This paper develops a positive theory of insurrections that treats insurrection and its deterrence or suppression as economic activities that compete with production for scarce resources. The general equilibrium analytical framework reveals how the allocation of labor time among insurrection, soldiering, and production and the probabilistic distribution of income between the peasant families and the ruler's clientele both depend on the technology of insurrection. A central result is that equilibria with more time allocated to insurrection and a higher probability of a successful insurrection have lower production and total income, but nevertheless can have higher expected income for the peasants

Contrary to the long-held notion of purchasing power parity (PPP), economists have found systematic evidence that the general level of prices across countries at a point in time varies dramatically. Irving B. Kravis, Alan W. Heston, and Robert Summers (1982), for example, report that some countries' national price levels are no more than one-third the U.S. price level. Extensions of this work show that such departures from PPP have persisted for decades. Recently, efforts have been made to explain systematically these persistent, or structural, departures from PPP. Pioneering work by Kravis and Robert E. Lipsey (1983, 1987, 1988) has demonstrated that a positive correlation between the price level and (real) per capita gross domestic product is robust across numerous cross-sectional specifications. For instance, using data from Kravis et al. (1982 table 6-12), 87 percent of the variation in national price levels (PL) of 21 countries' in 1975 is explained by per capita GDP (y) and a constant

I describe a simple two-stage mechanism, the compensation mechanism, that implements efficient allocations in economic environments involving externalities. The compensation mechanism can be used to solve a wide variety of externalities problems, including the standard problem of public goods provision. It requires that that the agents know the magnitudes of the benefits and costs that they impose on other agents, but will also work with naive agents who follow a simple tatonnement

When households are mobile among jurisdictions, income redistribution by individual jurisdictions creates fiscal externalities. A model of interjurisdictional migration is used to study the nature of this redistributive externality. Analysis of optimal redistribution and optimal corrective subsidies from higher-level governments shows that benefit levels for the recipients of income transfers and tax rates on mobile taxpayers should be equalized across jurisdictions. A system of jurisdictions with a common labor market can achieve welfare improvements through coordination of "domestic" redistributive policy or through the intervention of a higher-level government.

The history and organization of the membership recruitment process of American sororities is studied. Like entry-level labor markets studied previously, this process experienced failures that led to the adaptation of a centralized matching procedure in which a matching is determined on the basis of preference lists submitted by the agents. Analysis of the rules of the match and of preference lists from twenty-one matches reveals an unstable matching procedure that gives agents incentives to behave strategically. The analysis also shows how the agents act on these incentives and how the resulting strategic behavior has contributed to the longevity of the matching system and to the stability of the resulting matches.

The debate over whether the expected present value of dividends adequately describes stock prices hinges in part on whether dividends are trend-stationary or integrated processes: it does not if dividends are trend-stationary; it does if they are integrated. This paper argues that classical statistical tests only indicate that there is not sufficient evidence to reject either specification and provides Bayesian analyses designed to reveal the relative support the data give to the two specifications. The analysis suggests that dividends and prices are more likely to be trend-stationary than integrated, leaving the determination of prices a puzzle

The authors examine a firm's decision either to produce an essential input itself or to hire a subcontractor to produce the input. The authors focus on how this decision is affected by technological change in the industry. In general, cost-reducing technological change leads the firm to produce the input itself more often. The firm's calculus is shown to depend on whether the subcontractor's skills are idiosyncratic or transferable. In the latter case, technological progress can even be detrimental to the firm and to society as a whole.