We decentralize incentive efficient allocations in large adverse selection economies by introducing a Walrasian market for mechanisms, that is, for menus of contracts. Facing a budget constraint, informed individuals choose lotteries over mechanisms, while firms supply (slots at) mechanisms at given prices. An equilibrium requires that firms cannot favorably change, or cut, prices. We show that...

We analyze the pricing of a productive asset in a class of dynamic exchange economies with heterogeneous, infinitely–lived agents, and self–enforcing intertemporal trades. Individual incomes fluctuate and are correlated; preferences, dividends and aggregate income are fixed. Almost all economies in this class have a unique stationary Markovian equilibrium with fluctuations in asset prices. As t...

We extend the classical results on the Walras-core existence and equivalence to an ambiguous asymmetric information economies, i.e., economies where agents maximize Maximin Expected Utility (MEU). The interest of considering ambiguity arises from the fact that, in the presence of MEU decision making, there is no conflict between efficiency and incentive compatibility, (contrary to the Bayesian ...

In this paper, I provide a possible explanation of why nominally risk-free bonds are essential in monetary economies. I argue that the role of nominal bonds is to enable agents to engage in intertemporal exchanges of money. I show that bonds can only serve this role if they are illiquid (costly to exchange for goods). Finally, I argue that in economies in which nominal bonds are essential, it i...

This paper presents a model in which economies of scope in production play a key role in a vertically-linked production structure. It identifies the divergence in the degrees of economies of scope and the attribute spaces of the products in different stages of production as a fundamental economic force behind outsourcing. Among other things, it is shown that outsourcing occurs in the following ...

This study aimed at examining the merit of crop diversification as a strategy for agricultural growth in Bangladesh. Specifically, the existence of economies of diversification, scale economies and diversification efficiencies at the farm level were examined using a stochastic input-distance function approach. Results reveal strong evidence of diversification economies amongst most crop enterpr...

The paper investigates the situation of middle-income economies around the world. Since 1965, only 18 economies with a population of more than 3 million and not dependent on oil exports have made the transition to being high income. Many more have not been able to move beyond the middle-income stage. We conduct statistical tests of differences between two groups of economies across a range of g...

This paper explains why public domestic debt composition in emerging economies can be risky, namely in foreign currency, with a short maturity or indexed. It analyses empirically the determinants of these risk sources separately, developing a new large dataset compiled from national sources for 33 emerging economies over 1994-2006. The paper finds that economic size, the breadth of the domestic...

The paper suggests that the evolution of modern technologies in manufacturing, from economiesof-scale to economies-of-scope, plays a key role in the increasing outsourcing activities. It is shown that the divergence in the degrees of economies-of-scope and the attribute space of the products between different stages of production is the fundamental economic force behind the recent trend of outs...

We use generalized method of moments to estimate a rational expectations aggregate demand/aggregate supply macroeconomic model for five European economies and the United States. Our aim is to examine whether supply or demand shocks have predominated in these economies during the post-war era, and whether shocks of either type have been primarily temporary or permanent in nature. The estimation ...