I. DSGE Theory and Computation

                       

A. Sequential and Recursive Competitive Equilibrium

           

Textbooks

           

T. Cooley, Frontiers of Business Cycle Research, Princeton University Press, 1995. Chapters 1-2.

         

L. Ljungqvist and T. Sargent, Recursive Macroeconomic Theory, MIT Press, 2000. Chapter 12, New chapters for 2nd Edition.

         

N. Stokey and R.E. Lucas with E. Prescott, Recursive Methods in Economic Dynamics, Harvard University Press, 1989, Chapters 15-16.

           

Papers

           

R. Mehra and E. Prescott, Recursive Competitive Equilibrium: The Case of Homogenous Households, Econometrica 48, 1365-80, September 1980.

 

Bona, J.L. and M.S. Santos, On the Role of Computation in Economic Theory, Journal of Economic Theory, Volume 72, Issue 2, February 1997, Pages 241-281
         

B. Monotone Methods

           

Textbooks

           

Athey, S., P. Milgrom, and J. Roberts, Robust Comparative Statics, draft manuscript (not publicly available currently).

 

Cooper, R., Coordination Games: Complementarities and Macroeconomics, Cambridge University Press, 1999.

         

Topkis, D., Supermodularity and Complementarity, Princeton University Press, 1998.

         

Papers

         

Athey, S., Monotone Comparative Statics Under Uncertainty, Quarterly Journal of Economics, CXVII (1), February 2002, 187-223.

 

Cooper, R. and A. John, Coordinating Coordination Failures in Keynesian Models, Quarterly Journal of Economics, 103 (1988), 441-463.

                             

Hopenhayn, H. and E.C. Prescott, Stochastic Monotonicity and Stationary Distributions for Dynamic Economies, Econometrica, 60 (2), November 1992, 1387-1406.

         

Milgrom, P. and J. Roberts, Comparing Equilibria, American Economic Review, 84 (3), 1994, 441-459.

         

Milgrom, P. and C. Shannon, Monotone Comparative Statics, Econometrica, 62(1), January 1994, 157-180.

         

Mirman, L.J., and R. Ruble, Lattice Programming and the Consumers Problem, January 2003.

                   

Vives, X., Nash Equilibrium with Strategic Complementarities, Journal of Mathematical Economics, 19 (1990), 305-21.

         

Zhou, L., The Set of Nash Equilibria of a Supermodular Game is a Complete Lattice, Games and Economic Behavior, 7 (1994) 295-300.

         

C. Representative Agent Nonoptimal Economies

         

Textbooks

         

T. Cooley, Frontiers of Business Cycle Research, Princeton University Press, 1995. Chapter 3.

                   

L. Ljungqvist and T. Sargent, Recursive Macroeconomic Theory, MIT Press, 2000. Chapter 12, New chapters for 2nd Edition.

         

N. Stokey and R.E. Lucas with E. Prescott, Recursive Methods in Economic Dynamics, Harvard University Press, 1989. Chapter 18

         

Papers

         

Amir, R., L. J. Mirman and W. Perkins, 1991, One-sector New classical Optimal Growth: Optimality Conditions and Comparative Dynamics, International Economic Review, 32, 625-644.

         

Coleman, W. J., II. 1990, Solving the Stochastic Growth Model by Policy Function Iteration, Journal of Business and Economic Statistics, 8 (1990), 27-29.

         

Coleman, W. J., II. 1991. Equilibrium in a Production Economy with an Income Tax. Econometrica, 59, 1091-1104.

         

Coleman, W. J., II. 1997. Equilibria in Distorted Infinite-horizon Economies with Capital and Labor. Journal of Economic Theory, 72, 446-461.

         

Coleman, W. J., II. 2000. The Uniqueness of Equilibrium in Infinite horizon Economies with Taxes and Externalities, Journal of Economic Theory, 95, 71-78.

                   

Datta, M., L. J. Mirman, and K. L. Reffett, 2002. Existence and Uniqueness of Equilibrium in Distorted Dynamic Economies with Capital and Labor, Journal of Economic Theory, 103, 377-410.

