1999 Annual Meetings of the Society for Economic Dynamics

Porto Conte Research Center
Alghero, Sardinia, ITALY

June 27 – July 30

Conference Program

Plenary Sessions:

Sunday, June 27, 5:30 6:30 p.m.
Guido Tabellini, Universit� Bocconi and IGIER, Fiscal Policy in Representative Democracies.

Monday, June 28, 5:30 6:30 p.m.
Andrew Postlewaite, University of Pennsylvania, Social Arrangements and Economic Behavior.

Tuesday, June 29, 5:30 6:30 p.m.
Robert E. Lucas, Jr., University of Chicago, Externalities and Cities.

Regular Sessions:

There will be three time slots for each day on Sunday, Monday and Tuesday:

1 = 9:30 11:30 a.m.
2 = 1:00 3:00 p.m.
3 = 3:15 5:15 p.m.
There will be two time slots on Wednesday:

1 = 9:00 11:00 a.m.
2 = 11:15 a.m. 12:45 p.m.

Presenter is highlighted in bold.

Sunday 1

Session A: Localized Spillovers and Agglomeration

Room: Anghelu Ruju
Chair: Francesco Pigliaru

Agglomeration and Trade Revisited,
Gianmarco Ottaviano, Universit� di Bologna, Jacques-Fran�ois Thisse, Universit� Catholique de Louvain
Geography of Innovation and Production in Europe and their Effects on Specialization and Trade,
Laura Bottazzi, Universit� Bocconi and IGIER, Giovanni Peri, Universit� Bocconi and IGIER.
Death and Birth of a City: The Myth of the (Arabian) Phoenix,
Andrea Lamorgese, Universit� Libre de Bruxelles.
Information Spillovers and Factors Adjustment,
Luigi Guiso, Universit� di Sassari and Ente “Luigi Einaudi”,
Fabiano Schivardi, Banca d’Italia.

Session B: Dynamic Contracts and Bargaining

Room: Foradada
Chair: Leonardo Felli

Learning, Commitment and Downward-Flexible Wage Dynamics,
Thomas de Garidel-Thoron, University College of London.
Gradual Concessions, Delays, and the Role of Outside Options in Bargaining,
Olivier Compte, Ecole Nationale des Ponts et Chauss�es, Philippe Jehiel, Ecole Nationale des Ponts et Chauss�es and University College London.
Costly Bargaining and Renegotiation,
Luca Anderlini, St. John’s College, Cambridge, Leonardo Felli, London School of Economics.
Providing Managerial Incentives: Do Benchmarks Matter?
Juan Pedro Gomez, ITAM and Universidad Carlos III de Madrid, Tridib Sharma, ITAM.

Session C: Crimes and Misdemeanors

Room: Cabirol
Chair: Peter Rupert

What Accounts for the Decline in Crime in the 1990’s?
Ayse Imrohoroglu, University of Southern California, Antonio Merlo, New York University, Peter Rupert, Federal Reserve Bank of Cleveland.
Crime and Unemployment,
Kenneth Burdett, Essex University, Ricardo Lagos, London School of Economics, Randall Wright, University of Pennsylvania.
Dynastic Criminal Organizations,
Daria Zakharova, University of Minnesota and Federal Reserve Bank of Minneapolis.
Smuggling, Black Markets in Currencies, and the Inflation Tax: A Welfare Analysis,
Alex Mourmouras, International Monetary Fund.

Session D: Investment Dynamics

Room: Baratz
Chair: Michael Horvath

Do Adjustment Costs Explain Investment-Cash Flow Insensitivity?,
Sangeeta Pratap, ITAM.
Firm Specific Learning and the Investment Behavior of Large and Small Firms,
Wenli Li, Federal Reserve Bank of Richmond, John Weinberg, Federal Reserve Bank of Richmond.
Business Cycles and the Failure of Marginal Firms,
Michael Horvath, Stanford University.
Strategic Technology Investment under Uncertainty,
Kuno Huisman,Tilburg University, Peter Kort, Tilburg University.

Session E: International Business Cycles

Room: Nettuno
Chair: Christian Zimmermann

Static Labor Supply in a Two-Good Two-Country Model: Explaining International Comovements,
J.O. Hairault, Universit� de Paris I.
International Business Cycles; Facts and Fiction,
Steve Ambler, Universit� du Qu�bec � Montr�al, Emanuela Cardia, Universit� de Montr�al, Christian Zimmermann, Universit� du Qu�bec � Montr�al.
Optimal and Simple Monetary Rules and Exchange Regimes in an Open-Economy Business Cycle Model,
Luca Dedola, Banca d’Italia, Sylvain Leduc, Federal Reserve Bank of Philadelphia.
Effects of Government Spending in Open Economies: Empirical Evidence and Predictions of a Dynamic General Equilibrium Model With Nominal Rigidities,
Robert Kollmann, Universit� de Paris XII.

Session F: Monetary Policy I

Room: Calik
Chair: Vincenzo Quadrini

Why do Prices Respond so Sluggishly to Monetary Policy Shocks?
David Andolfatto, Bank of Canada, Guang-Jia Zhang, Bank of Canada
Is Monetary Policy Based on the Phillips Curve Relation Optimal?
Thomas F. Cooley, University of Rochester, Vincenzo Quadrini, Duke University.
Unemployment Dynamics and Monetary Policy,
Gil Mehrez, Georgetown University, Natacha Valla, European University Institute.

Session G: Optimal Taxation

Room: Dragunara
Chair: Paul Klein

Time-Consistent Optimal Taxation,
Paul Klein, Stockholm University, Jos�-V�ctor R�os-Rull, University of Pennsylvania.
On Optimal Taxation in Overlapping Generations Economies,
Thomas I. Renstr�m, Tilburg University.
Optimal Taxation: An Overlapping Generations Approach,
Carlos Garriga, Universitat de Barcelona.
The Optimal Mix of Taxes on Money, Consumption and Income,
Fiorella De Fiore, European Central Bank, Pedro Teles, Banco de Portugal and Universidade Cat�lica Portuguesa.

