NAJ Economics

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Susan Athey
Ted Bergstrom
Michele Boldrin
V.V. Chari
Jeff Ely
Drew Fudenberg
Matthew O. Jackson
Jon Levin
David K. Levine
Thomas R. Palfrey
Wolfgang Pesendorfer
Matt Rabin
Ariel Rubinstein
Jose A. Scheinkman
Ran Spiegler

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Volume 13 - May 11, 2006 Previous Next

1. Marco Battaglini and Stephen Coate A Dynamic Theory of Public Spending, Taxation and Debt

This impressive paper integrates a number of important ideas from public finance, political economy, and macroeconomics. Robert Barro argued nearly thirty years ago that government should use public debt to smooth disortionary taxation over time. Battaglini and Coate depart from Barro's benevolent planner and model the voting process through which taxes, public good provision, pork spending and government borrowing are chosen. They provide a sharp characterization of equilibrium spending, taxation and debt management. Among other results, they show that in time of crisis the government will eschew pork spending and finance public goods with bonds that are paid off slowly as the crisis recedes.
original link cached copy reviewed by Jon Levin on 05/11/06

2. Vianney Dequiedt and David Martimort Mechanism Design with Private Communication

This paper considers a twist on the familiar principal-multiple agent mechanism design environment. Agents never see any of the other agents' messages to the principal, other than what the principal tells them and the principal can lie. While one might think this is just a simple enrichment of the usual setting, it ends up with some important implications. It limits the ability of the principal to make use of information from one agent that is correlated with the type of another agent, because of incentive compatibility constraints. This restores a continuity of mechanism design in the information structure, and small amounts of correlation no longer have drastic effects. The mechanisms also have some intuitive features, and take a simpler form than in settings where all messages are verifiable by all agents.
original link cached copy reviewed by Matthew O. Jackson on 06/02/07

3. Christopher Phelan and Andrzej Skrzypacz Private Monitoring with Infinite Histories

This paper uses a clever formulation of a repeated game with private monitoring to develop new techniques for characterizing equilibria. The authors examine time sequences that are infinite in both directions, so there is no ``starting period.'' This helps in formulating how strategies depend on past history, as it allows for a stationarity not possible in games with a starting period, and allows the authors to examine a class of equilibria playable by finite automata. This also provides new results into how coordination on past histories map into correlated equilibria.
original link cached copy reviewed by Matthew O. Jackson on 06/02/07

4. Jean-Francois Caulier, Ana Mauleon and Vincent VAnnetelbosch Contractually Stable Networks

The authors provide a model where utility or productive value depends on how players are partitioned into communities as well as how they are connected in a network. The results extend notions of stability and value allocations. While this is still preliminary work, the setting will help our understanding of how individuals maintain relationships of different types at the same time, and how such layered relationships interact in determining social structure.
original link cached copy reviewed by Matthew O. Jackson on 06/02/07

5. Alessandro Lizzeri and Marciano Siniscalchi Parental Guidance and Supervised Learning

The authors examine learning in a situation where a parent can guide a child's learning by intervening to eliminate mistakes. The parent faces a tradeoff between improving short term well-being and slowing learning. While there are large literatures in psychology and game theory on learning, examining such guided learning from a formal perspective provides interesting insights regarding the ability of the child, the discount rate, and the parent's intervention.
original link cached copy reviewed by Matthew O. Jackson on 06/28/07