Past projects

Current projects | Past projects

"Conflict, refugees and stability"
PGC2018-096133-B-100, Ministerio de Ciencia, Innovación y Universidades
Laura Mayoral , Joan M. Esteban, Hannes Mueller, Timothy Besley, Andrea Canidio, Itzhak Gilboa, Andre Groeger, Massimo Morelli Dominic Rohner, Ola Olsson, Debraj Ray, Joan Serrat

Two areas are central to our project. The first block investigates the causes and consequences of social conflict. The second area involves a deeper inquiry into the link between political instability, state formation and fragility and long-run development. In our previous work we have focused on the role of ethnic divisions on social conflict. We now study class conflict; why we have seen less class conflict than what the intuition suggests. We shall also study some consequences of violent conflict, on the creation and persistence of gender roles as well as on population displacement. The second main block is on political instability. We examine the factors that contribute to early state formation and long-run economic development. We will also study social conflict and the design of political institutions, the conditions under which checks and balances spread, making systems (countries) robust to economic and political crisis. Yet they limit the capacity for a quick positive response to changes in the environment. The second subproject studies the optimal allocation of surplus among two competing selfish social groups. We focus on three sources of inefficiencies: (i) potential costly conflict; (ii) waste of resources to increase power; and (iii) encourage instead productive investments that increase the surplus to be shared.

"Innovation and policy intervention in social and economic issues"
PGC2018-097898-B-100, Ministerio de Ciencia, Innovación y Universidades
Sjaak Hurkens , Esther Hauk, Enriqueta Aragonès, Toke Aidt, Facundo Albornoz-Crespo, Antonio Cabrales, Doh-Shin Jeon, Andrea Lanteri, Albert Marcet, Javier Ortega, Clara Ponsatí, Orestis Troumpounis, Dimitrios Xefteris

In this project we propose an analysis of the optimality of different political interventions in a number of social and economic issues. We focus both on specific and currently relevant applications such as the mobile and automobile markets and crowdfunding, as well as on more general issues about the functioning and economic consequences of certain social and economic institutions. The ultimate goal of this project is to guarantee optimal levels of social welfare in all those environments where those social and economic institutions understudy play a relevant role. Therefore, our main interest would be to characterize the main efficiency problems caused by the characteristics of such institutions and to design specific measures of policy intervention and regulations that may overcome these shortcomings.

"Microeconomics in the digital era"
ECO2017-88129-P, Ministerio de Economía, Industria y Competitividad
Mattew Ellman , Roberto Burguet, Ramon Caminal y David Austen-Smith

Advances in digital technology have dramatically reduced the costs of storing, processing, publishing and searching for information. In this project, we plan to build on our past work in the field of microeconomics to investigate how these changes have shifted the way markets function and how people interact within a networked society. We will focus on three sets of issues: (1) how enhanced search and targeting of advertisements affect markets for products, labor and information; (2) how the digital era is affecting the market for news and information and political competition; (3) how strategic interactions on platforms and within markets affect the optimal design of crowdfunding, reputation systems, the gig economy, product innovation, coalitional bargaining and regulatory policy.

"Experimental economics, matching markets, and subjective well-being"
ECO2017-88130-P, Ministerio de Economía, Industria y Competitividad
Flip Klijn , Jordi Brandts, Ada Ferrer, Peter Biró, David Cooper, Joan Costa-Font, Enrique Fatas, Karita Gerxhani, Bettina Klaus, Joan Pais, Arno Riedl, Christina Rott y Arthur Schram

This project brings together three research lines in the field of microeconomics:
1. Experimental studies on economic and social issues
2. Experimental and theoretical studies on matching markets
3. Welfare, preferences, and the social and economic context

"Theoretical and experimental microeconomics"
2017 SGR 1136 , Generalitat de Catalunya
Jordi Brandts , Roberto Burguet, Ramon Caminal, Matthew Ellman, Sjaak Hurkens, Vaiva Petrikaite

We work on theoretical and experimental microeconomics, with emphasis on industrial organization and organizational economics. Specific issues we cover are: crowdfunding, the regulation of the telecom industry, markets for search and experience goods, market phenomena linked to internet trade, the internal organization of the firm, sperformance effects of profit sharing and coalitional bargaining.

