[A tractable dynamic general equilibrium model of continuous product innovation is developed. Patents, or any imitation lag, of infinite duration may achieve too much, too little, or the socially optimum level of innovation. Most surprising, finite-life patents may induce undamped oscillations in innovation.]

Dennis L. Hoffman and, Don E. Schlagenhauf, Real Interest Rates, Anticipated Inflation, and Unanticipated Money: A Multi-Country Study, The Review of Economics and Statistics, Vol. 67, No. 2 (May, 1985), pp. 284-296

Equilibrium in the market for real assets requires that the price of those assets be bid up to reflect the tax shields they can offer to levered firms.Thus there must be an equality between the market values of real assets and the values of optimally levered firms.The standard measure of the advantage to leverage compares the values of levered and unlevered assets, and can be misleading and difficult to interpret.We show that a meaningful measure of the advantage to debt is the extra rate of return, net of a market premium for bankruptcy risk, earned by a levered firm relative to an otherwise-identical unlevered firm.We construct an option valuation model to calculate such a measure and present extensive simulation results.We use this model to compute optimal debt maturities, show how this approach can be used for capital budgeting, and discuss its implications for the comparison of bankruptcy costs versus tax shields.

[This article discusses the accounting implications of a new type of financial security introduced on the European bond market. The security, known as a deferred-payment note, allows the investor to acquire a note by paying a portion of the issue price at the time of issuance. The remaining amount is required to be paid in a second installment due some months later. Alternative accounting treatments are presented. These treatments are evaluated in light of the FASB's conceptual framework pronouncements. The paper concludes that the FASB's current position fails to provide appropriate guidelines which the profession can use to resolve this new financial reporting issue.]

Keith C. Brown, Larry J. Lockwood, Scott L. Lummer, An Examination of Event Dependency and Structural Change in Security Pricing Models, The Journal of Financial and Quantitative Analysis, Vol. 20, No. 3 (Sep., 1985), pp. 315-334

Olivier J. Blanchard, Eric S. Maskin, Lawrence H. Summers; Manifesto, The Quarterly Journal of Economics, Volume 100, Issue 1, 1 February 1985, Pages iii,