The Association Agreement between Jordan and the EU entered into force in 2002. It provides a gradual reduction of import duties on EU products over a period of twelve years. In this paper we investigate the economic implications of induced trade liberalization on aggregate economic performance as well as effects on welfare and income distribution of heterogenous households. This is done by int...

In a dynamic general equilibrium model we explictly consider the relationship between the product attributes ’durability’ and ’recyclability’. Both efficiency and sustainability aspects are taken into account. It turns out (a) that durability may be inefficient even in a perfectly competitive economy in which environmental externalities are absent, (b) that in case where markets for product des...

We develop a tractable dynamic general equilibrium model of oligopolistic competition with a continuum of heterogeneous industries. Industries are exposed to aggregate and industry-specific productivity shocks. Firms in each industry set value-maximizing state-contingent markups, taking as given the behavior of all other industries. When consumers are risk-averse, industry markups are countercy...

We incorporate a wage-bargaining structure in a dynamic general equilibrium model and show how this feature changes shortand long-run properties of equilibria compared with a perfectly competitive setting. We discuss how employment, capital and income shares respond to wage-setting shocks and show that adjustment dynamics depend decisively on the magnitude of the elasticity of substitution betw...

I study a bilateral bargaining game in which the size of the surplus follows a stochastic process and in which players might be optimistic about their bargaining power. Following Yildiz (2003), I model optimism by assuming that players have different beliefs about the recognition process. I show that the unique subgame perfect equilibrium of this game might involve inefficient delays. I also sh...

E C O N O M I C R E V I E W Second Quarter 2005 The 2001 recession displayed unique characteristics in comparison to other recessions. Although moderate in terms of the decline in output, the recession was unique in that the contraction in measured output was driven almost entirely by retrenchment in business capital spending. Consumer spending growth remained positive, and residential investme...

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...

The two major paradigms in the theoretical agency literature are moral hazard (i.e., hidden action) and adverse selection (i.e., hidden information). Prior research typically solves these problems in isolation, as opposed to simultaneously incorporating both adverse selection and moral hazard features. We formulate two complementary generalized principalagent models that incorporate features ob...

In this paper I propose an alternative to calibration of linearized singular dynamic stochastic general equilibrium models. Given an a-theoretical econometric model as a representative of the data generating process, I will construct an information measure which compares the conditional distribution of the econometric model variables with the corresponding singular conditional distribution of t...

In this paper we propose a recursive equilibrium algorithm for the numerical simulation of nonoptimal dynamic economies. This algorithm builds upon a convergent operator over an expanded set of state variables. The fixed point of this operator defines the set of all Markovian equilibria. We study approximation properties of the operator. We also apply our recursive equilibrium algorithm to vari...