         

Datta, M., L. J. Mirman, O. Morand, and K. L. Reffett, 2002, Monotone Methods for Markovian Equilibrium in Dynamic Economies.

         

Greenwood, J., and G. Huffman. 1995. On the Existence of Nonoptimal Equilibria in Dynamic Stochastic Economies, Journal of Economic Theory, 65, 611-623.

         

Kehoe, T., D. Levine, and P. Romer. 1992. On characterizing equilibria of economies with externalities and taxes as solutions to optimization problems. Economic Theory, 2, 43-68.

 

Santos, M.S., Accuracy of Numerical Solutions Using the Euler Equation Residuals, Econometrica 68 (2000), 1377-1402.

 

Santos, M.S., On Non-existence of Markov Equilibria in Competitive-Market Economies, Journal of Economic Theory, Volume 105, Issue 1, July 2002, 73-98

 

Santos, M.S. and J. Vigo-Aguiar, Analysis of a Numerical Dynamic Programming Algorithm Applied to Economic Models, Econometrica, Vol. 66, No. 2. (Mar., 1998), pp. 409-426

 

                   

D. Heterogeneity and Incomplete Markets: Bewley Model

         

Textbooks

 

T. Cooley, Frontiers of Business Cycle Research, Princeton University Press, 1995. Chapter 4.

 

L. Ljunqvist and T. Sargent, Recursive Macroeconomic Theory, 2000, MIT Press. Chapter 14.

         

Papers

         

S.R. Aiyagari, Uninsured Idiosyncratic Risk and Aggregate Saving, Quarterly Journal of Economics, 109 (1994) 659-684.

         

S.R. Aiyagari, Optimal Capital Income Taxation with Incomplete Markets, Borrowing Constraints and Constant Discounting, Journal of Political Economy, 6 (1995) 1158-1175.

         

S.R. Aiyagari and E.R. McGrattan, The Optimal Quantity of Debt, Journal of Monetary Economics (Vol. 42, No. 3, December 1998, pp. 447-469) Appendix

 

K. Athreya, 2002, Welfare Implications of the Bankruptcy Reform Act of 1999, forthcoming, Journal of Monetary Economics 49, 1567-1595.

         

T. Bewley, Stationary monetary equilibrium with a continuum of independently fluctuating consumers, in W. Hildenbrand and A. Mas-Colell ed., Contributions to Mathematical Economics in Honor of Gerard Debreu, Amsterdam: North Holland, 1986.

                             

M. Huggett, The Risk-Free Rate in Heterogeneous-Agent Incomplete-Insurance Economies, Journal of Economic Dynamics and Control, 17 (1993) 953-969.

 

M. Huggett, Wealth Distribution in Life-Cycle Economies, Journal of Monetary Economics 38 (1996), 469-494.

         

M. Huggett, The One-Sector Growth Model with Idiosyncratic Shocks: Steady States and Dynamics, Journal of Monetary Economics, 39 (1997) 385-403.

                   

P. Krusell and A. Smith, Income and Wealth Heterogeneity in the Macroeconomy, Journal of Political Economy, 105 (1998) 867-896.

         

W. Li and Pierre-Daniel Sarte, The Macroeconomics of U.S. Consumer Bankruptcy Choice: Chapter 7 or Chapter 13? 2002.

         

X. Mateos-Planas and Giulio Seccia, Welfare Implications of Bankruptcy with Endogenous Credit Limits, 2003

         

J. Miao, Stationary equilibria of economies with a continuum of consumers, Working paper, University of Rochester, 2001.

         

J. Miao, Competitive Equilibria of Economies with a Continuum of Consumers and Aggregate Shocks, Working paper, University of Rochester, 2003.

 

Jennifer M. Platania, The Welfare Implications of the Tax Benefit to Homeownership, 2001.

