We study the cyclical effects of the timing of durable goods purchases in a general equilibrium model in which both durable and non-durable goods are consumed and the durable good is lumpy. At the microeconomic level, the timing of durable goods purchases supplies some insulation for non-durable...

We study the cyclical effects of the timing of durable goods purchases in a general equilibrium model in which both durable and non-durable goods are consumed and the durable good is lumpy. At the microeconomic level, the timing of durable goods purchases supplies some insulation for nondurable...

In welfare theory it is standard to pick the consumption stream that maximizes the welfare of the representative agent. We argue against this position, and show that a benevolent social planner will generally place a greater weight on future consumption than does the representative agent.

How much information should a policy maker pass on to an ill-informed citizen? In this paper, we address this classic question of Crawford and Sobel (1982)in a setting in which beliefs impact utility, as in Kreps and Porteus (1978). We show that this question cannot be answered using a utility...

After a long dormant period, lower Sixth Avenue in New York has undergone a rapid revitalization. The authors show that a simple search theoretic model with information spillovers can explain both the period of underuse and the rapid turnaround. The model reduces to a simple equation, which...

Although the United States has developed highly sophisticated markets for funding corporate investment projects, markets for financing home ownership are comparatively rudimentary. When a corporation wishes to fund a project, it can choose any mix of debt and equity financing. In contrast, to...