"Social and political conflict"
2017 SGR 1359 , Generalitat de Catalunya
Ada Ferrer , Enriqueta Aragonès, Flip Klijn, Ana Rute Pedro Cardoso, Joan Mª Esteban, Laura Mayoral, Ursula Mello, Hannes Mueller

We study social and political conflict issues focusing on: (i) how economic and political conditions, and ethnic composition may precipitate conflict; (ii) the role of economic inequality as a source of conflict; (iii) study economic inequality with a focus on labor market institutions; (iv) consequences of inequality for individuals' behavior and attitudes; (v) migration; and (vi) the behavior of participants in electoral processes and other markets to understand how conflict evolves and the institutions that promote the development of democracy and good functioning of the market. The research is based on theory and empirics, using cutting-edge statistical analysis.

"Theoretical and applied macroeconomics: inequality, partial information and expectations"
2017 SGR 1571 , Generalitat de Catalunya
Hugo Rodríguez , Esther Hauk, Joachim Jungherr, Xavier Ramos, Sara Ayllón, Pau Milán, Luis Rojas, Raúl Santaeulalia

Our group Works on the following areas:
1. Expectations: the literature assumes that investors know how prices are formed. We assume limited knowledge and study stock and bond price fluctuations and policy. 2. Debt frictions and Financial Intermediation: we study if banks should be rescued and the issuance of government and bank debt. 3. Optimal Policy: we develop a framework to study policy when the government has imperfect information about the economy, an issue usually ignored, applied to fiscal, monetary and debt policy. 4.Labor Income: we study the implication of countercyclical labor shares for labor market dynamics and human capital misallocations. We study efficiency in occupational choice with endogenous spillovers due to socializing and on the job learning. 5.inequality: we design indeces of social integration and inequality of opportunity and indeces that capture individual well-being. We study inequality reducing policies including redistribution, conditional cash transfer programs and education policies.

"Firm behavior under government policies: the interaction of credit markets and labor markets in shaping economic performance"
ECO2016 76734-P, Ministerio de Economía, Industria y Competitividad
Ana Rute Cardoso , Hugo Rodríguez, David Card, Paulo Guimaraes, Lous-Philippe Morin, Benjamin Olken, Dina Pomeranz

This project focuses on the interaction between firm behavior and government policies, and aims at improving our understanding of the drivers of economic performance. Its core contribution is to bring the firm to the forefront of the analysis, progressing from the previous literature in labor economics, international trade, or emigration, which most often assumed that firms are homogeneous. In particular, we will consider two specific types of government policies that may affect firm behavior: labor market regulations and financial market regulations . Both policy areas have recently witnessed major changes and intense controversies. Financial market regulations crucially determine firms' access to capital , whereas labor market regulations, such as minimum wages and collective bargaining, as well as compulsory education laws, crucially determine firms' access to labor -- beyond its quantity, its quality and price.

We are interested in a broad set of outcomes and will address the following questions:
1) What is the impact of firm access to credit on labor contracts?
2 ) What is the role of firm-to-firm job mobility in shaping workers' lifecycle earnings profiles? Do men benefit more than women from job mobility?
3 ) Are there spillovers of education at the firm level?
4 ) How do minimum wages impact workers' careers? Does collective bargaining hamper economic adjustment and will recovery from the crisis require the dismantling of the European wage setting model?

Emphasis will be placed on empirical microeconomic modeling and task 1 will provide as well theoretical modeling from a macroeconomic perspective.

"Costly consumer search and privacy online markets""
ECO2015-74328-JIN, Ministerio de Economía, Industria y Competitividad
Vaiva Petrikaite ,

The project will investigate the aspects of online retail markets, determined by seller's and buyer's new incentives and instruments. The analysis will encompass the main aspects of e-commerce by studying costly consumer search, targeted advertising and consumer privacy issues. Thus, the study will provide with a coherent integrated online market analysis that will be used to identify necessary economic policy measures leading to more effeciend digital markets and consumer privacy protection.