Sunday 2

Session A: Equilibrium Models of Political Processes

Room: Nettuno
Chair: Thomas Palfrey

An Experimental Study of Jury Decisions,
Richard D. McKelvey, California Institute of Technology, Thomas R. Palfrey, California Institute of Technology.
Ambiguity in Equilibrium for Two Party Electoral Competition,
Enriqueta Aragones, Universitat Pompeu Fabra, Andrew Postlewaite, University of Pennsylvania.
Government Turnover in Parliamentary Democracies,
Daniel Diermeier, Northwestern University, Antonio Merlo, New York University.

Session B: Industry Dynamics & the Organization of Production

Room: Calik
Chair: Matthew Mitchell

Does Technological Change Spur Venture Capital?
Masako Ueda, Universitat Pompeu Fabra.
Regional Employment Dynamics,
Keith Sill, Federal Reserve Bank of Philadelphia.
Industry Dynamics: Aggregate Uncertainty, Heterogeneity, and the Entry and Exit of Firms,
Mallika Ishwaran, Carnegie Mellon University.

Session C: Finance and Growth

Room: Anghelu Ruju
Chair: Marco Vannini

Interactions Between Economic and Financial Development,
Luca Deidda, University of London, Universit� di Sassari, and CRENoS.
Financial Structure, Inequalities and Growth,
Thierry Tressel, DELTA and Universit� de Cergy-Pontoise.
Financial Development and Economic Growth,
Aubhik Khan, University of Virginia and Federal Reserve Bank of Philadelphia.
Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data,
Nicola Cetorelli, Federal Reserve Bank of Chicago, Michele Gambera, Federal Reserve Bank of Chicago.

Session D: Dynamic Fiscal Policy

Room: Foradada
Chair: Gerhard Glomm

Capital versus Labor Taxation with Heterogeneous Agents,
Jonathan Heathcote, Stockholm School of Economics, David Domeij, Stockholm School of Economics.
Long-run Growth with Distortionary Government Expenditures and Transfers,
Scott Baier, University of Notre Dame, Gerhard Glomm, Michigan State University.
Tax Policy, Growth Convergence and Level Convergence,
Steven P. Cassou, Kansas State University, M. Junaid Khawaja, Kansas State University.

Session E: Monetary Policy II

Room: Dragunara
Chair: Andres Erosa

Inflation, Heterogeneity and Costly Credit: How Regressive is the Inflation Tax?
Andres Erosa, University of Western Ontario, Gustavo Ventura, University of Western Ontario.
Optimal Inflation Tax with Imperfect Competition in the Banking Sector,
Bernardino Adao, Banco de Portugal.
Poole Revisited,
Fabrice Collard, CEPREMAP, Harris Dellas, University of Bern, Guy Ertz, Universit� Catholique de Louvain.

Session F: International Finance

Room: Baratz
Chair: Gaetano Antinolfi

International Financial Crises and the Term Structure of Debt Contracts,
Marco Espinosa-Vega, Federal Reserve Bank of Atlanta,
Steve Russell, IUPUI.
On Domestic Financial Market Frictions, Unrestricted International Capital Flows, and Crises in Small Open Economies,
Gaetano Antinolfi, Washington University, Elisabeth Huybens, ITAM.
Parameterizing Currency Risk in the EMS: The Irish Pound and Spanish Peseta against the German Mark,
G.C. Lim, University of Melbourne, Paul D. McNelis, Georgetown University.

Session G: Economics of the Household

Room: Cabirol
Chair: Peter Rupert

Household Production with Time to Build,
Paul Gomme, Federal Reserve Bank of Cleveland, Finn Kydland, Carnegie Mellon University, Peter Rupert, Federal Reserve Bank of Cleveland.
Social Norms and Intergenerational Transfers: Evidence from a Pre-Modern Economy,
Maristella Botticini, Boston University.
An Economic Analysis of Family Structure: Inheritance Rules and Marriage Systems,
Nezih Guner, University of Rochester.
Endogenous Labor Market Rigidities and Family Ties,
Alessandra Fogli, University of Pennsylvania.

Sunday 3

Session A: Time Series

Room: Foradada
Chair: Oliver Linton

Contemporaneous Aggregation of Linear Dynamic Models in Large Economies,
Marco Lippi, Universit� di Roma “La Sapienza,” Paolo Zaffaroni, Banca d’Italia.
Business Cycle Asymmetries: Characterisation and Testing Based on Markov-Switching Autoregressions,
Michael P. Clements, University of Warwick, Hans-Martin Krolzig, Nuffield College, Oxford.
Sectoral Business Cycle Dynamics Using Spatial Methods,
Timothy G. Conley, Northwestern University, Bill Dupor, University of Pennsylvania.
The Asymptotic Distribution of Nonparametric Estimates of the Lyapunov Exponent for Stochastic Time Series,
Yoon-Jae Whang , Ewha University, Oliver Linton, Yale University.

Session B: Dynamic Games and Dynamic Contracts

Room: Anghelu Ruju
Chair: Alessandro Lizzeri

Interim Evaluations in Dynamic Tournaments: the Effects of Midterm Exams,
Alessandro Lizzeri, Princeton University, Margaret Meyer, Nuffield College, Oxford, Nicola Persico, University of Pennsylvania.
Dynamic Costly State Verification,
Cheng Wang, Carnegie Mellon University.
Dynamic Games with Hidden Actions and Hidden States,
Harold Cole, Federal Reserve Bank of Minneapolis, Narayana Kocherlakota, University of Minnesota.
Optimal Dynamic Contracts: Theory and Evidence from the Life Insurance Industry,
Igal Hendel, Princeton University, Alessandro Lizzeri, Princeton University.

Session C: Firm Dynamics

Room: Calik
Chair: Gautam Gowrisankaran

On the Nature of Capital Adjustment Costs,
Russell Cooper, Boston University, John Haltiwanger, University of Maryland.
Firm Investment under Imperfect Capital Markets: A Structural Estimation,
Sangeeta Pratap, ITAM, Silvio Rendon, Universitat Pompeu Fabra.
Financial Constraints and Firm Dynamics,
Andrea Caggese, London School of Economics.
Demand-Side Increasing Returns: Implications for Firm Investment Policy,
Andrew Young, Emory University.

