We develop a simple model featuring search frictions and a nondegenerate labor supply decision along the extensive margin. The model is a standard version of the neoclassical growth model with indivisible labor and idiosyncratic productivity shocks and frictions characterized by employment loss and employment opportunity arrival shocks. We argue that it is able to account for the key features o...

The main purpose of the paper is to show that the process of household formation in a competitive market does not necessarily lead to outcomes that are efficient at the economy level, even assuming that members of each household take efficient collective consumption decisions. To this end, we consider a generalization of the Arrow-Debreu exchange economy model in which endogenous household form...

This paper considers an economy where agents face limited commitment and must transfer a durable asset as collateral to borrow. Rehypothecation allows lenders to re-sell this pledged asset or re-use it as collateral to sustain further borrowing. As such, it increases the ultimate supply of durable asset in the economy along collateralized credit chains. However, limited commitment now affects r...

This paper is an adaptation to the WAYANG model of Indonesia of the ORANIG course paper authored by Horridge, Parmenter and Pearson. WAYANG is based partly on an earlier version of WAYANG documented by Peter Warr and associates, and uses the database devised by them, and partly on ORANI-G. The description of the model's equations and database is closely integrated with an explanation of how the...

Asset prices and returns are known to vary signi®cantly more than output or aggregate consumption growth, and an order of magnitude in excess of what is justi®ed by innovations to fundamentals. We study excess price volatility in a lifecycle economy with two assets (claims on capital and a public debt bubble), heterogeneous agents, and increasing returns to ®nancial intermediation. We show that...

BACKGROUND Computable general equilibrium models are known as a powerful instrument in economic analyses and widely have been used in order to evaluate trade liberalization effects. The purpose of this study was to provide the impacts of trade openness on pharmaceutical industry using CGE model. METHODS Using a computable general equilibrium model in this study, the effects of decrease in tar...

We introduce agent-based dynamics in a class of Arrow-Debreu economies with capital accumulation and technological progress. In this framework we confirm the results obtained by Gintis (2006, 2007) in an exchange economy: the micro-behavior of boundedly rational agents can lead to the emergence of equilibrium at the macro-level provided some form of collective optimization takes place via evolu...