"Innovación e información en la economía digital"
201612006, Fundación BBVA- Ayudas a Equipos de Investigación Científica
Matthew Ellman , Roberto Burguet, Sjaak Hurkens, Vaiva Petrikaite, Fabrizio Germano, Tomás Rodriguez-Barraquer

Does the large and growing digital footprint in modern life simply reflect a shift to conduct social and economic interactions in a lower cost medium, or do the new technologies and greater interconnection bring fundamental changes in how people interact? This project seeks answers by building a series of models, based on reduced costs of storage, processing and transfer. In the first line, we focus on how social networks, search engines, advertisers and low cost publishing and distribution affect the quality of the news that gets produced and consumed. In the second, we investigate the use of digital algorithms to support work and innovation via crowdfunding. In the third, we study firms' incentives to accumulate information about people to target advertising and gain a competitive advantage.

"Culture and social conflict"
ECO2015-66883-P, Ministerio de Economía y Competitividad
Laura Mayoral , Joan M. Esteban, Hannes Mueller Timothy Besley, Massimo Morelli, Joachim Voth, Gilat Levy, Dominic Rohner, Christopher Rauh, Debraj Ray

The general research theme of our project is the interaction between culture/religiosity, social conflict and political instability. We have set to ourselves three goals: (i) to study in greater depth the two-way relationship between culture and conflict, (ii) to have a richer understanding of the drivers of conflict, with emphasis on the difficulties to reach prior agreements, and (iii) to obtain measures of political risk that allow us to anticipate the onset of violence.
Our first research line focuses on the bidirectional relationship between culture and conflict. Culture is a mechanism that transmits behavioral norms from generation to generation. As situations of extreme violence can alter these norms, the effect of conflict in a society can be perpetuated through cultural transmision.
The second set of issues studies the determinants of conflict onset. First, we consider two independent sets of reasons of why it turns out to often be imposible to reach an agreement. One explanation we offer is that it might me imposible to satisfy the participation constraints of all the potential coalitions threatening peace. Our second explanation wants to develop a model in which 'just' agreements turn out to be an incentive for an even more violent conflict. We characterize sharing rules that lead to peaceful agreements.
In the third set of issues considered we turn to the economic consequences of conflict and weak political institutions. This line of research first aim to develop an empirical method to predict civil wars. The prediction uses several hundred thousand articles from English-speaking newspapers and an unsupervised learning algorithm to generate topics from these texts. These topics are then used to predict instability out of sample. Finally, the project analyses the effect of weak law and order enforcement, which is often found in fragile countries.

"Policy intervention in social and economic networks"
ECO2015-67171-P, Ministerio de Economía y Competitividad
Esther Hauk , Sjaak Hurkens, Enriqueta Aragonés, Orestis Troumpounis, Facudno Albornoz-Crespo, Doh-Shin Jeon, Dimitrios Xefteris, Andrea Lanteri

In this project we propose to analyse social and economic networks with the aim of studing how policy intervention may solve their shortcomings. We focus both on specific and currently relevant applications such as the digital markets, as well as on more general issues about the functioning and economic consequences of social and economic networks. The ultimate goal of this project is to guarantee optimal levels of social welfare in all those environments where social or economic networks play a role. Therefore, our main interest would be to characterize the main efficiency problems caused by the existence of networks, to design specific measures of policy intervention and regulations that may overcome this shortcomings, and finally to characterize the features of the political instutions that may guarantee the correct implementation of the designed policies.
With this aim we have structured the contents of the project in two research lines:
1) Social and economic networks, where we analyze its functioning and detect its possible inefficiencies
2) Political institutions and optimal policies, where we design policy intervention and its strategic implementation
Both research lines consist of several subprojects. The first research line attempts to integrate the social preference literature with the social network literature with the aim of understanding the effects of the networks features on social welfare. It also studies market competition with strong network effects in a particular application: the digital market. The second research line proposes a new equilibrium concept in order to study optimal policy, examines the effect of corruption on the society's policy preferences and analyzes a number of political institutions according to their social and economic effects on society's welfare

"Frictions and Failures in Old and New Markets"
ECO2014-59959-P, Ministerio de Economía y Competitividad
Ramon Caminal , Roberto Burguet, Matthew Ellman, Vaiva Petrikaite, Lídia Farré