Session D: Financial Intermediation

Room: Dragunara
Chair: Pietro Reichlin

Adverse Selection of Investment Projects and the Business Cycle,
Pietro Reichlin, Universit� di Roma “La Sapienza,” Paolo Siconolfi, Columbia University.
Financial Intermediaries as Matchmakers: The Role of Market Informational Frictions,
Zsolt Becsi, Federal Reserve Bank of Atlanta, Victor Li, Princeton University, Ping Wang, Vanderbilt University.
Dynamic Credit Relationships in General Equilibrium,
Anthony A. Smith, Jr., Carnegie Mellon University, Cheng Wang, Carnegie Mellon University.
Credit Crunch, Bank Lending Behaviour and Monetary Policy: A Model of Financial Intermediation with Heterogeneous Projects,
Mingwei Yuan, Bank of Canada, Christian Zimmermann, Universit� du Qu�bec � Montr�al.

Session E: Trade and Growth

Room: Cabirol
Chair: Jonathan Eaton

Diffusion of Countries’ Growth through Specialization and Trade of Intermediate Inputs,
Antonio Manresa, Universitat de Barcelona, Monica Pigem, Universitat de Barcelona.
Is Openness Relevant for Growth?
Jonathan Eaton, Boston University, Samuel Kortum, Boston University.
Dynamic Interaction: A North-South Story of Technological Diffusion,
Michelle P. Connolly, Duke University.
Vertical Specialization and the Growth of World Trade,
Kei-Mu Yi, Federal Reserve Bank of New York.

Session F: Indeterminacy

Room: Baratz
Chair: Guido Cozzi

Ruling Out Indeterminacy and Multiplicity: The Role of Heterogeneity,
Berthold Herrendorf, University of Warwick, �kos Valentinyi, University of Southampton, Robert Waldmann, Universit� di Chieti.
Technological Volatility as a Route to Indeterminacy,
Guido Cozzi, Cornell University and Universit� di Roma “La Sapienza.”
Indeterminacy and Stabilization Policy in a Two Sector Model with Externalities,
Jang-Ting Guo, University of California, Riverside, Sharon Harrison, Barnard College.
Infinite Lived Agent Economy with Myopia and Overlapping Generation,
Stefano M. Lovo, Universit� Catholique de Louvain.

Session G: Monetary Union

Room: Nettuno
Chair: Hubert Kempf

Designing a Monetary Union: Monetary Rules and Fiscal Constraints,
Russell Cooper, Boston University, Hubert Kempf, Universit� de Paris I.
Labor Markets and Monetary Union: a Preliminary Strategic Analysis,
Alex Cukierman, Tel Aviv University, Francesco Lippi, Banca di Italia.
Public Debt, Default Risk and European Monetary Union,
Silvia Valli, Ente per gli Studi Monetari Bancari e Finanziari “Luigi Einaudi” and University of Warwick.
Welfare Reform, Unemployment, and Growth in Europe,
Francesco Daveri, Universit� di Parma and IGIER, Marco Maffezzoli, Universit� Bocconi.

Monday 1

Session A: Theory of the Firm

Room: Foradada
Chair: Luigi Zingales

A Theory of Supervision with Endogenous Transaction Costs,
A. Faure-Grimaud, London School of Economics, J.J. Laffont and D. Martimort, Universit� de Toulouse.
The Firm as a Dedicated Hierarchy: A Theory of the Origins and Growth of Firms,
R. Rajan and Luigi Zingales, University of Chicago.
Endogenous Spillovers, Increased Competition and Reorganization Waves,
Diego Rodriguez-Palenzuela, Universitat Pompeu Fabra.
Competition and Reputation,
Ramon Marimon, European University Institute and Universitat Pompeu Fabra, Juan Pablo Nicolini, Universidad Torcuato di Tella and Universitat Pompeu Fabra, Pedro Teles, Banco de Portugal and Universidade Cat�lica Portuguesa.

Session B: Political Economics

Room: Anghelu Ruju
Chair: Guido Tabellini

Privatisation, Politics and Institutions: A Cross Country Analysis,
Bernardo Bortolotti, Universit� di Torino and Fondazione eni Enrico Mattei, Domenico Siniscalco, Universit� di Torino and Fondazione eni Enrico Mattei.
Suboptimal Rules Rather than Discretion in Representative Democracies,
V.V. Chari, University of Minnesota, Larry Jones, Northwestern University, Ramon Marimon, European University Institute and Universitat Pompeu Fabra.
Electoral Competition and Political Rents,
Michele Polo, Universit� Bocconi.
Inequality, Inflation and Central Bank Independence,
Jim Dolmas, Southern Methodist University, Gregory W. Huffman, Southern Methodist University and Federal Reserve Bank of Dallas, Mark A. Wynne, Federal Reserve Bank of Dallas.

Session C: Applications in Structural Estimation of Multi-Agent Models

Room: Cabirol
Chair: Kenneth Wolpin

The Minimum Wage and Labor Market Outcomes: Theory and Evidence,
Christopher Flinn, New York University.
The Effect of Statistical Discrimination on Black-White Wage Differentials: Estimating a Model with Multiple Equilibria,
Andrea Moro, University of Minnesota.
Estimating a Bargaining Model with Asymmetric Information: Evidence from Medical Malpractice Disputes,
Holger Sieg, Duke University.
Multiple Equilibria and Minimum Wages in Labor Markets with Informational Frictions and Heterogeneous Production Technologies,
Gerard van den Berg, Free University Amsterdam.

Session D: Labor Market Search

Room: Calik
Chair: Randall Wright

Equilibrium Search Models with Firm-Specific Capital: Theory and Estimation,
Kenneth Burdett, Essex University, Michael S. Nielsen, University of Aarhus.
The Dynamics of Informal Employment,
Jane Ihrig, University of Virginia, Karine Moe, Macalester College.
A Matching Model of Endogenous Skill Requirements with On-the-Job Search,
James Albrecht, Georgetown University, Susan Vroman, Georgetown University.
Efficiency and Labor-Market Search in a Dynamic General Equilibrium Model,
Arnaud Cheron, Universit� de Paris I.

Session E: Capacity Utilization

Room: Dragunara
Chair: Pamela Labadie

Capital Utilization: A (Another?) Fully Worked-Out General Equilibrium Model,
Martial Dupaigne, Universit� de Cergy-Pontoise and CREST.
Agency Costs, Capital Utilization and the Real Business Cycle,
Pamela Labadie, George Washington University.
Time-to-Build and Capacity Choice,
Avner Bar-Ilan, University of Haifa, Agn�s Sulem, INRIA , Alessandro Zanello, International Monetary Fund.
Inventories and Capacity Utilization in a Real Business Cycle Model
Carlo A. Favero and Marco Maffezzoli, Universit� Bocconi.

