the japanese saving rate despite much work economists have not been able to quantitatively account for the differences in the japanese and u s saving rates after world war ii in this paper we show that the use of actual japanese total factor productivity growth rates in a standard growth model generates saving rates that are reasonably similar to the japanese data between 1956 and 2000 jel e21 e22 o41 o47

informational constraints and the overlapping generations model folk and anti folk theorems this paper analyses the sustainability of inter generational transfers in samuelson s consumption loan model when agents are imperfectly informed about past events we find that with mild informational constraints transfers cannot be supported by pure strategy equilibria mixed strategies allow transfers to be sustained even if agents have little information so that a version of the folk theorem holds however these equilibria are not robust if each agent s utility function is subjected to a small random perturbation as in harsanyi 1973 these mixed strategy equilibria unravel and only the zero transfer allocation survives as the unique rationalizable outcome this result is an example of mixed strategy equilibrium of an extensive form game which cannot be purified

equilibrium in auctions with entry the authors model entry incentives in auctions with risk neutral bidders and characterize a symmetric equilibrium in which the number of entrants is stochastic the presence of too many potential bidders raises coordination costs that detract from welfare the authors show that the seller and society can benefit from policies that reduce market thickness i e the relative abundance of buyers their analysis extends well known revenue equivalence and ranking theorems but also demonstrates that variations in the auction environment affect optimal policies e g reservation prices in ways not anticipated by models that ignore entry copyright 1994 by american economic association

the canadian productivity stagnation 2002 2014 total factor productivity tfp growth in canada between 2002 and 2014 has been only 0 16 per year although many developed countries have experienced a productivity slowdown since the beginning of the century this figure is still substantially smaller than that of the u s we perform multiple counterfactual exercises to show that this difference in tfp growth cannot be accounted for by several compositional effects and or mismeasurements of factors of production we identify two key sectors mining and manufacturing that drive all of the tfp growth difference with the u s despite the lack of tfp growth canada has experienced sustained income growth due to a prolonged period of appreciation of the terms of trade while terms of trade in the u s have deteriorated making real income in the two countries grow at similar rates

why does household investment lead business investment over the business cycle household investment leads nonresidential business fixed investment over the u s business cycle because real business cycle theory has not been able to account for this observation it represents a potent challenge to the view that transitory productivity disturbances are the main source of aggregate fluctuations this paper reconciles rbc theory with the investment dynamics by extending the traditional home production model to make household capital complementary to business capital and labor in market production empirical evidence suggesting that household capital is a complementary input in market production is also presented

the wealth distribution with durable goods in the united states the distribution of houses is less egalitarian than that of earnings for the total population but these two distributions are remarkably similar for homeowners additionally housing as a fraction of total wealth decreases with the level of wealth in order to understand the different factors that account for these wealth composition patterns we introduce illiquid houses and collateral credit in a general equilibrium model of heterogeneous agents with idiosyncratic uncertainty a combination of very persistent shocks to earnings frictions in the housing market and a rental market is necessary to obtain numbers in line with the evidence

a recursive formulation for repeated agency with history dependence abstract we present general recursive methods to handle environments where privately observed variables are linked over time we show that incentive compatible contracts are implemented recursively with a threat keeping constraint in addition to the usual temporary incentive compatibility and promise keeping conditions journal of economic literature classification numbers d30 d31 d80 d82

capital goods measured tfp and growth the case of spain the effect of investing in equipment and or structures on tfp and long run growth is investigated here we argue that economies can grow in spite of stagnant tfp if the investment rate is inefficiently high we study the case of spain where real gdp per worker grew at 2 74 percent annually and tfp was stagnant during 1996 2007 we show that low spanish tfp is due to low istc and an inefficiently high investment in residential structures we quantify the effect of the housing boom of the 2000s the total cost of subsidies to residential structures in terms of tfp and income growth

repeated games with frequent signals we study repeated games with frequent actions and frequent imperfect public signals where the signals are the aggregate of many discrete events such as sales or tasks the high frequency limit of the equilibrium set depends on both the probability law governing the discrete events and on how many events are aggregated into a single signal when the underlying events have a binomial distribution the limit equilibria correspond to the equilibria of the associated continuous time game with diffusion signals but other event processes that aggregate to a diffusion limit can have a different set of limit equilibria thus the continuous time game need not be a good approximation of the high frequency limit whenever the underlying events have three or more possible values

multidimensional incentive compatibility and mechanism design abstract incentive compatibility conditions are characterized in general for problems in which several goods are to be allocated and agents types are multidimensional two questions of monopoly pricing under multidimensional uncertainty are then analyzed first we find the optimal nonlinear pricing scheme when the monopolist knows only the distribution of an arbitrarily parameterized family of demand curves and second we solve for the optimal bundling policy for a multiproduct monopolist