This project contributes to the analysis of interaction among individuals at a microeconomic level in the presence of frictions and group determinants. As such, it is part of the effort to bring the classical microeconomic model of a frictionless economy closer to the complexities of reality.
The project is divided in four sections:
- 1st section deals with open questions inside the classical framework of industrial economics.
- 2nd section focuses on online transactions and the issues specific to that vehicle of interaction.
- 3rd section will be devoted to the study of the effects of social determinants on individual choice and behavior
- 4th section will consider interactions not necessarily mediated by prices, subject to relational frictions. Issues pertaining to this category include the spillovers from intra-group decisions onto inter-group decisions, the design of procurement rules in front of corruption, the endogenous selection of members in problems of team formation, or the use and consequences of crowdfunding as a mechanism for financing new projects.
These four sections cover a wide thematic spectrum, and constitute a coherent research project organized around a unified methodological approach and the common theme of frictions in the economic interactions of individuals. The project includes theoretical and empirical work, and will help clarify open questions in the frontier of economic analysis

"Experimental Economics, Two-sided Markets and Subjective Well-being"
ECO2014-59302-P, Ministerio Economía y Competitividad
Jordi Brandts , Flip Kliin, Ada Ferrer, Jose María Ortíz, Joana Pais, Péter Biró, Markus Walzl, Bettina Klaus, Klarita Gerxhani, Arthur Schram, David Cooper, Enrique Fatas

The project brings together three research lines in the field of microeconomics:
1. Experimental studies on economic and social issues
2. Experimental and theoretical studies on two-sided matching markets.
3. Welfare and the social and economic context.

The studies in this project aim at world-class research that will contribute to the international literature by pushing forward on the frontier of knowledge. Both, the experimental and the questionnaire based evidence will allow us to obtain a more complete view of social life, as well as to establish bridges between economics and other social sciences like psychology and sociology.

"The Macroeconomic Implications of Heterogenous Firms"
2014 SGR 1432, Generalitat de Catalunya
Omar Licandro , Joachim Jungherr, Francesco Cerigioni, Dmitry Matveev

Within the general framework of the empirical and theoretical literature on firm dynamics, its applications to trade, on firms' financing choice along the business cycle, the dynamics of employment and occupations, the history of longevity and migration, the welfare implications of output growth measurement and endogenous fertility, and on the relationship between bank opacity and financial stability, the research of the group will cover the following issues:

1. The dynamics of Spanish manufacturing firms
2. Real Exchange Rate and Export Behavior of Firms2
3. Dynamics of Firm Dynamics
4. Occupational Obsolescence
5. Longevity and Migration in Human History
6. The Welfare Implications of GDP Growth
7. Capital Structure, Uncertainty and Macroeconomic Fluctuations
8. Bank Opacity and Financial Stability

"Macroeconomia teòrica i aplicada"
2014 SGR 1446, Generalitat de Catalunya
Albert Marcet , Angel de la Fuente, Hugo Rodríguez, Sarolta Laczó, Albert Sánchez

The research of the group will focus on five major topics:

1. Formation of expectations. Rational expectations (RE) are replaced by the Internal Rationality (IR) approach that includes a learning algorithm consistent with the optimal behavior of the agents.
2. Volatility of asset prices. IR models will be applied to explain the apparent excess variability in the price of certain assets.
3. Fiscal policy. The optimal portfolio of debt will be analyzed and the implications of consistent temporarily fiscal policy. We quantify the results of the regional financing system at a national level.
4. Monetary policy. We will employ the IR approach to this policy. We will analyze the implementation of monetary policy during financial crises.
5. Economic growth. The links between education and economic growth will be studied. We will analyze the statistical quality of education indicators and the impact of the quality and quantity of education on the level of income and productivity of countries.