Session F: International Trade and Factor Movements

Room: Baratz
Chair: Graziella Bertocchi

Labor Market Institutions, International Capital Mobility, and the Persistence of Underdevelopment,
Graziella Bertocchi, Universit� di Modena.
Altruism and International Labour Migration,
Alice Mesnard, CREST and Universit� de Paris II, Damien Gaumont, Universit� de Paris II.
A Model of Sequential Trade Bloc Formation,
Jessica D. Tjornhom, University of Minnesota.

Session G: Social Security

Room: Nettuno
Chair: Selo Imrohoroglu

Social Security and Myopia,
Ayse Imrohoroglu, Selahattin Imrohoroglu, Douglas H. Joines, University of Southern California.
Social Security and Labor Markets,
Douglas H. Joines,
Ayse Imrohoroglu, Selahattin Imrohoroglu, University of Southern California.
A Macro-Market Alternative to Unemployment Insurance,
Marco Del Negro, ITAM.
What Can We Learn About Pension Reform from Generational Accounts for the UK?
James Banks, Institute for Fiscal Studies and University College London, Richard Disney, Institute for Fiscal Studies and University of Nottingham, Zoe Smith, Institute for Fiscal Studies.

Monday 2

Session A: Fund Management Takeovers

Room: Baratz
Chair: Francesca Cornelli

General Equilibrium Implications of Fund Managers’ Compensation Fees,
Domenico Cuoco, Ron Kaniel, University of Pennsylvania.
A Model of Dynamic Loss Aversion,
Nick Barberis, University of Chicago, Ming Huang, Stanford University, Jesus Santos, University of Chicago.
A Theory of Takeover Bidding,
Bilge Yilmaz, University of Pennsylvania.
Risk Arbitrage in Takeovers,
Francesca Cornelli, London Business School, David D. Li, University of Michigan.

Session B: Applications in Structural Estimation of Single-Agent Models

Room: Anghelu Ruju
Chair: Chris Flinn

Training and Occupation Choice of Highly Skilled Immigrants,
Sarit Cohen, Zvi Eckstein, Yoram Weiss, Tel Aviv University.
An Empirical Model of Inventory Investment by Durable Commodity Intermediaries,
George Hall, John Rust, Yale University.
The Effect of Parental Transfers and Borrowing Constraints on Educational Attainment,
Michael Keane, University of Minnesota, Kenneth Wolpin, University of Pennsylvania.
On the Use of Expectations Data in Estimating Structural Dynamic Models: An Analysis of Career Choices,
Wilbert van der Klaauw, New York University.

Session C: Economic Growth I

Room: Anghelu Ruju
Chair: Manuel Santos

Growth Under Perfect Competition: Heterogeneous Agents,
Michele Boldrin, Universidad Carlos III de Madrid, David K. Levine, UCLA.
Economic Growth with Physical and Human Capital,
Manuel Santos, University of Minnesota.
Malthus to Solow,
Ed Prescott, University of Minnesota, Gary Hansen, UCLA.
Growth under Habit Formation and Keeping Up with the Joneses,
Guiseppe Ferraguto, Universit� Bocconi, Patrizio Pagano, Banca d’Italia.

Session D: Applications of Search Models I

Room: Foradada
Chair: Randall Wright

Policy Analysis in the Search Model of the Islands,
Fernando Alvarez, University of Chicago, Marcelo Veracierto, Federal Reserve Bank of Chicago.
On the Neutrality for Severance Payments in the Theory of Search Unemployment,
Pietro Garibaldi, International Monetary Fund, Giovanni Violante, University College London.
Taking Another Look at the Diamond Search Model: Asymmetrical Cycles and Fluctuations,
Masanao Aoki, UCLA.

Session E: Political Economy of Taxation

Room: Calik
Chair: Marco Bassetto

A Coalition Theory of Social Security,
Vincenzo Galasso, Universidad Carlos III de Madrid, Jose Ignacio Conde Ruiz, Universitat Aut�noma de Barcelona.
Why Non-Social-Security Taxes are Important for Assessing Social Security Reforms,
Monika B�tler, Tilburg University.
Political Economy of Taxation in an Overlapping-Generations Economy,
Marco Bassetto, Northwestern University.
Voting on Unemployment Insurance Generosity: Different Voters, Different Votes,
Stephane Pallage and Christian Zimmermann, Universit� du Qu�bec � Montr�al.

Session F: Deviations from the Law of One Price

Room: Cabirol
Chair: Caroline Betts

Tradability for Goods and Real Exchange Rate Fluctuations,
Caroline M. Betts, University of Southern California, Timothy J. Kehoe, University of Minnesota.
What Can We Learn from Deviations from the Law of One Price?
Mario J. Crucini, Ohio State University, Chris I. Telmer, Carnegie-Mellon University, Marios Zachariadis.
Fixed Versus Floating Exchange Rate,
Michael Devereux, University of British Columbia and Hong Kong University of Science and Technology, Charles Engel, University of Washington.
Consumer Search and International Deviations from the Law of One Price,
George A. Alessandria, University of Pennsylvania.

Session G: Monetary Policy III

Room: Dragunara
Chair: Pablo Andres Neumeyer

Should Honest Governments Sell Futures?
Pablo Andres Neumeyer, Universidad Torcuato di Tella and New York University, Fernando Alvarez, University of Chicago and Universidad Torcuato di Tella.
On the Optimality for Activist Policies with a Less Informed Government,
Jean-Pascal Benassy, CEPREMAP.
Nominal Debt as a Burden to Monetary Policy,
Giorgia Giovannetti, Universit� di Firenze and European University Institute, Ramon Marimon, European University Institute and Universitat Pompeu Fabra, Pedro Teles, Banco de Portugal and Universidade Cat�lica Portuguesa.
Global Price Stability with Adaptive Agents and Fiscal Constraints,
Gian Italo Bischi, Universit� di Urbino, Ramon Marimon, European University Institute and Universitat Pompeu Fabra.

