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Creator: Bryant, John B. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 175 Abstract: Game theory is both at the heart of economics and without a definitive solution. This paper proposes a solution. It is argued that a dominance criterion generates a, and perhaps the, generalized equilibrium solution for game theory. First we provide a set theoretic perspective from which to view game theory, and then present and discuss the proposed solution.
Keyword: Nash equilbrium, Dominance, and Equilibria Subject (JEL): C72  Noncooperative Games, C68  Computable General Equilibrium Models, and C70  Game Theory and Bargaining Theory: General 
Creator: Kollintzas, Tryphon, 1953 Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 352 Abstract: This paper derives a variance bounds test for a broad class of linear rational expectations models. According to this test if observed data accords with the model, then a weighted sum of autocovariances of the covariancestationary components of the endogenous state variables should be nonnegative. The new test reinterprets its forefather—West's [1986] variance bounds test— and extends its applicability by not requiring exogenous state variables in order to be tested. The possibility of the test's application to nonlinear models is also discussed.
Keyword: Overlapping generations models, Inventory, and Macroeconomics Subject (JEL): C52  Model Evaluation, Validation, and Selection and E22  Investment; Capital; Intangible Capital; Capacity 
Creator: Uhlig, Harald, 1961 Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 342 Abstract: [Please note that the following Greek lettering is improperly transcribed.] If [0,1] is a measure space of agents and X a collection of pairwise uncorrelated random variables with common finite mean U and variance a , one would like to establish a law of large numbers () Xdl = U. In this paper we propose to interpret () as a Pettis integral. Using the corresponding Riemanntype version of this integral, we establish (*) and interpret it as an L2law of large numbers. Intuitively, the main idea is to integrate before drawing an W, thus avoiding wellknow measurability problems. We discuss distributional properties of i.i.d. random shocks across the population. We given examples for the economic interpretability of our definition. Finally, we establish a vectorvalued version of the law of large numbers for economies.
Keyword: Khinchines law of large numbers, Pettis integral, L2 law of large numbers, Riemann integral, Large numbers, and Random variable Subject (JEL): C10  Econometric and Statistical Methods and Methodology: General 
Creator: Uhlig, Harald, 1961 Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 342 Abstract: [Please note that the following Greek lettering is improperly transcribed.] If [0,1] is a measure space of agents and X a collection of pairwise uncorrelated random variables with common finite mean U and variance a , one would like to establish a law of large numbers () Xdl = U. In this paper we propose to interpret () as a Pettis integral. Using the corresponding Riemanntype version of this integral, we establish (*) and interpret it as an L2law of large numbers. Intuitively, the main idea is to integrate before drawing an W, thus avoiding wellknow measurability problems. We discuss distributional properties of i.i.d. random shocks across the population. We given examples for the economic interpretability of our definition. Finally, we establish a vectorvalued version of the law of large numbers for economies.
Keyword: Khinchines law of large numbers, Pettis integral, L2 law of large numbers, Riemann integral, Large numbers, and Random variable Subject (JEL): C10  Econometric and Statistical Methods and Methodology: General 
Creator: Smith, Bruce D. (Bruce David), 19542002 Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 240 Abstract: A model of a labor market is developed in which agents possess private information about their marginal products. As a result, involuntary unemployment may arise as a consequence of attempts by firms to create appropriate selfselection incentives. Moreover, employment lotteries may arise for the same reason despite the fact that, in equilibrium, there is no uncertainty in the model. When employment is random, this is both privately and socially desirable. Finally, it is shown that the unemployment that arises is consistent with (a) procyclical aggregate real wages and productivity, (b) employment that fluctuates (at individual and aggregate levels) much more than real wages.
Keyword: Wages, Employment, Private information, and Labor market Subject (JEL): E24  Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity, E12  General Aggregative Models: Keynes; Keynesian; PostKeynesian, and D82  Asymmetric and Private Information; Mechanism Design 
Creator: Sargent, Thomas J. and Wallace, Neil Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 214 Keyword: Quantity theory of money, Seignorage, Commodities, Symmetallism, Private issue inside money, and Bimetallism Subject (JEL): E52  Monetary Policy and E42  Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems 
Creator: Braun, R. Anton and McGrattan, Ellen R. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 527 Keyword: Homework, Employment, Women, Family labor supply, Men, Hours per worker , and Household production Subject (JEL): J22  Time Allocation and Labor Supply and D13  Household Production and Intrahousehold Allocation 
Creator: Bryant, John B. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 136 Keyword: Equilibrium strategy, Long term contracts, Enduring contracts, and Supergame Subject (JEL): C70  Game Theory and Bargaining Theory: General and J41  Labor Contracts 
Creator: Smith, Bruce D. (Bruce David), 19542002 Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 260 Keyword: Nominal wages, Trade, Monetary payments, and Contract Subject (JEL): L14  Transactional Relationships; Contracts and Reputation; Networks and J33  Compensation Packages; Payment Methods 
Creator: Bryant, John B. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 126 Abstract: A model is presented in which demand deposits backed by fractional currency reserves and public insurance can be beneficial. The model uses Samuelson's pure consumptionloans model. The case for demand deposits, reserves, and deposit insurance rests on costs of illiquidity and incomplete information. The effect of deposit insurance depends upon how, and at what cost, the government meets its insurer's obligationsomething which is not specified in practice. It remains possible that demand deposits and deposit insurance are a distortion, and reserve requirements serve only to limit the size of this distortion.
Keyword: Bank panic, Reserve requirements, Insolvency, Banks, and Bond reserve Subject (JEL): G21  Banks; Depository Institutions; Micro Finance Institutions; Mortgages and E58  Central Banks and Their Policies