"Microeconomia teòrica i aplicada"
2014 SGR 510, Generalitat de Catalunya
Roberto Burguet , Jordi Brandts, Ramon Caminal, Matthew Ellman, Sjaak Hurkens, Jose Mª Ortiz

The research will cover organizational economics. This includes transactions that take place inside the firm. We will pay particular attention to issues referring to manager-employee relationships, particularly the effects of several factors (legitimacy, employee assignment, group composition, etc.) on the feasibility of cooperation. It also includes transactions that take place outside the boundaries of the firm. We will study issues related to bilinguism, media subsidization, or service externalization.
The research will also cover topics on the economics of market mechanisms, with a focus on industries characterized by the need of coordination or centralization, typically due to the existence of externalities or an essential facility. This includes analysis of telecommunication or energy markets or the internet.
Finally, we will contribute to classical themes in industrial economics, with the study of issues like bundling, the dynamics of consumer preferences, or procurement.

"Social Unrest, Migration and Inequality"
2014 SGR 1414, Generalitat de Catalunya
Ada Ferrer , Ana Rute Cardoso, Joan Esteban, Laura Mayoral, Guillem Pons, Adrian Pino

This research proposal aims at contributing to the understanding of the causes of social unrest, focusing on economic and ethnicity diversity. The research will be based on both theory and empirics. The project can we divided into the six parts: (i) study how the economic conditions of a society and its ethnic composition may interact to precipitate internal conflict; (ii) examine the link between inequality and status seeking and how this affects individuals' welfare perceptions; (iii) assessing the inequalities in the labor market, in concrete, looking at the impact of firm dynamics and labor market institutions on the returns to education, the gender pay gap, and labor market inequality; (iv) explore further immigrant locations and native residential preferences in Spain; (v) build a theory of migration where in some development stages immigrants are an essential mean to increase the natives' welfare; and (vi) contribute to the econometric literature of instrumental variables.

"Economia Política"
2014 SGR 1064, Generalitat de Catalunya
Enriqueta Aragonès , Josep M. Colomer, Hannes Mueller, Esther Hauk, Flip Klijn, Clara Ponsatí, Jan Zapal, Benjamin Tello

This research group focuses on the relationship between economics and politics. On the one hand, we work on the application of economic analysis to political issues, that is, we use the analytical tools that have been developed mostly by economists that have been adopted to study issues that traditionally belong to other disciplines, specially political science. On the other hand, we study the relationship between economic structures and decisions with political and public institutions. In particular, we analyze the possibilities of reform for political and public institutions, for electoral and voting rules, federalism, institutional design, turnout, electoral strategies, economic growth, inequality. The aim of this research group is both theoretical and applied.

"Tecnología, Capital Humano, Innovación y Comercio"
ECO2013-48884-C3-1-P, Ministerio de Economía y Competitividad
Omar Licandro , Joachim Jungherr, Fernando Del Rio, Eduardo Giménez, Miquel Pérez-Nievas, Antonio Rodríguez Sampayo, José Ramón Ruiz

The aim of this project is to contribute to the understanding of the processes of technological innovation and capital accumulation in a global economy. Technology interacts with the investment decisions taken by households, firms and governments over the accumulation of physical and human capital, and the management of natural resources, the labor force and population growth. This interaction occurs in a global environment opened to international trade and international capital and labor flows. All of these processes are of interest for the Convocatoria de Excelencia del Plan Nacional de I+D, and at the core of some of the Challenges of the Spanish Strategy of Research 2013-16 (Challenge 6 and part of Challenge 5).
To better understand the aforementioned processes our goal is to construct economic models that incorporate those features, and test the models empirically. We target models of i) sustainable growth; ii) inequality, poverty and growth; iii) demography and fertility, iv) international trade and finance, v) competitive search and bargaining, vi) employment and business cycle, vii) technology adoption and vintage capital, viii) energy use and non-renewable resources. The results obtained with these models will allow us to make recommendations for macroeconomic policy. We will consider applications of many of these models not only to the global economy but also to the Spanish economy and the EU.

