This paper studies the design of unemployment insurance when neither the searching effort nor the savings of an unemployed agent can be monitored. If the principal could monitor the savings, the optimal policy would leave the agent savings-constrained. With a constant absolute risk-aversion (CARA) utility function, we obtain a closed form solution of the optimal contract. Under the optimal cont...

Using staggered changes to debt contract enforcement costs in India, we estimate it’s causal effect on financing and asset maturity. A reduction in enforcement costs is associated with an increase in long-term debt and a decrease in short-term debt and trade-credit. The increase in debt maturity is confined to firms that borrow from multiple and diverse set of lenders and to smaller firms. Firm...

We study competitive awarding procedures of short haul railway passenger services in Germany from 1995 to 2011 by means of a newly collected data set. In particular, we use regression techniques to investigate the determinants of the number of bidders, the identity of the winning bidder and the subsidy level. We find that there are more bidders when the contract duration is high and the revenue...

We characterize the optimal renegotiation-proof contract in a dynamic principal–agent model in which the type of the agent may change stochastically over time. We show that, under general conditions, the optimal contract with commitment is renegotiation proof even when type realizations are serially correlated. When the renegotiation-proofness constraint is binding, it is always optimal to part...

We analyze the optimal contract to finance the series of investments of a growing firm. The analysis is based on the need to repeatedly raise funds when informed insiders can expropriate outside investors. The optimal contract can be implemented by a sequence of one-period debt contracts and equity ownership by outsiders. Debt is optimal, as it reduces the expected cost of auditing, while parti...

The effects of public policy programs which aim at internalizing spill-overs due to successful innovation are analyzed in a sequential double-sided moral hazard doublesided adverse selection framework. The central focus lies in analyzing their impact on contract design. We show that in our framework only ex post grants are a robust instrument for implementing the first-best situation, whereas t...

This paper investigates the e¤ects of replacing the consumer price index (CPI) with the wholesale price index (WPI) in the cointegrating international parity relationships found by Juselius and MacDonald (2000). Our empirical analysis outstandingly produced results similar to the ones obtained by Juselius and MacDonald, suggesting that the cointegration relationships in the international parity...

This paper evaluates three models for predicting currency crises that were proposed before 1997. The idea is to answer the question: if we had been using these models in late 1996, how well armed would we have been to predict the Asian crisis? The results are mixed. Two of the models fail to provide useful forecasts. One model provides forecasts that are somewhat informative though still not re...

We use microdata collected at the border and store to characterize price impact of recent US trade policy on importers, exporters, consumers. At border, import tariff pass-through is much higher than exchange rate pass-through. Chinese exporters did not lower their dollar prices by much, despite appreciation dollar. By contrast, significantly lowered affected foreign retaliatory tariffs. In sto...

How does the central bank’s incentive to build a reputation affect speculators’ ability to coordinate and the likelihood of the devaluation outcome during speculative currency crises? What role does market information play in speculators’ coordination and the central bank’s reputation building? I address these questions in a dynamic regime change game that highlights the interaction between the...