 

Gustavo Ventura, Flat Tax Reform: A Quantitative Exploration, Journal of Economic Dynamics and Control, 23, 1999.

 

E. Heterogeneous Agents Pure Exchange Economies

 

Textbooks

 

L. Ljunqvist and T. Sargent, Recursive Macroeconomic Theory, 2000, MIT Press. Chapter 7.

 

Papers

 

Duffie, D., J. Geanakoplos, A. Mas-Colell, and A. McLennan, Stationary Markov Equilibria, Econometrica, 62 (1994) 745-781.

 

Judd, K., F. Kubler, and K. Schmedders, Asset Trading Volume in Infinite-Horizon Economies with Dynamically Complete Markets and Heterogeneous Agents, Journal of Finance (forthcoming), (pdf)

 

Judd, K., F. Kubler, and K. Schmedders, Computational Methods for Dynamic Equilibria with Heterogeneous Agents, Advances in Economic Theory and Econometrics, Volume III, Econometric Society, New York, 2003.

 

Krebs, T., "Non-Existence of Recursive Equilibria on Compact State Spaces When Markets Are Incomplete", forthcoming in The Journal of Economic Theory

 

Kubler, F. and K. Schmedders, Stationary Equilibria in Asset-Pricing Models with Incomplete Markets and Collateral, (pdf), Econometrica (forthcoming).

 

Kubler, F. and K. Schmedders, Recursive Equilibria in Economies with Incomplete Markets, Macroeconomic Dynamics, 6 (2002) 284-306

 

Levin, D. and W. Zame, Debt Constraints and Equilibrium in Infinite Horizon Economies with Incomplete Markets, Journal of Mathematical Economics 26 (1996), 103-131.

 

Levin, D. and W. Zame, Does Market Incompleteness Matter [09/25/01]

 

Magill, M. and M. Quinzii, Infinite Horizon Incomplete Markets, Econometrica 62 (1994), 853-880.

 

Magill, M. and M. Quinzii, Incomplete Markets Over An Infinite Horizon:  Long Lived Securities and Speculative Bubbles, Journal of Mathematical Economics, vol. 26, 1996, pp. 133-170.

 

Santos, M.S. and M. Woodford, Rational Asset Pricing Bubbles, Econometrica 65: 19-58 (1997)

         

II. Asset Pricing

         

Textbooks

         

Cochrane, J., Asset Pricing, Princeton University Press, 2002.

 

T. Cooley, Frontiers of Business Cycle Research, Princeton University Press, 1995. Chapter 10.

         

L. Ljunqvist and T. Sargent, Recursive Macroeconomic Theory, 2000, MIT Press. Chapters 7 and 10.

         

A. Stylized Facts and Standard CCAPM

         

Campbell, J., Consumption-Based Asset Pricing, forthcoming in Handbook of the Economics of Finance, George Constantinides, Milton Harris, and Rene Stulz eds., North-Holland, Amsterdam, 2003.

         

Campbell, J., Asset Pricing at the Millennium, Journal of Finance, August 2000.

         

James L. Davis, Explaining Stock Returns: A Literature Survey, 2001.

         

Kocherlakota, N. (1996), The Equity Premium: It's Still a Puzzle, Journal of Economic Literature, vol XXXIV, #1.

 

Lettau, Martin, Inspecting the Mechanism: The Determination of Asset Prices in the RBC Model." Economic Journal, forthcoming July 2003.

         

Lucas (1978), Asset Prices in an Exchange Economy, Econometrica 46, 1429-1446.

         

Mehra, R. and E. Prescott (1985), The Equity Premium: A Puzzle, Journal of Monetary Economics 15: 145-161.

         

B. Beyond Standard Model

         

Nonstandard Preferences and Behavioral Finance
 
Barberis, N., and R. Thaler, "A Survey of Behavioral Finance", forthcoming in the Handbook of the Economics of Finance.
Barberis, N., M. Huang, and T. Santos (2001), Prospect Theory and Asset Prices, Quarterly Journal of Economics, February 2001.
         