"Integrated Macro-Financial Modelling for Robust Policy Design"
MACFINROBODS, FP7-SSH-2013- 2 GA 612796, European Commission,
Albert Marcet , Esther Hauk, Omar Licandro, Sarolta Laczo, Nezih Guner, Juan Carlos Conesa, Joan Llull y Francesc Obiols. Other institutions participant: University of Amsterdam (Project Coordinator), Centre Pour La Recherche Economique Et Ses Applications (CEP)
During the global financial crisis and ensuing Great Recession, economists at policy-making institutions had little choice but to augment macroeconomic models with ad-hoc assumptions and adjustments in order to provide analysis and advice for policy makers. Our consortium's proposal aims to move policy-focused macroeconomic modelling beyond this approach to the endogenous modelling of the dynamics resulting from financial risks and related decision making in banks, households, firms and public institutions. We bring together four broad lines of research to systematically develop new behavioural and institutional building blocks, integrating them in policy-focused macroeconomic models and using these models in a new framework for policy evaluation. In terms of building blocks, one line of research moves beyond the assumption of representative and homo-oeconomicus-type agents to incorporate micro-behavioural realism in decision making, while a second line of research advances the modelling of financial institutions, their fragility and the dynamics of systemic risk. The third line of research integrates these new building blocks (including a selection of those developed by researchers outside the consortium) in a new generation of policy-focused macroeconomic models. In parallel, in the fourth line of research new policy evaluation tools are developed, with a focus on robust tools aimed at containing financial contagion and boom-bust cycles, maintaining fiscal sustainability and coordinating monetary, fiscal and regulatory policies in normal and crisis regimes. The consortium comprises researchers with a strong track record in advancing the frontier on behavioural and institutional modelling, highly influential macroeconomic modellers as well as seasoned veterans of model-based monetary, fiscal, and regulatory policy evaluation and design. Consortium members have strong academic backgrounds as well as substantive practical experience at policy-making institutions.

"The Dynamics of Firm Behavior at the Intersection of Labor Markets, Financial Markets, Foreign Product Markets, and Government Regulations"
ECO2012-38460, Ministerio Economía y Competitividad
Ana Rute Cardoso , Hugo Rodriguez Mendizabal, Radim Bohacek, David Card, Paulo Guimaraes, Patrick Kline, Núria Rodríguez-Planas, Keke Sun, Jose Varejao
Misallocation of workers and capital across firms has been shown to generate substantial loss of income and wellbeing. This problem is particularly obvious when we talk about high unemployment rates in a crisis setting, jobless economic recoveries, or a profusion of low quality jobs. At the heart of these problems lies the behavior of firms, which are constrained by financial markets, product markets, labor markets, and government regulations.
This project brings to the forefront of the analysis the firm and its decisions on the allocation of resources, addressing three issues on the dynamics of firm behavior: i) What are the sources of firm quality (access to high quality and flexible labor force? Access to export product markets? Access to financial markets?); ii) How do firms of different quality compare, in terms of their growth rates and the development of careers they offer their workers?; iii) How stable is the ranking of firms over time according to their quality?
We aim at analyzing the interaction between institutions and regulations, on one hand, and supply and demand market forces, on the other, as determinants of firm behavior. We are particularly interested in the labor market, foreign product markets, financial markets, and regulations such as: incentives for labor market participation, rules on labor flexibility and adequate pay, regulations aimed at reducing financial market frictions and promoting insurance markets, and recent innovations in central banking policies.

"Schools, Culture, Markets and Democratic Institutions in a Globalized World"
ECO2012-37065, Ministerio Economía y Competitividad
Esther Hauk , Sjaak Hurkens, Clara Ponsatí Obiols, Facundo Albornoz Crespo, Giovanni Immordino, Doh-Shin Jeon, Javier Ortega Diego, Arnau Valladares Esteban
The number of immigrants are growing, cultures mix, are schooled together and need to find ways to resolve their conflicts. As markets grow, network effects gain importance. The aim of this project is to address some of these challenges that globalization entails. We will concentrate on the following main issues. (i) We will look at the historical issue of Nations and Nationbuilding and propose a theoretical model that links nation building and industrialization. (ii) We will study family immigration, in particular, the effect of immigration on the school system and try to understand how to attract immigrants with high parental motivation. (iii) We will try to understand whether TV program imports constitute a threat for cultural diversity, (iv) we will examine lying aversion and whether the same behavioral theory can explain behavior in TV game shows in different countries, (v) we will study competition and regulation in markets with network effects. Finally, we are interested in understanding how groups should negotiate and which institutions will form under democracy: in particular, we want to understand which sharing rules and stable organizations evolve under democratic decision making, how different majority rule affect the conflict resolution among two groups and if groups will choose a delegate to represent them in negotiations or prefer to submit the agreements reached by their representative to a ratification vote.