Monday 3

Session A: Macroeconomics

Room: Nettuno
Chair: Ellen McGrattan

The Macroeconomic Effects of Big Fiscal Shocks: The Case of World War II,
Ellen McGrattan, Federal Reserve Bank of Minneapolis, Lee Ohanian, University of Minnesota.
The IT Revolution and Stock Prices,
Jeremy Greenwood, University of Rochester, Boyan Jovanovic, New York University.
Aggregate Car Purchases: a Dynamic Discrete Choice Explanation,
Jerome Adda, University College London, Russell Cooper, Boston University.
The Replacement of Durable Goods: an Application to Car Scrappage Schemes,
Omar Licandro, FEDEA, Antonio Sampayo, Universidad de Santiago.

Session B: Search and Matching Theory

Room: Cabirol
Chair: Kenneth Burdett

The Economics of `New Blood’: Vintage Human Capital, Involuntary Unemployment and Endogenous Wage Structures,
Derek Laing, Penn State University, Theodore Palivos, Louisiana State University, Ping Wang, Vanderbilt University.
Policy Analysis of Aggregate Demand Management in Search-Based Models,
Yiting Li, Tsing Hua University, Randall Wright, University of Pennsylvania.
Heterogeneity as a Coordination Mechanism,
Melvyn Coles, Essex University, Jan Eeckhout, Universitat Pompeu Fabra.

Session C: Political Economy of Education

Room: Anghelu Ruju
Chair: Elisabeth Caucutt

The Political Economy of Means-Tested Education Vouchers,
Peter Bearse, University of North Carolina at Greensboro, Gerhard Glomm, Michigan State University, B. Ravikumar, University of Iowa.
Higher Education Subsidies and Heterogeneity,
Elisabeth Caucutt, University of Rochester, Krishna Kumar, University of Southern California.
Beyond Serrano vs. Priest: National Funding of Education,
Jorge Soares, George Washington University.
Evaluating the Long-Run Effectiveness of Poverty Policy: A General-Equilibrium Approach,
John Knowles, University of Pennsylvania.

Session D: Empirical Health Economics

Room: Dragunara
Chair: Chris Flinn

Cigarette Consumption over the Life-Cycle: Quantifying Health and Price Effects,
Jerome Adda and Valerie Lechene, University College London.
Estimating Hospital Quality Using a Bayesian Selection Model,
John Geweke and Gautam Gowrisankaran, University of Minnesota, Robert Town, University of California, Irvine.
Parental Investments in the Mental Health of Children,
Morris Davis, Federal Reserve Board, Michael Foster, Georgia State University.

Session E: Experimentation and Learning

Room: Baratz
Chair: Marcelle Chauvet

Market Structure and Experimentation,
Matteo Bugamelli, Banca d’Italia and Columbia University, Paolo De Santis, McKinsey & Company.
Learning Premia,
Marcelle Chauvet, University of California, Riverside, Simon Potter, Federal Reserve Bank of New York.
Strategic Experimentation and Disruptive Technological Change,
Fabiano Schivardi, Banca d’Italia, Martin Schneider, Stanford University.
Strategic Investment in Technological Innovations,
Kuno Huisman and Peter Kort, Tilburg University.

Session F: Dynamic Contracts

Room: Calik
Chair: Beth Allen

Quantitative Asset Pricing Implications of Endogenous Solvency Constraints,
Fernando Alvarez, University of Chicago and Universidad Torcuato Di Tella, Urban J. Jermann, University of Pennsylvania.
Endogenous Risk, Incentives and Aggregate Fluctuations,
Adriano A. Rampini, Northwestern University.
On the Timing of Transactions,
Beth Allen, University of Minnesota.

Session F: Growth and Business Cycles

Room: Foradada
Chair: Omar Licandro

Endogenous vs. Exogenously Driven Fluctuations in Vintage Capital Models,
Raouf Boucekkine, Universit� Catholique de Louvain, Fernando del Rio, CEPREMAP, Omar Licandro, FEDEA.
Linkages between Growth and Business Cycles,
Keith Blackburn, University of Manchester, Alessandra Pelloni, Universit� di Sassari.
A Multi-Technique Model of Capital Accumulation and Growth,
Juan Carlos Cordoba, University of Rochester.
On Output Dynamics and Shock Propagation in Real Business Cycle Models with Endogenous Growth,
Bernd Lucke, Universit�t Hamburg.

Tuesday 1

Session A: Housing

Room: Anghelu Ruju
Chair: Fran�ois Ortalo-Magne

Loss Aversion and Seller Behavior: Evidence From the Housing Market,
David Genesove, Hebrew University, Chris Mayer, Columbia University.
Bargaining over Residential Real Estate: Evidence from the U.K.,
Antonio Merlo, New York University, Fran�ois Ortalo-Magne, London School of Economics.
Stock-Flow Matching,
Melvyn Coles, University of Essex.

Session B: Limited Enforcement

Room: Cabirol
Chair: Narayana Kocherlakota

Efficient Institutions of Intermediation,
Narayana Kocherlakota, University of Minnesota.
Optimal Dynamic Lending Contracts with Imperfect Information,
Rui Albuquerque, University of Rochester.
Risk Sharing in Economies with Incomplete Markets,
Dirk Krueger, University of Minnesota.
Money and Collateral Constraints,
Marla Patricia Ripoll and Juan Carlos Cordoba, University of Rochester.

Session C: Applications of Search Models II

Room: Foradada
Chair: Kenneth Burdett

The Liquidity Effect of Money in a Search Economy,
Guillaume Rocheteau, Universit� de Paris II.
Endogenous Market Formation,
Klaus Kultti, Helsinki School of Economics and Business Administration.
The `Perverse Effect’ of the Minimum Wage: How Raising the Minimum Wage Can Reduce Endogenous Labor Market Segmentation,
Laurence Rioux, INSEE.
Bidding for Jobs, Holdups & Efficiency,
Marcel Jansen, European University Institute.

Session D: Dynamic Models of Intelectual Property

Room: Calik
Chair: Matthew Mitchell

Innovation Fertility and Patent Design,
Hugo Hopenhayn , University of Rochester, Matthew Mitchell, University of Minnesota.
Patent Design under the Threat of Litigation,
Gerard Llobet, University of Rochester.
Industry Evolution: New Technology and New Firms,
Darren Filson, Claremont University, April Franco, University of Rochester.
Optimal Search and Break-up and Rigidities,
Byeongju Jeong, CERGE-EI, Czech Republic.

