We model the diffusion of two types of information through a population under the assumption that communication time is limited. When a meeting between individuals occurs, at most one information can be communicated. Preferences over information types divide the population into two groups, and...

We present a model of transnational terrorism where two countries, home and foreign, face a terrorist threat based in the foreign country. The home country chooses how much to invest in defending itself or in reducing terrorist resources either indirectly by subsidising the foreign country or by...

We show that price level stabilization is not optimal in an economy where agents have incomplete knowledge about the policy implemented and try to learn it. A systematically more accommodative policy than what agents expect generates short term gains without triggering an abrupt loss of...

This paper examines observational equivalence in a class of nonparametric structural equations models under weaker conditions than those currently available in the literature. It allows for several endogenous variables, does not impose differentiability or continuity of the equations which are...

This paper considers the panel data model with a multifactor structure in both the errors and the regressors which was studied by Pesaran (“Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure, Econometrica, 2006). Estimators are proposed that are...

Despite the recent financial crisis the UK financial pay premium has continued to rise. To some extent this is a consequence of increased skill intensity in the finance sector, but this paper shows that finance workers have higher cognitive skills, on average, and this partly explains their...

The response of hours to technology shocks is a key controversy in macroeconomics. We show that differences between RBC and NK models hinge on highly restrictive views of technology. We introduce CES production technologies and demonstrate that the response of hours depends on the...

The purpose of this paper is to contribute a new model of the Gold Standard, focusing on the interaction between resource scarcity and demographics. In a dynamic micro-founded model we find that: i) prices and equilibrium gold holdings increase with population (a scale effect), but decrease with...

Following the Arab-Spring protests, we examine macroeconomic interactions between a productive firm and a rent-seeking government characterized by a continuous probability of regime shift. The model is able to rationalize the early growth leaps witnessed in many Arab economies (the “Social...

Most growth models imply positive impacts on economic growth from greater openness. And a key factor linking openness and growth is the efficiency with which resources are used. Empirically, however, the efficiency impacts of trade have been ambiguous. Using a stochastic frontier analysis, we...