"Advances in the Political Economy of Democratic Institutions"
ECO2012-37857, Ministerio Economía y Competitividad
Enriqueta Aragonès , Josep Maria Colomer Calsina, Hannes Felix Mueller, Timothy John Besley, Micael R. Castanheira de Moura, Marco Giani, Dominic Patrick Rohner, Dimitrios Xefteris
This project brings together researchers in Economics and Political Science. Its aim is to explore the role and social consequences of different political institutions by developing scientific methods that lie on the frontier between Economics and Political Science. Its ultimate goal is to contribute to the innovative design of social and political institutions.
The new developments that we propose in our work plan will proceed along three main research lines:

1. Proposing models of electoral competition that analyze the effects and the effectivity of electoral campaigns from both the voters’ and the political parties’ point of view.
2. Addressing the design of democratic institutions that could improve the performace of representative democracy.
3. Analyzing the political dimension of conflict: the role of social and political institutions in determining the extend and consequences of social conflict.

"Social Polarization and Conflict: Models, Estimation, Evidence"
ECO2011-25293, Ministerio de Ciencia e Innovación
Laura Mayoral , Joan Esteban, Francesco Fasani, Laia Balcells, Andrew Gianou, Alessandra Conte, Debraj Ray, Mateo Cervellati, Massimo Morelli, Dominic Rohner, Kalyvas Stathis, Ana Arjona
The project deals with the determinants of societal conflict as an outcome of rational behaviour, combining formal modelling with empirical testing of the implications of the models. In the ongoing research by Joan Esteban, Laura Mayoral and Debraj Ray we define a general model of conflict that provides a framework where one can accommodate the key role of non-material aspects often present in civil conflicts. These aspects are the payoffs other than direct private benefits(fighting for a “cause”) and the concern for the fate of the group, involving (partially) altruistic behaviour. This is an empirically testable model that in addition facilitates an organized way of thinking about the different issues involved in inter-group conflict that constitute the core of this research project. We will use this framework as a thread that organizes most of the research plan. This general model suggests two features that appear to be key in explaining the nature of conflict and its correlates: what the group is fighting for and the level of group cohesion. Following these two leads, we shall first develop different questions associated with the group’s objectives and how are they set, and next we will develop various determinants of group cohesion. How the objectives are set, how mutual concern and differentiation from the “others” can develop, what are the trade-offs between homogeneity and heterogeneity within groups? Finally, we will discuss the problem of civil conflict between groups in a framework of repeated interaction.

Every question addressed combines modelling with empirical tests. Empirical work on this topic poses two complex problems. One is the scarcity and quality of the data. For instance, the ethnic or religious composition of many countries is not known or the data are extremely unreliable. The second issue is methodological: the nonlinear models typically employed to estimate conflict probabilities are subject to a number of problems that difficult the estimation strategy. This research project will take these issues very seriously and will devote a significant amount of resources to adequately dealing with them.

Besides the scientific contribution of our project, the results obtained will be useful for a rigorous study of some pressing issues relevant to Spain. We are observing a marked process of dilution of the social cohesion driven by an increased income inequality and the large influx of immigrant population. The understanding of the role of ethnic, religious and/or economic polarization in the creation of social unrest may permit to adapt the institutions for a harmonic channelling of the increasingly different attitudes and social priorities.

"Contracts, Negotiations, and Markets"
ECO2011-29663, Ministerio de Ciencia e Innovación
Roberto Burguet , Ramon Caminal, Matthew Ellman, Lídia Farré, Ben Ner Avner
This project deals with individuals’ interactions and exchange in negotiations, contracts and markets. First, the project will contribute to contract theory and in particular to the analysis of the relationship between formal and informal contracts. It will extend this study to other situations where the trade-off between formality and informality is an issue. Second, the project will contribute to the study of negotiation and renegotiation, both from the conceptual point of view and in particular settings. In this sense, we will analyze endogenous mergers and option contracting under renegotaition. A third goal is to analyze issues both in contract theory and in negotiation theory that affect public policy. Here we will deal with the analysis of bribery, accountability and subsidies. Finally, we will continue analyzing problems of market behavior from the microeconomic point of view, including product variety, loyalty reward, or labor substitution. The project will contribute with theoretical concepts, applied analysis and also empirical test of hypothesis and measurement.

