variance