Campbell, J., and J. Cochrane,  (1999) By Force of Habit: A Consumption-Based Explanation of Aggregate Stock Market Behavior, Journal of Political Economy 107, 205-251.

         

Chen, Z. and L. Epstein, Ambiguity, Risk and Asset Returns in Continuous Time, Econometrica 70 (2002), 1403-1443

         

L. Epstein and S. Zin (1991), Substitution, Risk Aversion and the Temporal Behavior of Consumption and Asset Returns: A Theoretical Framework, Econometrica 57, 937-969.       

Hirshleifer, D., “Investor Psychology and Asset Pricing,” Journal of Finance, 56(4), August (2001):1533-1598.

Hirshleifer, D., and S. Teoh, Herd Behavior and Cascading in Capital Markets: A Review and Synthesis, 2001.

         

Luttmer, E. and T. Mariotti, Subjective Discounting in an Exchange Economy, Journal of Political Economy, forthcoming.

         

Rabin, M., Psychology and Economics, Journal of Economic Literature, Vol. XXXVI, 11-46, March 1998.

         

Shleifer, A., Inefficient Markets: An Introduction to Behavioral Finance, Oxford University Press, 2000.

         

Housing

         

Case, K.E., Real Estate and the Macroeconomy, Brookings Papers on Economic Activity, 2000, 2

         

Hanno, L. and S.V Nieuwerburgh, Housing Collateral, Consumption Insurance and Risk Premia, 2003

         

Piazzesi, M., M. Schneider, and S. Tuzel, Housing, Consumption, and Asset Pricing, 2003, Working paper.

         

Heterogeneity and Incomplete markets

         

Aiyagari, R. and M. Gertler (1991). Asset Returns with Transactions Costs and Uninsured Individual Risk. Journal of Monetary Economics 27, 311-31.

         

Constantinides, G. and D. Duffie (1996), Asset Pricing with Heterogeneous Consumers, Journal of Political Economy 104, 219-240.

         

Heaton, J., and D. Lucas (1996). Evaluating the Effects of Incomplete Markets on Risk Sharing and Asset Pricing. Journal of Political Economy 104, 443-87.

         

Heaton, J. and D. Lucas (1995), The Importance of Investor Heterogeneity and Financial Market Imperfections for the Behavior of Asset Prices, Carnegie Rochester Conference Series on Public Policy 42, 1-32.

Telmer, C. (1993) Asset Pricing Puzzles and Incomplete Markets, Journal of Finance, Vol. 48, No. 5. (Dec., 1993), pp. 1803-1832.

Limited Stock Market Participation

         

Brav, Constantinides and Ceczy (2001), Asset Pricing with Heterogeneous Consumers and Limited Participation: Empirical Evidence, Journal of Political Economy 110 (2002), 793-824.

Guvenen, F.,  Does Stockholding Provide Perfect Risk Sharing?, 2003.

Heaton, J. and D. Lucas (2000), Stock Pricing and Fundamentals, NBER Macroeconomics Annual

         

Mankiw, N.G. and Zeldes (1991), The Consumption of Stockholders and Non-Stockholders, Journal of Financial Economics 29, 97-112.

         

Cross-Sectional Asset Pricing

         

Gomes, J., L. Kogan, and L. Zhang, Equilibrium Cross-section Returns, Journal of Political Economy, 2003.

         

Lettau, Martin, and Sydney Ludvigson, Resurrecting the (C)CAPM: A Cross-Sectional Test When Risk Premia Are Time-Varying, Journal of Political Economy 109, 1238-1286, 2001.

         

Yogo, Motohiro, A Consumption-Based Explanation of the Cross-Section of Expected Stock Returns, unpublished paper, Harvard University, 2003.

         

Corporate Finance

         

Bernanke, B., and M. Gertler (1989). Agency Costs, Net Worth, and Business Fluctuations, American Economic Review 79(1), 14-31.

