We examine an exchange economy with two agents: one risk neutral with a certain endowment and a second risk averse with a random endowment. The realization of the endowment is public but can be falsified by the second agent at a cost. For a broad class of falsification cost functions the optimal no-falsification contract is noncontingent on a left-hand interval and strictly increasing with a slope strictly less than one on a right-hand interval. Under a mild further restriction, optimal no-falsification contracts are, in addition, piece-wise linear. Optimal contracts may in general require falsifying the state, but for a set of the highest endowment realizations there is no falsification. We find simple conditions under which the optimal contract is a no-falsification contract. The model has applications that include financial, insurance, and employment contracts and tax policy.

This paper outlines a procedure for estimating a general index of technical change within the context of a quite general production technology. Specifically, when panel data are available for firms in an industry, time-specific dummies can be combined in a nonlinear estimation procedure to yield a general index of technical change that may be both nonneutral and scale augmenting. This approach offers numerous advantages over the traditional time trend representation of technical change. For example, the general index can serve as the basis for analysis of the determinants of technical change. Results for a sample of 30 electric utilities over the period 1951-78 show that the productivity decline of the 1970s can be attributed primarily to sulphur oxide restrictions and secularly declining capacity utilization due to rapidly increasing peak-load demands.

It is sometimes asserted that rational speculative activity must result in more stable prices because speculators buy when prices are low and sell when they are high. This is incorrect. Speculators buy when the chances of price appreciation are high, selling when the chances are low. Speculative activity in an economy in which all agents are rational, have identical priors, and have access to identical information may destabilize prices, under any reasonable definition of destabilization. It takes extremely strong conditions to ensure that speculative activity (of the commodity storage variety) "stabilizes" price, even in a very weak sense.

The concept of self-control is incorporated in a theory of individual intertemporal choice by modeling the individual as an organization. The individual at a point in time is assumed to be both a farsighted planner and a myopic doer. The resulting conflict is seen to be fundamentally similar to the agency conflict between the owners and managers of a firm. Both individuals and firms use the same techniques to mitigate the problems which the conflicts create. This paper stresses the implications of this agency model and discusses as applications the effect of pensions on saving, saving and the timing of income flows, and individual discount rates.

Employment may be important to well-being for reasons beyond its role as an income source. This paper presents a causal estimate of the psychosocial value of employment in refugee camps in Bangladesh. We involve 745 individuals in a field experiment with three arms: a control arm, a weekly cash arm, and an employment arm of equal value. Employment raises psychosocial well-being substantially more than cash alone, and 66 percent of the employed are willing to forgo cash payments to continue working temporarily for free. Despite material poverty, those in our context both experience and recognize a nonmonetary, psychosocial value to employment.

Although school choice programs are common, we know little about the underlying decision-making processes. In this study, we randomly assigned 900 junior high schools in Ghana, a country with universal secondary school choice, to 1 of 3 treatment arms: (1) information to students, (2) information to students and guardians, and (3) control group. We observe changes in beliefs, behaviors, and the decision maker's identity through a survey of guardians. Our intervention increased the likelihood that guardians were involved with and informed about the school selection process. Moreover, specifically targeting guardians led to significantly larger changes for most outcomes.

new econometric model of aggregate consumer behavior in the United States and to apply this model to the analysis of impacts of alternative economic policies on the welfare of individual consuming units. The model incorporates time-series data on quantities consumed, prices, the level and distribution of income, and demographic characteristics of the population. It also incorporates cross-section data on the allocation of consumer expenditures for households with different demographic characteristics. Our econometric model is based on the theory of exact aggregation developed by Lau (1977a, c). This theory makes it possible to dispense with the notion of a representative consumer in constructing models of aggregate consumer behavior. One of the most remarkable implications of Lau's theory of exact aggregation is that systems of demand functions for individuals with common demographic characteristics can be recovered uniquely from the system of aggregate demand functions. Using the individual demand functions we can analyze the impact of economic policy on consumer welfare.

We examine how participation in social safety net programs differs by income-to-poverty levels, and how that relationship changed after the Great Recession. We define income-to-poverty based on the average of 2 years of merged CPS data, and investigate program participation among households with income less than 300 percent of poverty. We find changes in both the level and distribution of safety-net program participation during the Great Recession, with SNAP expanding most at the bottom, the EITC expanding most in the middle, and UI expanding most at the top of the income ranges that we investigate; TANF did not expand.

We present evidence on the level of and trend in inequality from 1985-2010 in the United States, using disposable income and consumption for a sample of individuals from the Consumer Expenditure (CE) Survey. Differing from the findings in other recent research, we find that the trends in income and consumption inequality are broadly similar between 1985 and 2006, but diverge during the Great Recession with consumption inequality decreasing and income inequality increasing. Given the differences in the trends in inequality in the last four years, using both income and consumption provides useful information.

We examine the impacts of increased US gasoline taxes in a model that links the markets for new, used, and scrapped vehicles and recognizes the considerable heterogeneity among households and cars. Household choice parameters derive from an estimation procedure that integrates individual choices for car ownership and miles traveled. We find that each cent-per-gallon increase in the price of gasoline reduces the equilibrium gasoline consumption by about 0.2 percent. Taking account of revenue recycling, the impact of a 25-cent gasoline tax increase on the average household is about $30 per year (2001 dollars). Distributional impacts depend importantly on how additional revenues from the tax increase are recycled.