beliefs and private monitoring this paper develops new recursive set based methods for studying repeated games with private monitoring for any nite state strategy prole we nd necessary and sucient conditions for whether there exists a distribution over initial states such that the strategy together with this distribution form a correlated sequential equilibrium also for any given correlation device for determining initial states including degenerate cases where players initial states are common knowledge we provide necessary and sucient conditions for the correlation device and strategy to be a correlated sequential equilibrium or in the case of a degenerate correlation device for the strategy to be a sequential equilibrium we also consider several applications in these we show that the methods are computationally feasible show how to construct and verify equilibria in a secret price setting game

optimal search auctions with correlated bidder types abstract we study optimal auctions when contacting prospective bidders is costly and the bidders values are correlated although full surplus extraction is in general impossible we can construct a search mechanism that fully extracts the surplus with an arbitrarily high probability

indivisible labor lotteries and equilibrium abstract this paper considers an economy where labor is indivisible and agents are identical although the discontinuity in labor supply at the individual level disappears as a result of aggregation it is shown that indivisible labor has strong consequences for the aggregate bahavior of the economy it is also shown that optimal allocations involve lotteries over employment and consumption

repeated games with long run and short run players this paper studies the set of equilibrium payoffs in repeated games with long and short run players and little discounting because the short run players are unconcerned about the future each equilibrium outcome is constrained to lie on their static reaction best response curves the natural extension of the folk theorem to games of this sort would simply include this constraint in the definitions of the feasible payoffs and minmax values in fact this extension does obtain under the assumption that each player s choice of a mixed strategy for the stage game is publicly observable but in contrast to standard repeated games the set of equilibrium payoffs is different if players can observe only their opponents realized actions

structural reforms in a debt overhang we assess the eects of reforms in product and labor markets in an econ omy where credit restrictions and long term debt combine to produce a persis tent recession with slow deleveraging following a negative nancial shock we show that reforms that reduce markups in product markets stimulate output and employment even in the short run despite their de ationary eects by favouring a faster recovery of investment and collateral values product mar ket reforms bring forward the end of the deleveraging phase this last eect is missing in the case of labor market reforms the short run eects of which are sensitive to the response of trade ows and to debt maturity

optimal repeated purchases when sellers are learning about costs abstract a buyer repeatedly purchases some good suppliers privately learn their cost only upon producing at least once efficiency would imply sampling sellers until one is found with cost lower than a increasing with time reservation value then the good would be permanently purchased from the seller with lowest cost a sequence of second price auctions with participation premia and entry fees is shown to be both efficient and optimal for the buyer an alternative calls for price offers by informed sellers with compensations that increase in the offer in both cases the buyer subsidizes competition through participation premia or compensations journal of economic literature classification numbers d44 d83 l14

investment specific technological change and growth accounting greenwood et al 1997 long run implications of investment specific technological change american economic review 87 3 342 362 and 2000 the role of investment specific technological change in the business cycle european economic review 44 91 115 and hercowitz 1998 the embodiment controversy a review essay journal of monetary economics 41 217 224 have claimed that the jorgenson form of growth accounting is conceptually flawed and severely understates the importance of technological progress embodied in new capital goods for explaining growth to the contrary this paper shows that in its technology aspects their model is a special case of the jorgensonian growth accounting model what they call investment specific technological change is shown to be closely related to the more familiar concept of total factor productivity tfp growth statements about the one can be translated into statements about the other empirically differences between their conclusions and those of growth accounting studies about the extent to which embodiment explains us economic growth are found to relate more to data than to methodology

restricted feedback in long term relationships abstract this paper studies long term relationships modeled as repeated games with restricted feedback players condition current play on summary statistics of past play rather than the entire history as may be the case in online markets our state strategy equilibrium framework allows for arbitrary restrictions on strategies we derive a recursive characterization for the set of equilibrium payoffs similar to that of abreu pearce and stacchetti 1986 1990 2 3 for perfect public equilibria and show that the set of equilibrium payoffs is the largest fixed point of a monotone operator we use our characterization to derive necessary and sufficient conditions for efficient trade in a repeated product choice game where costumers condition their purchase decisions only on the last performance signal

sustainable reputations with rating systems abstract in a product choice game played between a long lived seller and an infinite sequence of buyers we assume that buyers cannot observe past signals to facilitate the analysis of applications such as online auctions e g ebay online shopping search engines e g bizrate com and consumer reports we assume that a central mechanism observes all past signals and makes public announcements every period the set of announcements and the mapping from observed signals to the set of announcements is called a rating system we show that absent reputation effects information censoring cannot improve attainable payoffs however if there is an initial probability that the seller is a commitment type that plays a particular strategy every period then there exists a finite rating system and an equilibrium of the resulting game such that the expected present discounted payoff of the seller is almost his stackelberg payoff after every history this is in contrast to cripps mailath and samuelson 2004 5 where it is shown that reputation effects do not last forever in such games if buyers can observe all past signals we also construct finite rating systems that increase payoffs of almost all buyers while decreasing the seller s payoff

dynamic games with hidden actions and hidden states abstract we consider a class of dynamic games in which each player s actions are unobservable to the other players and each player s actions can influence a state variable that is unobservable to the other players we develop an algorithm that solves for the subset of sequential equilibria in which equilibrium strategies depend on private information only through the privately observed state journal of economic literature classification numbers c63 c73

