This paper analyses a model of overlapping generations in which agents who do not participate in th elabor market are unable to borrow. Thus an increase in a fully funded pension raises aggregate savings even with a fixed participation rate since private savings are not crowded out one-for-one....

We show that extrinsic or non-fundamental uncertainty influences markets in a controlled environment. This work provides the first direct evidence of sunspot equilibria. These equilibria require a common understanding of the semantics of the sunspot variable, and they appear to be sensitive to...

We analyse a model of overlapping generations in which clean air, a pure public good is used as a private input into production. Although production exhibits constant returns to scale, endogenous growth can occur. In a laissez-faire equilibrium, firms generate rents that are the value of the...