Session E: Demographic Transition and Income Distribution

Room: Dragunara
Chair: Ayse Imrohoroglu

The Demographic Transition, Income Distribution, and the Transisition from Agriculture to Industry,
Matthias D�pke, University of Chicago.
Life-span Uncertainty, Altruistic Bequests and the U.S. Wealth Distribution,
Luisa Fuster, Universitat Pompeu Fabra, Ayse Imrohoroglu and Selahattin Imrohoroglu, University of Southern California.
Population Age Structure and Asset Returns: A Dynamic General Equilibrium Analysis,
Jennifer Platania and Don E. Schlagenhauf, Florida State University.
Transitional Dynamics in the Neoclassical Growth Model and the Kuznets Hypothesis,
Maria Jose Alvarez-Pelaez and Antonia Diaz, Universidad de Alicante.

Session F: R&D and Growth

Room: Baratz
Chair: Dan Peled

Growth Implications of R&D Participation Decisions,
Benjamin Bental and Dan Peled, University of Haifa.
Engines of Growth in the U.S. Economy,
Thijs ten Raa, Tilburg University, Edward N. Wolff, New York University.
Endogenous Growth in a Ramsey Vintage Capital Model,
Raouf Boucekkine, Universit� Catholique de Louvain,
Omar Licandro, FEDEA, Luis A. Puch, Universidad Complutense de Madrid.
Vintage Capital Model of Endogenous Growth,
Dante Quaglione, New York University.

Session G: Industry Dynamics with Heterogeneous Firms

Room: Nettuno
Chair: Thomas Cooley

Dynamic Optimal Lending and the Dynamics of Firms,
Thomas Cooley, University of Rochester, Ramon Marimon, European University Institute and Universitat Pompeu Fabra, Vincenzo Quadrini, Duke University.
Liquidity Flows and the Fragility for Business Enterprises,
Wouter Den Haan, Garey Ramey, and Joel Watson, University of California, San Diego.
Optimal Lending Contracts with Firm Survival and Moral Hazard,
Gian LucaClementi and Hugo Hopenhayn, University of Rochester.
Firm Level Financing Constraints and Asset Prices,
Joao Gomes, University of Pennsylvania, and Amir Yaron.

Tuesday 2

Session A: Monetary Policy in an Open Economy

Room: Dragunara
Chair: Elisabeth Huybens

What to Stabilize in the Open Economy: The Case with Production,
Valerie Bencivenga, University of Texas at Austin,
Elisabeth Huybens, ITAM, Bruce D. Smith, University of Texas at Austin, Fabiola Rincon Gonzalez, ITAM.
Into the Mussa Puzzle: Monetary Policy Regimes and the Real Exchange Rate in a Small Open Economy,
Tommaso Monacelli, New York University.
On the Dynamics of the Real Exchange Rate,
Joao C. das Neves, Universidade Cat�lica Portuguesa,
Sergio Rebelo, Northwestern University.
Exchange Rates, Monetary Policy Regimes, and Beliefs,
Keith Sill and Jeff Wrase, Federal Reserve Bank of Philadelphia.

Session B: Search Models of Money

Room: Calik
Chair: Randall Wright

Prices and Velocity for Money in Search Equilibrium,
Saqib Jafarey and Adrian Masters, University of Essex.
On the Local Interaction of Money and Credit,
Yi Jin and Ted Temzelides, University of Iowa.
Monetary Equilibrium From an Initial State: the Case Without Discounting,
Edward Green, Federal Reserve Bank of Minneapolis, Ruilin Zhou, University of Pennsylvania
Search and Middlemen,
Andrey Shevchenko, University of Pennsylvania.

Session C: Empirical Labor I

Room: Cabirol
Chair: Dale Mortensen

Modeling Matched Job-Worker Flows,
Dale Mortensen , Northwestern University.
Job Destruction and Wage Dynamics,
George Neumann, University of Iowa.
Estimating an Efficiency Wage Model,
Jens Larsen, Bank of England.
Serially Correlated Wages in a Dynamic Discrete Choice Model of Teacher Attrition,
Todd Stinebrickner, University of Western Ontario.

Session D: Inequality

Room: Foradada
Chair: Richard Rogerson

The Welfare Implications of Factor Taxation with Rising Wage Inequality,
William Blankenau, University of Wisconsin-Whitewater, Beth Ingram, University of Iowa.
Income Distribution Effects of Public Education and Social Security in a Growing Economy,
Gerhard Glomm, Michigan State University, Michael Kaganovich, Indiana University.
Sorting and Long-run Inequality,
Raquel Fernandez, New York University, Richard Rogerson, University of Pennsylvania.
Wealth Inequality in a Life-Cycle Model with Intergenerational Transfers,
Mariacristina De Nardi, Federal Reserve Bank of Chicago.

Session E: Challenges of Exchange Rate Management

Room: Nettuno
Chair: Enrique Mendoza

Delaying the Inevitable: Optimal Interest Rate Policy and BOP Crises,
Amartya Lahiri and Carlos Vegh, UCLA.
Prospective Deficits and the Asian Currency Crisis,
Craig Burnside, World Bank, Martin Eichenbaum and Sergio Rebelo, Northwestern University.
Capital Flows and Real Exchange Rates Following Spain’s Entry into the European Community,
Gonzalo Fernandez de Cordoba, Universidad de Salamanca, Timothy J. Kehoe, University of Minnesota.
The Business Cycles of Balance-of-Payment Crises: A Revision of a Mundellian Framework,
Enrique G. Mendoza, Duke University, Martin Uribe, University of Pennsylvania.

Session F: Finance and Growth II

Room: Baratz
Chair: Salvador Ortigueira

Financing Innovations in a Growth Model with Complementarities and Substitutions,
Andrea Gerali, Banca d’ Italia.
Variability for the Income Velocity of Money in a Cash-in-Advance Economy with Capital,
Jana Hromcova, Universitat Aut�noma de Barcelona.
Equilibrium Indeterminacy in an Endogenous Growth Model: Debt as a Coordination Device,
Salvador Ortigueira, Cornell University.

Session G: Nonmarket Allocation Processes

Room: Anghelu Ruju
Chair: Andrew Postlewaite

Efficient Mechanisms for Public Goods with Use Exclusions,
Peter Norman, University of Wisconsin.
Laws and Authority,
George Mailath, University of Pennsylvania, Stephen Morris, Yale University, Andrew Postlewaite, University of Pennsylvania.
Fiscal Democracy,
Luca Anderlini, University of Cambridge, Paolo Siconolfi, Columbia University.

