Research Interests

Published and Forthcoming Papers

1. Can decentralization be beneficial?, Journal of Public Economics, 2005, vol. 89(7), pages 1231-1249. (CU WP abstract)
2. An Inquiry into the Efficiency of Water Projects under WRDA86, International Tax and Public Finance, 2004, v.11(6), pp.741-762
3. Existence and uniqueness of an equilibrium in a model of spatial electoral competition with entry, with Shlomo Weber, Advances in Mathematical Economics, 2007, v.10, pp.101-119
4. A Note on Redistributive Fairness and Economic Reform, with Ruqu Wang, Journal of Development Economics, 2008, 86, pp.447-452. (pre-pub version)
5. Ideological Divide within the Cabinet and Public Spending, Journal of Public Economic Theory, 2008, 10(6) pp. 1069-1083
6. Contests with Heterogeneous Agents, with Sérgio O. Parreiras, Games and Economic Behavior, V. 68(2), March 2010, pp. 703-715 (pre-pub version)
7. Intergenerational Equity and the Discount Rate for Policy Analysis, with Jean-François Mertens, Macroeconomic Dynamics , volume 16, issue 01, pp. 61-93.

Working papers

• Cost-Benefit Analysis in Overlapping Generations Models

  • Equilibria in an overlapping generations model with transfer policies and exogenous growth with Jean-François Mertens
    For an overlapping generations economy with varying life-cycle productivity continuous time starting at $-\infty$ (hence allowing for full anticipation), constant-returns-to-scale production and CES utility we fully characterise equilibria where output is higher than investment, which is strictly positive. The amount of aggregate excess savings is constant in any equilibrium. The number of balanced growth equilibria (BGE) is finite, and in golden rule equilibria the value of capital is typically different from savings, while other BGE have zero net balances, in accord with Gale (1973). Their parity, however, depends on the life-cycle productivity, in particular, on the relation between the intertemporal elasticity of substitution, the minimal working age and the minimal tax age.
  • Pareto Optimality of the Golden Rule equilibrium in Overlapping Generations Model with Production and Transfers with Jean-François Mertens
  • Tools
  • Separate control over the local and the asymptotic behaviour in $L_p$ spaces with Jean-François Mertens, University of Haifa WP2011/1
    We introduce 2 parameter variants $L_{p,q}$ of the Lebesgue spaces, to gain separate control on the asymptotic behaviour ($p$) and the local behaviour ($q$). Thus they behave w.r.t.\ $p$ like the spaces $\ell_p$ and w.r.t.\ $q$ like the spaces $L_q$ on a probability space; they are in fact isomorphic to $\ell_p^{L_q}$. Convolution behaves very well on those spaces.
  • Banach families and the implicit function theorem with Jean-François Mertens
    We generalise the classical implicit function theorem (IFT) for a family of Banach spaces, with the resulting implicit function having derivatives that are locally Lipschitz to very strong operator norms.
  • Regularity and stability of equilibria in an overlapping generations model with exogenous growth with Jean-François Mertens
    In an exogenous-growth economy with overlapping generations (OG) we analyse local stability of a ``balanced growth'' equilibrium with respect to endowment perturbations, interpreted as transfers. We show that generically in the space of parameters equilibria around BGE are locally unique and are locally differentiable functions of endowments, with derivatives given by kernels. Further, those equilibria are stable in the sense that the effects of temporary changes decay exponentially fast at infinity. It follows that equilibrium welfare too is differentiable, and that computation of this derivative is analytically feasible: there is no need to invert the system of equilibrium equations..
  • Welfare evaluation of policies in an overlapping generations growth model with Jean-François Mertens, Preliminary Draft,
    In the classical growth model, with overlapping generations and continuous time starting at $-\infty$, generically there exist a unique equilibrium in the policy-neighbourhood of any balanced growth equilibrium as shown in "Regularity and stability of equilibria in an OLG model with exogeneous growth". Policies are endowment perturbations. In this paper we show that, for any such equilibrium selection, welfare is differentiable, and that the derivative at the balanced growth equilibrium can be computed analytically from the primitives of the model.
  • Discounting, Stationarity and Welfare Evaluation of Policies with Jean-François Mertens

    Policy discounting can be rationalised as an approximation to welfare in an overlapping generations model, even with heterogeneous consumers, when the status-quo is a balanced growth path --- and only then: any form of discounting requires stationarity of the baseline. Imposing the equality between the discount rate and the interest rate is equivalent (in case of a utilitarian welfare) to imposing welfare weights. In particular, the intergenerationally fair interest rate in an OLG model with production differs from the interest rate, even in the golden rule equilibrium, unless population growth is null.

• Political Economy

• Demand for Contract Enforcement and Gains from Trade with Roberto M. Samaniego
  Do greater potential gains from trade \emph{enhance} or \emph{erode} contracting institutions? In an anonymous exchange environment traders can sign a contract, hence agreeing to interact with the assigned partner, or wait till the next match. Any contract can be endorsed (for a pay) by the enforcement agency, which then observes the interaction with a positive probability known to the traders and punishes the detected infractors. %The agency enforces only those contracts that are paid for, and a trader freely chooses whether to endorse his contract. Demand for contract enforcement is the highest amount a proposer of a contract is ready to pay to the agency (in a stationary subgame perfect equilibrium). It may be strictly positive, as we show, even when contracts are broken. Surprisingly, larger potential gains from exchange may dampen the demand, but not always: they may boost the demand for `high quality' agencies (that oversee the interactions frequently enough).
• Balance of Power and Divergence of Policies in a Model of Electoral Competition with Shlomo Weber, CORE DP
  Two incumbent parties choose their platforms in a unidimensional policy space while facing a credible threat of an entry by the third party. Relative electoral support is the predominant objective of each party, and the third party enters only if it can displace one of the incumbents. In an equilibrium the two incumbents choose to prevent the entry, achieving the balance of power, i.e., splitting the electorate equally. The incumbents' positions might diverge more as compared to a system in which the parties seek to solely maximize the voters' support. Therefore, rank preoccupation under the threat of entry might contribute to more polarized political platforms of the two leading parties.

• Contests

• Optimal Diversity Mix For Contests with Sérgio O. Parreiras

• Social Choice

• More on Aggregation of Opinions and the Doctrinal Paradox with Eyal Baharad and Zvika Neeman
  Several experts provide their quantitative opinions about a number of aspects (atomic propositions) of an issue. We focus on two ways to formulate a joint opinion about the issue. One is to first aggregate across atomic propositions for each individual and then aggregate across individuals. Second is to switch the order and aggregate across individuals first getting the joint opinion about each aspect and then to combine those into a joint verdict. If both aggregators are majority voting, the result might depend on the order. This phenomenon is known as the Doctrinal Paradox. We show that (i) if one of the aggregators is linear, then the other one has to be linear as well to avoid the paradox; (ii) it is impossible to avoid the paradox if both aggregators behave as q-voting rules on the binary evaluations.

• Other Topics in Public Economics

• Why Are Some Taxes "More Equal Than Others?"  (CORE 2002/43 DP PDF)
• A Way to Compare Externalities Generated by a Public Project PDF