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We use playing time in the National Basketball Association to investigate whether sunk costs affect decision making. Behavioral economics implies that teams favor players chosen in the lottery and first round of the draft because of the greater financial and psychic commitment to them. Neoclassical economics implies that only current performance matters. We build on previous work in two ways. First, we better capture potential playing time by accounting for time lost to injuries or suspension. Second, we use regression discontinuity to capture changes when a player's draft position crosses thresholds. We find that teams allocate no more time to highly drafted players. ( JEL L83, J23, D03) [ABSTRACT FROM AUTHOR]

A general model incorporating rent-seeking activities in the standard neoclassical model of capital accumulation is presented. The welfare of the representative agent is negatively affected by the efficiency of rent-seeking activities. Although intuitive, this result is not obvious because long-run income can be positively affected by more efficient rent-seeking activities. The model is used to provide explanations for some recent experiences in developing countries, including the relative poor performance of economies that experience a move to a more decentralized system and the observed path of total factor productivity (TFP) in countries like Ireland and Venezuela. ( JEL D23, D74, O40, O41, O47) [ABSTRACT FROM AUTHOR]

Although industrialization first occurred in England, it is thought that China, not England, may have been the world leader in technology at the time. Yet, China did not industrialize until 150 yr after England and nearly a century after less advanced European countries. This represents a puzzle because two-sector neoclassical growth models, such as Hansen and Prescott (2002) , that accurately match industrialization, require that more technologically advanced countries industrialize at an earlier date. I find that a model that accounts for cross-country heterogeneities in population density accurately predicts the timing of industrialization in China. ( JEL F43, N10, N30, O11, O14, O41) [ABSTRACT FROM AUTHOR]

This paper studies industry-level dynamics and demonstrates the ability of a modified neoclassical growth model to capture a range of empirical facts. The paper begins by using U.S. data to document skilled and unskilled labor trends within industry sector classifications as well as industry sector output trends. Using Current Population Survey data from 1968 to 2004, it is shown that the ratio of skilled workers to unskilled workers employed has risen in all industries. The absolute increase in this ratio was larger in the more skilled industries, while the growth rate was larger in the less skilled industries. Furthermore, using national income account data, it is shown that relatively high-skilled industries have accounted for an increasing share of output over time. A version of the neoclassical growth model is then constructed to match these observations. One important feature of this model is a structure that introduces new goods into the economy at each moment of time. The model is able to capture a rich set of labor market movements between sectors and between skill levels as well as changes in the relative output shares across industries, yet preserves many nice features of the neoclassical growth model.( JEL E13, J20, 030) [ABSTRACT FROM AUTHOR]

This study employs laboratory experiments to test aspects of Ricardian equivalence. An overlapping generations model forms the basis of the experimental design. Whenever Ricardian equivalence predicts a positive bequest, outcomes close to those predicted occur, after allowance for learning. Observed deviations from Ricardian equilibrium are small, but biased in a Keynesian direction: changes in bequests do not fully offset changes in government debt. The imposition of a binding nonnegativity constraint on bequests produces the predicted neoclassical behavior. The cost to the players of deviations from the theoretical equilibrium is apparently an important determinant of the variability of observed deviations. [ABSTRACT FROM AUTHOR]

This paper examines the empirical content of the neoclassical theory of the firm. The main models (perfect competition, monopolistic competition, pure monopoly) are specified in terms of observable anomalies. These models are then tested against data and against each other. The findings pave the way for an appraisal of the empirical status of the perfectly competitive model, relative to the data and relative to the other neoclassical models. [ABSTRACT FROM AUTHOR]

Presents a study that examined the empirical definition of money. Role of time deposits as substitutes for money; Comparison of the Keynesian and neoclassical models of money demand; Data on the demand for money regressions.

Focuses on economist John Maynard Keynes' theory of effective demand. Derivation of an aggregate supply function from the standard principle of profit-maximization; Expression of aggregate supply in terms of wage units; Failure of the theory to specify the exact nature of the dynamic market mechanism; Brief review of the Marshallian perfect-competition price analysis.

Discusses the neoclassical dichotomization of economic theory. Comparison of the classical school with the neoclassical school of economics; Substantive alteration of the classical monetary theory; Interpretation of the quantity theory in neoclassical terms.

Presents differences between Keynes and the Neoclassics derived from implicit assumptions about relative speeds of adjustment prices and quantities in response to changes in demand. Difference between the spot market and the forward market; Two major cases when forward price may not equal the flow-supply price; Effects of changes in the money supply on gross national product and price level associated with any given flow of aggregate production.