Tuesday 3

Session A: Bargaining

Room: Nettuno
Chair: Antonio Merlo

Reform Implementation Under Sequential Bargaining,
Rui Castro and Daniele Coen Pirani, University of Rochester.
Strategic Delegation in n-Person Bargaining Games with Sidepayments,
Matthias Br�ckner, ZEI (Center for European Integration Studies).
Majority Rule in a Stochastic Model of Bargaining,
Hulya Eraslan, University of Minnesota, Antonio Merlo, New York University.
Endogenous Types, Middlemen, and Price Dispersion,
Gabriele Camera, Purdue University.

Session B: Marriage and Fertility

Room: Cabirol
Chair: Jose-Victor Rios-Rull

What Accounts for the Increase in Single Households and the Stability in Fertility?
Ferdinando Regalia, Universitat Pompeu Fabra, Jose-Victor Rios-Rull, University of Pennsylvania.
A Quantitative General Equilibrium Analysis of Mandatory Parental Leave Policies,
Andres Erosa, Luisa Fuster, and Diego Restuccia, University of Western Ontario.
A Defense of Compulsory Measures Against Child Labor,
Sylvain Dessy, Universit� Laval.

Session C: Empirical Labor II

Room: Dragunara
Chair: Daniela Del Boca

Identifying Dynamic Discrete Choice Models: An Application to School-Leaving in France,
Thierry Magnac, INRA-LEA and CREST, and David Thesmar, CREST.
Should I Stay or Should I Go? Educational Choices and Earnings: An Empirical Study for Portugal,
Leonor Modesto, Universidade Cat�lica Portuguesa.
Evaluating the Evolution of the Return to Skill,
Beth Ingram and George Neumann, University of Iowa.

Session D: Empirical Macro I

Room: Baratz
Chair: Satyajit Chatterjee

Comparing Calibrated Models; An Encompassing Approach,
Kevin D. Hoover, Kevin D. Salyer, and Edmund R. Snelling, University of California, Davis.
On the Welfare Effects of Postwar Stabilization Policies,
Satyajit Chatterjee and Dean Corbae, Federal Reserve Bank of Philadelphia.
Heterogeneity in Capital and Skills in a Neoclassical Stochastic Growth Model,
Lilia Maliar and Serguei Maliar, Universitat Pompeu Fabra.

Session E: Families and Clubs

Room: Anghelu Ruju
Chair: Elizabeth Caucutt

The Ties That Bind: Confiscatory Taxation Within the Family,
Elizabeth Caucutt, University of Rochester, Douglas Gollin, Williams College.
Endogenous Clubs, Inequality and Growth,
Fernando Jaramillo, Universit� de Paris I and Universidad de los Andes, Fabien Moizeau, Universit� de Paris I.
Educational Attainment and Timing of Fertility Decisions,
Juan Carlos Conesa, University of Minnesota and Federal Reserve Bank of Minneapolis.
Does Diversity Win in the Marriage Market?
Ramya Sundaram, University of Pennsylvania.

Session F: Adjustment Costs and Business Cycles

Room: Foradada
Chair: Benjamin Eden

Lumpy Investment, Partial Adjustment and the Business Cycle: A Reconciliation,
Julia Thomas, Carnegie Mellon University.
Interrelated Adjustment Costs and Endogenous Cycling in Business Cycles Models,
Xavier Fairise, Universit� d’Angers, Patrick Feve, Universit� de Nantes and CEPREMAP.
The Liquidity Effect in a Small Open Economy Model,
J. Andres, Banco de Espa�a and Universidad de Valencia, J.D. Lopez-Salido and Javier Valles, Banco de Espa�a.
Inventories and the Business Cycle: The Implications of a UST Model,
Benjamin Eden, University of Haifa.

Session G: Business Cycle Models

Room: Calik
Chair: Raphael Bergoeing

Unions, Increasing Returns and Endogenous Fluctuations,
Rui Coimbra, University of York, Teresa Lloyd-Braga and Leonor Modesto, Universidade Cat�lica Portuguesa.
Economic Policy and Endogenous Business Cycles,
Marta Aloi, University of Nottingham, Hans J�rgen Jacobsen, University of Copenhagen, Teresa Lloyd-Braga, Universidade Cat�lica Portuguesa.
Business Cycles and Government Policy; A Stochastic General Equilibrium Model to Analyze the Recent Chilean Experience,
Raphael Bergoeing and Raimundo Soto, ILADES Georgetown University, Chile.
Optimal Fiscal Policy in a Business Cycle Model: Alternative Identifications of the Optimal Ex-Post Capital Income Tax Rates,
Baltasar Manzano, Universidade de Vigo, Jesus Ruiz Andujar, Universitat Aut�noma de Barcelona.

Wednesday 1

Session A: Credit Markets

Room: Foradada
Chair: Franck Portier

A Dynamic Model of Credit Allocation,
Alexis Direr, Universit� de Paris I.
Anatomy of a Recession: France 1993 and the Maastricht Hypothesis,
Franck Portier, Universit� de Toulouse I.
The Predictive Content of the Yield Curve: A Theoretical Assessment,
Christel Rendu, London Business School.

Session B: Regional Growth

Room: Cabirol
Chair: Raffaele Paci

Migration Flows, Human Capital and Labor Demand,
Marina Murat, Universit� di Pavia, Sergio Paba, Universit� di Modena.
Technological Catch-up and Regional Growth in Europe,
Raffaele Paci and Francesco Pigliaru, Universit� di Cagliari and CRENoS.
Technological Externalities and Growth of Local Industries,
Mario Forni and Sergio Paba, Universit� di Modena.
The Effects of Integration on Regional Disparities: Convergence, Divergence or Both?
Mariassunta Giannetti, UCLA .

Session C: Unemployment

Room: Anghelu Ruju
Chair: Robert Reed

Long-Term Unemployment and the Duration of Benefit Payments in a Model of Learning by not Doing,
Melvyn Coles and Adrian Masters, Essex University.
Product Market Reputation and Labor Market Outcomes,
Derek Laing, Penn State University, Robert Reed III, Iowa State University.
Unemployment Insurance, Moral Hazard and Human Capital,
Anthony Smith, Chang Wang and Eric Young, Carnegie Mellon University.
Unemployment and Social Norms,
Claudia Olivetti, University of Pennsylvania.