         

Bernanke, B., M. Gertler and S. Gilchrist (1999). Financial Accelerator in a Quantitative Business Cycle Framework, In: J. Taylor and M. Woodford (eds.), Handbook of Macroeconomics, Elsevier Science, Amsterdam.

         

Donaldson, J.B. and J.P. Danthine, The Macroeconomics of Delegated Management, 2003

         

Gorton, G., J. Dow, and A. Krishnamurthy, Equilibrium Asset Prices under Imperfect Corporate Control, 2003

         

Gomes, J., A. Yaron, and L. Zhang, Asset Prices and Business Cycles with Costly External Finance, Review of Economic Dynamics.

         

Gomes, J., A. Yaron, and L. Zhang, Asset Pricing Implications of Firms' Financing Constraints, March 2003.

         

Holmstrom, B. and J. Tirole, LAPM: A Liquidity-Based Asset Pricing Model, Journal of Finance 56, 2001,1837-1867.

Jovanovic, B., and P. Rousseau, "Why Wait? A Century of Life Before IPO", AEA Papers & Proc., May 2001

Pastor, L. and P. Veronesi, Stock Prices and IPO Waves, 2003.

         

Taxes

McGrattan, E.R. and E.C. Prescott, Taxes, Regulations, and the Value of U.S. Corporations: A General Equilibrium Analysis, FRM Staff Report 309, 2002.

McGrattan, E.R. and E.C. Prescott, The 1929 Stock Market: Irving Fisher Was Right, 2003.

McGrattan, E.R. and E.C. Prescott, Average Debt and Equity Returns: Puzzling, 2003

McGrattan, E.R. and E.C. Prescott, Is the Stock Market Overvalued? FRM Quarterly Review, 24 (2000), 20-40.

Margin Requirements

Coen-Pirani, D., Margin Requirements and Equilibrium Asset Prices, GSIA, 2001.

Aiyagari, R. and M. Gertler,  "Overreaction" of Asset Prices in General Equilibrium . Review of Economic Dynamics, 2 (1), January 1999, pp.3-35.

Cuoco, D. and H. Liu, 2000, A Martingale Characterization of Consumption Choices and Hedging Costs with Margin Requirements , Mathematical Finance, Vol. 10, No. 3, 355-385.

III. Consumption and Portfolio Choice

         

Textbooks

         

John Y. Campbell and Luis M. Viceira, Strategic Asset Allocation: Portfolio Choice for Long-term Investors, Oxford University Press, 2002.

         

A. Stylized Facts and Standard Theory

         

Brueckner, J. (1997), Consumption and Investment Motives and the Portfolio Choices of Homeowners, Journal of Real Estate Finance and Economics vol. 15, pp. 159-180

         

Canner, Niko, N. Gregory Mankiw, and David N. Weil, ''An Asset Allocation Puzzle'', American Economic Review 87:181-191, March 1997.

                   

Guiso, Jappelli, and Terlizzese (1996), Income Risk, Borrowing Constraints and Portfolio Choice, American Economic Review 86, pp. 158-172

         

Heaton and Lucas (2000), Portfolio Choice and Asset Prices: The Importance of Entrepreneurial Risk. Journal of Finance, 55, 1163-1198.

                   

James M. Poterba and Andrew Samwick,, Stock Ownership Patterns, Stock Market Fluctuations, and Consumption, Brookings Papers on Economic Activity, 1995:2, pp. 295-357, 368-272.

         

B. New Development

Retirement and Social Security

Hugo Benitez-Silva, A Dynamic Model of Labor Supply, Consumption/Saving, and Annuity Decisions Under Uncertainty, 2000.

John Y. Campbell, Joao F. Cocco, Francisco J. Gomes and Pascal J. Maenhout, Investing Retirement Wealth: A Life Cycle Model, NBER 7029, 1999.

Liu, J., Endogenous Retirement and Portfolio Choice, 2002. Adobe PDF Version

L.J. Kotlikoff, J.B. Shoven and A. Spivak, Annuity Markets, Savings, and the Capital Stock, 1983

Scott Weisbenner, Do Pension Plans with Participant Investment Choice Teach Households to Hold More Equity? FRB, 1999.