optimal cartel equilibria with imperfect monitoring abstract there exist optimal symmetric equilibria in the green porter model 4 8 having an elementary intertemporal structure such an equilibrium is described entirely by two subsets of price space and two quantities the only production levels used by firms in any contingency the central technique employed in the analysis is the reduction of the repeated game to a family of static games

optimal search auctions abstract we study the design of profit maximizing single unit auctions under the assumption that the seller needs to incur costs to contact prospective bidders and inform them about the auction with independent bidders types and possibly interdependent valuations the seller s problem can be reduced to a search problem in which the surplus is measured in terms of virtual utilities minus search costs compared to the socially efficient mechanism the optimal mechanism features fewer participants longer search conditional on the same set of participants and inefficient sequence of entry

dynamic insurance with private information and balanced budgets this paper studies a dynamic insurance problem with bilateral asymmetric information and balanced budgets there are two infinitely lived agents in our model both risk averse and each has an i i d random endowment stream which is unobservable to the other in each period each agent must have a non negative consumption and together they must consume the entire aggregate endowment dynamic incentive compatibility in the nash sense is defined we give sufficient and necessary conditions for the existence of a constrained efficient contract we show that a constrained efficient contract can be characterized in a bellman equation we demonstrate that the long run distribution of expected utilities of each agent is not degenerate we also develop an algorithm for computing the efficient contract and in a numerical example we find that the consumption processes of the agents form stationary markov chains

long run implications of investment specific technological change an attempt is made to disentangle its effects from the more traditional hicksneutral form of technological progress the balanced growth path for the model is characterized and calibrated to u s national income and product account nipa data the quantitative analysis suggests that investment specific technological change accounts for the major part of growth jel e13 030 041 047

sequential equilibria in a ramsey tax model this paper presents a full characterization of the equilibrium value set of a ramsey tax model more generally it develops a dynamic programming method for a class of policy games between the government and a continuum of households by selectively incorporating euler conditions into a strategic dynamic programming framework we wed two technologies that are usually considered competing alternatives resulting in a substantial simplification of the problem

full extraction of the surplus in bayesian and dominant strategy auctions we consider auctions for a single indivisible object in the case where the bidders have information about each other which is not available to the seller we show that the seller can use this information to his own benefit and we completely characterize the environ ments in which a well chosen auction gives him the same expected payoff as that obtainable were he able to sell the object with full information about each bidder s willingness to pay we provide this characterization for auctions in which the bidders have dominant strate gies and for those where the relevant equilibrium concept is bayesian nash in both set ups the existence of these auctions hinges on the possibility of constructing lotteries with the correct properties we consider the situation in which an agent the seller possesses one indivisible unit of a good to which he attaches no value but the good has value to a number of potential buyers and its transfer to one of them would increase social welfare in particular the transfer to the buyer with the highest valuation maximizes social welfare in this paper we completely characterize environments in which the seller can design an auction that will enable him to capture for himself the full increase in social welfare induced by the transfer of the good to the bidder with the highest willingness to pay if the seller had full information about the reservation prices of potential buyers his optimal selling strategy would be very simple he would announce a price equal or very close to the highest reservation value the optimal strategy for the bidder with the highest evaluation would be to accept the offer note that we are treating a situation in which the seller can commit himself to a price as a result of the exchange the utility of the seller increases by the full amount of the increase in social welfare and he has been able to fully extract the surplus in many circumstances however a seller has only imperfect knowledge of the buyers willingnesses to pay in this case he must find some mechanism or auction which will enable him to maximize his benefit from the sale of the object the auction literature starts with this observation and shows how the seller can by an astute choice of auction extract the largest possible fraction of the surplus in general the literature has shown that this proportion is strictly less than one in some circumstances the bidders will have information about each other which is not available to the seller for instance in auctions for petroleum drilling rights bidders know the results of geological tests which they have

how robust is the folk theorem the folk theorem of repeated games has established that cooperative behavior can be sustained as an equilibrium in repeated settings early papers on private monitoring and a recent paper of cole and kocherlakota games and economic behavior 53 2005 59 72 challenge the robustness of this result by providing examples in which cooperation breaks down when players observe only imperfect private signals about other players actions or when attention is restricted to strategies with finite memory this paper shows that cole and kocherlakota s result is an artefact of a further restriction that they impose we prove that the folk theorem with imperfect public monitoring holds with strategies with finite memory as a corollary we establish that the folk theorem extends to environments in which monitoring is close to public yet private

international lending with moral hazard and risk of repudiation in this paper i examine the constrained optimal pattern of capital flows between a lender and a borrower in an environment in which there are two impediments to forming contracts the first impediment to contracting arises from the assumption that lenders cannot observe whether borrowers invest or consume borrowed funds this assumption leads to a moral hazard problem in investment the second impediment arises from the assumption that the borrower as a sovereign nation may choose to repudiate his debts the optimal contract is shown to specify that the borrowing country experience a capital outflow when the worst realizations of national output occur this seemingly perverse capital outflow forms a necessary part of the optimal solution to the moral hazard problem in investment