We analyze an equilibrium concept called revision-proofness for infinite-horizon games played by a dynasty of players. Revision-proofness requires strategies to be robust to joint deviations by multiple players and is a refinement of sub-game perfection. Sub-game perfect paths that can only be sustained by reversion to paths with payoffs below those of an alternative path are not revision-proof...

The framework of a general equilibrium heterogeneous agent model is used to study the optimal design of an unemployment insurance (UI) scheme and preferences for unemployment policy reforms. In a first step, the optimal defined benefit and defined replacement ratio UI systems are obtained in simulations. Then, the question whether switching to such an optimal system from the status quo would be...

In models with complete markets, targeting core inflation enables monetary policy to maximize welfare by replicating the flexible price equilibrium. We develop a two-sector new-Keynesian model to evaluate different inflation targeting rules in economies with financial frictions. We conclude that, in the presence of financial frictions, a welfaremaximizing central bank should adopt flexible head...

Redistributive Taxation and Personal Bankruptcy in US States Both personal bankruptcy and redistributive taxes can insure households’ consumption risk and both vary considerably across US states. We derive sufficient conditions under which more redistributive taxation makes bankruptcy exemptions less attractive both for the intratemporal insurance and for inter-temporal consumption smoothing. E...

It is shown that for a ‘complex economy’, characterised in terms of a formal dynamical system capable of computation universality, it is impossible to devise an e¤ective theory of policy. JEL Classi…cation Codes: C60, E60, E61, E69

By introducing the concepts of implicit coalitions and con‡ict of interests in a multiple-player context, this paper generalizes some theorems on policy invariance and equilibrium existence and uniqueness for LQ policy games. JEL: C72, E52, E61

The purpose of this paper is to confront economic models of climate change with the reality that limited information exists with which to form expectations about the evolution of the climate. A key element in the tension between those who believe we should impose aggressive climate change mitigation policies and those who do not is the question of if we are merely in a long period of shock-indu...

Some Thoughts on Macroeconomic Fluctuations and the Timing of Labor Market Reform In this paper, I analyze the pros and cons of implementing structural reforms of the labor market in booms vs. recessions, in light of considerations of social efficiency, political viability, and macroeconomic fine tuning. While the optimal timing of a reform depends on the relative importance of several conflict...

We study the role of anonymous markets in which trades cannot be monitored by the government. We adopt a Mirrlees approach to analyze economies in which agents have private information and a benevolent government controls optimal redistributive tax policy. While unrestricted access to anonymous markets reduces the set of policy instruments available to the government, it also limits the scope o...

the paper examines for the first time the foreign exchange intervention policy in foreign exchange market of iran. and in this framework, the study designs and simulates the foreign exchange intervention model in iran. in the first section, the paper shows that the injection of oil revenues directly to economy and also the absence of potent structure of output are inclusively caused the central...