James Poterba, Joshua Rauh, Steven Venti, David Wise, Utility Evaluation of Risk in Retirement Saving Accounts, NBER 9892, 2003.

Trading Constraints and Market Participation

         

Francisco J. Gomes, Exploiting Short-Run Predictability, 2003

         

Francisco J. Gomes and Alexander Michaelides, Life-Cycle Asset Allocation: A Model with Borrowing Constraints, Uninsurable Labor Income Risk and Stock-Market Participation Costs, 2002

         

Francisco J. Gomes and Alexander Michaelides, Optimal Life-Cycle Asset Allocation: Understanding the Empirical Evidence, 2003

Michael Haliassos, Alexander Michaelides, Portfolio Choice and Liquidity Constraints, 2000.

         

Vissing-Jorgensen, A. (2002), Towards an Explanation of Household Portfolio Choice Heterogeneity: Nonfinancial Income and Participation Cost Structures, manuscript, University of Chicago.

                   

Personal Bankruptcy

         

Scott Fay and Erik Hurst, M. White, The Household Bankruptcy Decision, American Economic Review, vol. 92:3, June 2002, pp. 708-718.

         

Wei Fan and M. White, Personal Bankruptcy and the Level of Entrepreneurial Activity, NBER working paper 9340. Forthcoming, Journal of Law & Economics, November 2003.

         

Wenli Li, To Forgive or Not to Forgive: An Analysis of US Consumer Bankruptcy Choices, FRBR: Economic Quarterly, Spring 2001: Vol. 87, No. 2.

         

Emily Y. Lin and M. White, Bankruptcy and the Market for Mortgage and Home Improvement Loans, Journal of Urban Economics, vol. 50:1, July 2001 (138-162).

Hung-jen Wang and M. White, An Optimal Personal Bankruptcy System and Proposed Reforms,"  Journal of Legal Studies, vol. XXIX(1), January 2000, pp. 255-286. Programs and parameter values for this paper.

                   

Personal Taxes

         

R. Dammon and C. Spatt, The Optimal Trading and Pricing of Securities with Asymmetric Capital Gains Taxes and Transaction Costs, Review of Financial Studies, 9, 1996, 921-952.

         

R. Dammon, C. Spatt, and H. Zhang, Optimal Consumption and Investment with Capital Gains Taxes, Review of Financial Studies, 14, Fall 2001, 583-616

         

R. Dammon, C. Spatt, and H. Zhang, Optimal Asset Location and Allocation with Taxable and Tax-Deferred Investing, 2001.

         

Lorenzo Garlappi and J. Huang, A Reduced-Form Approach to Retirement Planning under Constraints, 2003.

         

J. Huang, Portfolio Decisions with Taxable and Tax-Deferred Accounts: A Tax-Arbitrage Approach, 2003.

         

James M. Poterba, Taxation, Risk-Taking, and Household Portfolio Behavior, NBER w8340 Jun 2001.

         

James M. Poterba, Taxation and Portfolio Structure: Issues and Implications, NBER w8223 Apr 2001.

         

James M. Poterba and Andrew Samwick, Taxation and Household Portfolio Composition: U.S. Evidence from the 1980s and 1990s, NBER w7392 Oct 1999.

John B. Shoven, The Location and Allocation of Assets in Pension and Conventional Saving Accounts, NBER 7007, 1999.

John B. Shoven and C. Sialm, Asset Location in Tax-Deferred and Conventional Savings Accounts, NBER w7192, 1999.

         

Housing

         

John Y. Campbell and Joao F. Cocco, Household Risk Management and Optimal Mortgage Choice, 2003

         

Joao F. Cocco, Hedging House Price Risk With Incomplete Markets, 2001

         

Joao F. Cocco, Portfolio Choice in the Presence of Housing, 2000

         

Marjorie Flavin (2002). Owner-occupied housing in the presence of adjustment costs: Implications for asset pricing and nondurable consumption. Working Paper, UC San Diego.

