Showing papers in "Review of Economic Dynamics in 1998"

TL;DR: In this article, the authors examined a simple theory of altruism in which players' payoffs are linear in their own monetary income and their opponents' opponents' private information and varies in the population, depending on what the opponent's coefficient is believed to be.

TL;DR: In this paper, the authors take a step back and ask "How lumpy is investment?" by documenting the distributions of investment and capital adjustment for a sample of over 13,700 manufacturing plants drawn from over 300 four-digit industries.

TL;DR: This paper developed and estimated an overlapping generations general equilibrium model of labor earnings, skill formation, and physical capital accumulation with heterogenous human capital, which analyzes both schooling choices and post-school on-the-job investment in skills in a framework in which different schooling levels index different skills.

TL;DR: In this paper, the authors show that higher productivity growth induces lower unemployment when renovation costs are low, but that the response of employment to growth switches from positive to negative as the cost of updating existing technology rises above a unique critical level.

TL;DR: The authors studied the entry and exit of U.S. manufacturing plants over the business cycle and compared the results with those from a vintage capital model augmented to reproduce observed features of the plant life cycle.

TL;DR: In this article, it was shown that the rate at which the law of large numbers applies is controlled by the rate of increase in the number of rows in the input-use matrix rather than by the total number of sectors.

TL;DR: The authors argued that conventional monetary aggregates are of little use as targets or even indicators for monetary policy, owing to the instability of money demand relations in the economy and the difficulty of measuring monetary stability.

TL;DR: In this paper, a two-sided search model with transferable utility is analyzed, and conditions to guarantee uniqueness in equilibrium search models with or without transferable utilities are provided, even with increasing returns in the meeting technology.

TL;DR: This paper found that the growth effects of changes in capital income tax rates are negligible despite the distortionary government spending, and that simultaneous changes in taxes and spending on education have modest effects on growth.

TL;DR: In this article, the authors explore the mechanism in detail and show that if technology resides in machines and if a firm or worker must use just one technology at a time, a variety of machines will be in use, and workers' productivities will differ.

TL;DR: In this paper, the authors used the transactions and production files to create measures of the use of currency and crop inventory as well as changes in real capital assets, livestock, and net indebtedness for three ICRISAT villages in India's semi-arid tropics.

TL;DR: The authors reexamine the "cost of business cycle" calculations made by Lucas and Imrohorogl under alternative specifications of individuals' risk preferences and using alternative specifications for per capita consumption, and find that for a class of preferences used by Epstein and Zin (J. Monetary Econom. Polit. Econ. 97 (1989), 1364-1383) in an analysis of the equity premium puzzle, which display first-order risk aversion, the welfare cost of business cycles is potentially much larger than previous estimates.

TL;DR: In this article, the authors developed a model where the firm makes decisions about whether to replace or upgrade its old capital stock with new capital, and the model is used to study how technological characteristics of capital affect investment behavior.

TL;DR: In this paper, the authors model a firm's decision of when to update its technology and show that technology updates endogenously bring large drops in productivity, and also imply that such updates are more likely in a boom than in a recession since high rate of production enables the firm to learn more quickly about the new technology.

TL;DR: In this article, three alternative explanations are successively considered, respectively based upon agency considerations, the tacit nature of knowledge, and the decomposition of R and D activities into research and development.

TL;DR: In this paper, a two-good permanent-income model is proposed to estimate both the intra-period and inter-temporal elasticities of substitution, which can shed some light on whether private and public consumptions are best described as complements, substitutes, or unrelated occurrences in a Edgeworth-Pareto sense.

TL;DR: In this article, the authors developed and analyzed a macroeconomic model in which aggregate growth and fluctuations arise from the discovery and diffusion of new technologies; there are no exogenous aggregate shocks.

TL;DR: In this paper, a model is constructed in which the underlying state of nature changes according to a symmetric first-order Markov process, and a numerical simulation is carried out to derive the empirical distribution of movements of such a time series.

TL;DR: In this article, the authors used new data on the service lives of individual capital goods in the airline industry to empirically examine the impact that economic factors have on capital retirement, and they found that retirement is fundamentally an economic decision and is much more likely in recessions, when the cost of capital is low, or when a firm has good financial performance.

TL;DR: In this paper, the authors present an extended vintage model to explain the significant cross-sectional dispersion in plant-level productivity within narrowly defined industries, and provide alternative explanations for the phenomena of investment spikes and S-shaped diffusion.

TL;DR: This article developed a model that incorporates both parental altruism toward children and the allocation of time among human capital investment and production in market and non-market sectors to explain the transition from a low-human-capital and high-fertility economy to an economy characterized by high human capital and low fertility.

TL;DR: In this article, the authors examined the impact of changes in the rate of money creation and reserve requirements on real seigniorage revenue and showed that the effect of these changes on real revenue is quantitatively significant.

TL;DR: In this article, various mechanism design models are used to study the allocation of risk and allocation of productive resources in one ICRISAT village of India's semi-arid tropics.

TL;DR: A banking model is constructed where roles for government-provided deposit insurance and discount window lending arise when there are restrictions on branch banking, and banks arise endogenously as an efficient arrangement for sharing risk as discussed by the authors.

TL;DR: In this article, a mixed strategy bank run equilibrium that does not rely on sunspots may coexist with the sunspot run equilibrium previously studied in the literature, and the zero-profit contract in which runs never occur is supported as the unique equilibrium outcome if the agents play pure strategies only and their beliefs are restricted to be consistennt with a forward induction argument.

TL;DR: Gort's work on mergers dealt with the impact of economic shocks including technical change on dispersion in valuations and, hence, merger frequencies as mentioned in this paper and the effect of vintage of capital on productivity.

TL;DR: In this article, the authors provide a prototype general equilibrium model of team production, where the work schedules, wages, and employment of heterogeneous workers are endogenously determined in the presence of team-production.

TL;DR: In this article, a political-economic theory of fiscal policy is presented in which tax policy preferences are derived from a conflict of interest between individuals of different ages, and a comparison of the original equilibrium to one induced by the "constitutional commitment" of the fiscal policy isolates the strategic component of tax rates and demonstrates that aggregate labor productivity is biased.

TL;DR: In this paper, the authors examined the stochastic relationship between money and capital in an economy with spatially separated markets and found that aggregate capital is more likely to be negatively correlated with money growth and more unpredictable by past money growth.