We address the question of existence of equilibrium in general timing games with complete information. Under weak assumptions, any two-player timing game has a Markov subgame perfect e-equilibrium, for each e40: This result is tight. For some classes of games (symmetric games, games with cumulative payoffs), stronger existence results are established. r 2004 Elsevier Inc. All rights reserved. J...

a r t i c l e i n f o JEL classification: Q43 Q54 C68 D58 H50 H68 Keywords: Fuel prices Endogenous growth Budgetary consolidation Climate policy Dynamic general equilibrium Portugal This paper examines the influence of fossil fuel prices on carbon dioxide emissions, economic activity, and the public sector account in Portugal. It uses a dynamic general equilibrium model which highlights the mec...

We estimate the dynamic stochastic general equilibrium model of Christiano, Eichenbaum, and Evans (2005) on United Kingdom data. Our estimates suggest that price stickiness is a more important source of nominal rigidity in the U.K. than wage stickiness. Our estimates of parameters governing investment behavior are only well behaved when post-1979 observations are included, which reflects govern...

In this paper we argue that the number of candidates running for public office, their ideological differentiation, and the intensity of campaign competition are all naturally intertwined, and jointly determined in response to the incentives provided by the electoral system. We propose a simple general equilibrium model that integrates these elements in a unitary framework, and provide a compari...

The paper deals with the computation of DSGE models with a large number (or continuum) of heterogenous agents and incomplete markets. Solving this model requires approximate aggregation, representing the cross-sectional distribution by a finite number of state variables. In the existing literature, people compute nonlinear solutions with a very low-dimensional state vector, or a high-dimensiona...

This paper develops a computable general equilibrium model with overlapping generations [OLG] to analyse the behavioural, welfare and macroeconomic implications of the following hypothetical changes to the age pension means test: (i) abolition of the means test, (ii) 50 percent reduction in the income taper rate and (iii) removal of the labour earnings from the income test. The model features i...

This paper formulates and analyzes a general model of elections in which candidates receive private signals about voters’ preferences prior to committing to political platforms. We fully characterize the unique pure-strategy equilibrium: After receiving her signal, each candidate locates at the median of the distribution of the median voter’s location, conditional on the other candidate receivi...

Worker Absenteeism in Search Equilibrium The paper presents a general equilibrium model of search unemployment that incorporates absence from work as a distinct labor force state. Absenteeism is driven by random shocks to the value of leisure that are private information to the workers. Firms maximize profits while recognizing that the compensation package may affect the queue of job applicants...

We examine the linear-quadratic (LQ) approximation of non-linear stochastic dynamic optimization problems in macroeconomics, in particular for monetary policy. We make four main contributions: first, we draw attention to a general Hamiltonian framework for LQ approximation due to Magill (1977). We show that the procedure for the ‘large distortions’ case of Benigno and Woodford (2003, 2005) is e...

This paper develops a novel approach for estimating latent state variables of Dynamic Stochastic General Equilibrium (DSGE) models that are solved using a second-order accurate approximation. I apply the Kalman filter to a state-space representation of the second-order solution based on the ‘pruning’ scheme of Kim, Kim, Schaumburg and Sims (2008). By contrast to particle filters, no stochastic ...