         

Marjorie Flavin and Takashi Yamashita (2002). Owner-occupied housing and the composition of the household portfolio, American Economic Review, 345-62.

Peter Englund, M. Hwang, and J.M. Quigley, Hedging Housing Risk,

         

IV. Dynamic Contracts

         

Textbooks

         

L. Ljunqvist and T. Sargent, Recursive Macroeconomic Theory, 2000, MIT Press. Chapters 15-16.

         

A. Theory

         

Abreu, D., D. Pearce, and E. Stacchetti, Optimal Cartel Equilibria with Imperfect Monitoring, Journal of Economic Theory, (1986) 39, 251-269.

         

D. Abreu, D. Pearce, and E. Stacchetti, Toward a theory of discounted repeated games with imperfect monitoring, Econometrica, 58 (1990) 1041-1063.

         

Kehoe, T., and D. Levine (1993), Debt-constrained Asset Markets, Review of Economic Studies 60, 865-88.

         

Kehoe, T., and D. Levine (2001). Liquidity Constrained Markets vs. Debt Constrained Markets, Econometrica 69, 575-98.

Rogerson, W. Repeated Moral Hazard, Econometrica 53 (9985) 69-76.

         

S.E. Spear and S. Srivastava, On repeated moral hazard with discounting, Rev. Econ. Studies 54 (1987) 599-617.

         

J. Thomas and T. Worrall, Income fluctuation and assymmetric information: An example of a repeated principal-agent problem, Journal of Economic Theory, 51 (1990) 367-390.

         

B. Applications

         

Rui Albuquerque and Hugo Hopenhayn, Optimal Lending Contracts and Firm Dynamics, September 2002. Forthcoming Review of Economic Studies.

Alvarez, F., and U. Jermann (2000). Efficiency, Equilibrium, and Asset Pricing with Risk of Default, Econometrica 68, 775-97.

         

Alvarez, F., and U. Jermann (2001). Quantitative Asset Pricing Implications of Endogenous Solvency Constraints, Review of Financial Studies 14, 1117-51.

S. Athey, A. Atkeson, and P. Kehoe, The optimal degree of discrection in monetary policy, FRBM, Staff repart \#326, 2003.

R. Chang, Credible monetary policy in an infinite horizon model: recursive approaches, Journal of Economic Theory 81 (1998), 431-461.

Cooley, T., M. Marimon, and V. Quadrini, Aggregate Consequences of Limited Contract Enforceability, 2003.

         

Hanno Lustig, The Market Price of Aggregate Risk and the Wealth Distribution, 2003

         

Gian Luca Clementi and Hugo A. Hopenhayn, A Theory of Financing Constraints and Firm Dynamics, 2002.

         

Rui, Castro , Gian Luca Clementi and Glenn MacDonald, Investor Protection, Optimal Incentives, and Economic Growth, 2003

H. Hopenhayn and J. Nicolini, Optimal unemployment insurance, Journal of Political Economy, 105 (1997) 412-438.       

C. Wang, Incentives, CEO Compensation and Shareholder Wealth in a Dynamic Agency Model, Journal of Economic Theory, 75, 1997;

         

C. Phelan and E. Stacchetti, Sequential Equilibria in a Ramsey Tax Model, Econometrica, 1999.

Judd, K. S. Yeltekin, and J. Conklin, Computing Supergame Equilibria, 2003.

Sleet, C. and S. Yeltekin, Optimal Taxation with Endogenously Incomplete Debt Markets, 2003.

         

V. Investment

         

Textbooks

         

Adda, J. and R. Cooper, Dynamic Economics: Quantitative Methods and Applications, MIT Press.

Dixit, A. and R. Pindyck, 1994, Investment Under Uncertainty, Princeton University Press, Princeton, NJ.

         

A.    Neoclassical Theory

B.    Q Theory

C.       Irreversibility and Adjustment Costs

D.       Taxes and Investment