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The Organization of Innovation: Incomplete Contracts and the Outsourcing Decision

By Thomas Jungbauer, Sean Nicholson, June Pan, Michael Waldman, and Lucy Xiaolu Wang

American Economic Journal: Microeconomics

Why do firms outsource research and development (R&D) for some products while conduct- ing R&D in-house for similar ones? An innovating firm risks cannibalizing its existing products. The more profitable these products, the more the firm wants to limit ...

Inflation Targeting under Fiscal Fragility

By Aloisio Araujo, Vitor Costa, Paulo Lins, Rafael Santos, and Serge de Valk

American Economic Journal: Macroeconomics

We propose a model to study an inflation-targeting regime under a high government debt burden. We assume that an altruistic policymaker chooses debt issuance, inflation, and public expenditure, while private agents dislike inflation and finance the govern...