Session D: Political Economy

Room: Calik
Chair: Gregory Huffman

Special Interests and Technological Change,
Giorgio Bellettini and Gianmarco Ottaviano, Universit� di Bologna.
Redistributive Politics and the Impediments to Economic Reform,
Sanjay Jain and Sharun Mukand, Tufts University.
On the Political Economy of Immigration and Income Redistribution,
Jim Dolmas and Gregory Huffman, Southern Methodist University

Session E: Development

Room: Dragunara
Chair: Giovanni Urga

Convergence in Output and Investment in Transition Economies: Central and Eastern Europe, 1970-1995,
Stepana Lazarova, Saul Estrin, and Giovanni Urga, London Business School.
Human Capital’s Role in the Wealth and Development of Nations,
Scott L. Baier, University of Notre Dame, Gerald P. Dwyer, Federal Reserve Bank of Atlanta and Clemson University, Robert Tamura, Clemson University.
Education, Technology Adoption, and Productivity,
Xavier Mateos-Planas, University of Southampton.
Income Distribution and the Demand Constraint,
Anandi Mani, Vanderbilt University.

Session F: Debt Constraints and Liquidity Constraints

Room: Nettuno
Chair: Timothy Kehoe

Incomplete Markets Versus Debt Constrained Markets,
Timothy J. Kehoe, University of Minnesota, David K. Levine, UCLA.
Defaults and Incomplete Markets,
Fabrizio Perri, New York University.
Borrowing and Lending without Commitment and with Finite Life,
Luisa Lambertini, UCLA.
Decentralization of International Debt with Risk of Repudiation,
Karsten Jeske, University of Minnesota.

Session G: Empirical Macro II

Room: Baratz
Chair: Alberto Pozzolo

Investment and the Exchange Rate,
Francesco Nucci, Columbia University and Universit� di Roma “La Sapienza,” Alberto F. Pozzolo, Banca di Italia.
Some Econometric Issues in Convergence Regressions,
Adriana Di Liberto, University College London, Universit� di Sassari and CRENoS, James Symons, University College London.
International Integration and Long-Run Persistence of the GNP Distribution,
Jerome Glachant, Universit� d’Evry-Val-d’Essonne, Charles Vellutini, Universit� de Paris I.

Wednesday 2

Session A: Development II

Room: Nettuno
Chair: Stephen Parente

Home Work, Farm Work, and International Differences in Productivity,
Douglas Gollin, Williams College, and Stephen L. Parente and Richard Rogerson, University of Pennsylvania.
The Growth and Welfare Effects of Tariffs and Tariff Reform in a Small Open Economy,
Thomas Osang, Southern Methodist University, and Stephen J. Turnovsky, University of Washington.
Fiscal Centralization and Development: The Case of China, 900-1900 A.D.,
Ronald A. Edwards, University of Minnesota.

Session B: Intergenerational Links and Development

Room: Cabirol
Chair: Antonia Diaz

Intergenerational Income Persistence: Sources and Policy Implications,
Diego Restuccia, University of Western Ontario, and Carlos Urrutia, Universidad Carlos III de Madrid.
Altruism and Inter-Vivos Transfers,
Antonia Diaz, Universidad de Alicante, and Cristina Echevarria, University of Saskatchewan.
Investment Specialization, Fertility and Development,
Robert Tamura, Clemson University, and Michael Sadler, Kansas State University.

Session C: Precautionary Savings

Room: Calik
Chair: Hamish Low

Self-Insurance, Life-Cycle Labour Supply and Savings Behaviour,
Hamish Low, University of Cambridge and Institute for Fiscal Studies.
Precautionary Savings, Life-Cycle and Macroeconomics,
Pierre-Oliver Gourinchas, Princeton University.
Life-Cycles, Dynasties and Saving: Implications for Closed and Small Open Economies,
Hamid Faruqee and Douglas Laxton, International Monetary Fund.

Session D: Empirical Macro III

Room: Baratz
Chair: Gianna Boero

Monetary Policy Misspecification in VAR Models,
Fabio Canova, Universitat Pompeu Fabra and University of Southampton, and Joaquim Pires Pina, Universitat Pompeu Fabra.
Tests of the Expectations Hypothesis and Policy Reaction to the Term Spread: Some Comparative Evidence,
Gianna Boero, CRENoS, Universit� di Cagliari, and University of Warwick, and Costanza Torricelli, Universit� di Modena.
An Empirical Investigation on the Source of Inflation Persistence,
Guido Ascari and Juan Angel Garcia, University of Warwick.

Session E: Dynamic Models

Room: Dragunara
Chair: Maurizio Iacopetta

How to Evaluate R&D Firms in a Dynamic Technological Environment,
Maurizio Iacopetta, New York University and Universit� di Roma “La Sapienza”.
Prediction Ability and Investment Under Uncertainty,
Katsuya Takii, University of Pennsylvania.
Aggregation in Dynamic Models,
Serguei Maliar and Lilia Maliar, Universitat Pompeu Fabra.

Session F: Monetary Economics

Room: Foradada
Chair: Fran�ois Velde

A Model of Bimetallism,
Fran�ois Velde, Federal Reserve Bank of Chicago, and Warren Weber, Federal Reserve Bank of Minneapolis.
The Simple Case of Subsidiary-Coin Shortages Driven by Deflation in POW Camps,
Juan-Manuel Renero, Centro de Investigaci�n y Docencia Econ�micas.
Ruling Out Pareto Dominated Monetary Equilibria,
Bill Dupor, University of Pennsylvania.

Session G: Economic Growth II

Room: Anghelu Ruju
Chair: Vivek Ramachandran

Capital Accumulation in Imperfectly Competitive Economies with Externalities,
Vivek Ramachandran and Stephen E. Spear, Carnegie Mellon University.
Multiple Balanced Growth Paths and Global Indeterminacy in an Endogenous Growth Model with Public Capital,
Xavier Raurich, Universidad de Alicante.
National Debt Sustainability and the Dynamics in the Economy of Diamond,
David de la Croix, Universit� Catholique de Louvain, and Phillipe Michel, Universit� de la Mediterranee and GREQAM