The chosen final convergence for EMU has been to pre-announce the target convergence rate of ERM central parity. This paper analyses some of the pricing and the arbitrage problems market participants had to face between the FX forward and Vanilla option books. We describe a methodology to price...

We demonstrate that in a CAPM economy Homogeneity,Walras' Law, and the Tobin Separation Property characterize market demand on finite sets of prices. Consequently, for any number n there exist CAPM economies which have at least n equilibria and hence have n different beta pricing formulas....

By introducing repo markets we understand how agents need to borrow issued securities before shorting them: (re)-hypothecation is at the heart of shorting. Non-negative amounts of securities in the box of an agent (amounts borrowed or owned but not lent on) can be sold, and recursive use of...

This paper examines a set of necessary and sufficient conditions under which equilibrium involves mixing multiple types of workers in cities. Multi-skilled cities emerge if workers gain more from labor complementarities than they lose if they cannot consume their most preferred local amenities....

Inspired by the current debate over the future of the monetary union in Europe, this paper provides a simple model for the determination of the conditions of survival of the common good, which requires the creation of an effective fiscal union. We highlight the importance of institutional design...

This paper provides a general equilibrium model where jurisdictions offer not only public goods, but also job opportunities. In a context of multiple types of consumers, labor complementarities, and anonymous crowding, heterogeneous populated communities form in equilibrium with an endogenous...

Using a club theory approach, this paper provides an equilibrium model in which traders must belong to at least one bourse in order to trade assets. We show, by means of examples, that: 1) traders’ complementarities in preferences and endowments can determine the formation of both large...

his paper examines, in the context of a multiple types of consumers, a set of necessary and sufficient conditions under which equilibrium and optimum exist, and involve mixing types of consumers in jurisdictions. Pricing includes visa permits for entry. Following Berglas (1976), we assume...

We present empirical evidence on whether the introduction of the euro has changed the effect of economic fundamentals on the growth rates of euro countries’ GDPpc and GDPpc volatility. We find that the effect of increments in debt on economic growth exhibits a structural break in 1999. A...

In a setting where heterogeneous jurisdictions share a common policy, an increase in volatility breaks unanimous support for the status-quo and may prompt a subset of jurisdictions to favor either deepening the agreement through a fiscal union, or revert to autarky. A reassignment of political...