The key features of our model are those that prevent a sharp rise in marginal costs after an expansionary shock to monetary policy. Of these features, the most important are staggered wage contracts of average duration three quarters, and variable capital utilization. We illustrate the use of various frequency domain tools for estimating and testing dynamic, stochastic general equilibrium models. Anath Seshardi Many would say that children are society's most precious resource. To gain insight into this question, a dynamic general equilibrium model is developed where children differ by ability.
Parents invest time and money in their offspring, depending on their altruism.
This allows their children to grow up as more productive adults. First, the efficient allocation is characterized. Next, this is compared with the outcome that arises when financial markets are incomplete. The situation where childcare markets are also lacking is then examined. Additionally, the consequences of impure altruism are analyzed.