"Economic Growth and Public Policies (4)"
ECO2011-28348, Ministerio de Ciencia e Innovación
Ángel de la Fuente , Marcelo Soto, Francesca Rondina, María Gundín
This project analyzes the determinants of economic growth in two samples of economies, the Spanish regions and the member countries of the OECD, within the framework of modern growth theory, with special attention to the role of human capital and public investment policies. It also covers the construction of historical series of certain economic and demographic regional aggregates and the analysis of some issues related with public finances in the autonomic state, with the role of external aid in the development of LDCs and with policy design in the presence of model uncertainty. The issues to be studied include the private and social returns to investment in education, the impact and effectiveness of regional policies, the determinants of investment and job creation, the design of the regional financing system and the territorial implications of the public budget, the contribution of foreign aid to the development of poor countries and the role of private agents' expectations in the design of robust public policies. The results will be of interest to policymakers, especially those with responsibilities in the areas of regional and growth policy.

"Studies on Two-Sided Matching Markets and Subjective Well-Being"
ECO2011-29847, Ministerio de Ciencia e Innovación
Flip Klijn , Ada Ferrer, Bettina Klaus, Markus Walzl, Joana Dantas Vaz Pais
The first research line will consist of a number of theoretical and experimental studies on various aspects of two-sided matching markets. The research can be summarized in five topics. Three topics deal with centralized markets: (i) normative study of conditions under which school choice mechanisms satisfy consistency and converse consistency, (ii) experimental study of the performance of a school choice mechanism in a hybrid model with so-called exam schools and regular public schools, and (iii) experimental study of the impact of information flows on the performance of school choice mechanisms and its robustness with respect to varying preference intensities. The other topics deal with decentralized markets: (iv) equilibrium analysis of decentralized matching markets with an exogenous termination time (for transactions) and (v) study of coordination requirements and impact of limited blockings in the stabilization of decentralized markets.

The second research line will consist of a number of empirical studies on various aspects of individual preferences and behavior focusing mainly on the use of subjective well-being measures as a proxy for utility. The research can be summarized in four main topics: (i) the role of uncertainty and risk attitudes on well-being by examining how individual characteristics other than risk attitudes shape inequality aversion; (ii) empirically examining the validity of anchoring vignettes as a method to operationalizing the concept of ex ante utility; (iii) work on the formalization of an econometric method to estimate life satisfaction; and (iv) continue the work on the importance of uncertainty and risk attitudes for individuals’ behavior and outcomes in the labor market.

“Immigrant Location and Native Residential Preferences in Spain: New Ghettoes?”
ACUP , RecerCaixa 2011
Ada Ferrer-i-Carbonell , Jesús Fernández-Huertas Moraga, Albert Saiz

In recent years, Spain in general and Catalonia in particular have seen an enormous and unprecedented increase in the international migration inflows. This project wants to understand the impact of immigration on neighborhood dynamics in Spain. We will study whether immigrants and/or natives display preferences for residential segregation on an ethnic basis or if location decisions depend mostly or only on geographical amenities. Answering these questions would allow us to understand the future of ethnic segregation at the residential level in Spain and to evaluate whether there are policies that could help mute the segregation process. The residential level of segregation, geographical location of individuals, and the formation of ghettoes are very important determinants of future welfare.

Location is an important factor for social integration and public participation of migrants. If immigrants live close to natives, they have a larger probability to meet them and integrate into their social networks. This is especially important for their children (the second generation).

“Innovation, Internationalization and Vintages of Physical, Human and Natural Capital”
ECO2010-17943, Ministerio de Ciencia e Innovación
Omar Licandro , Luis Antonio Puch González, Raouf Boucekkine, Russel Cooper, Jorge Durán Laguna, Eduardo Gimenez Fernandez, Blanca Martínez Gonzalo, Miguel Pérez-Nievas Montiel, Julien Prat, Fernando del Río Iglesias, Ramón Ruiz Tamarit, Antonio Rodríguez Sampayo
The aim of this research project is to contribute to the understanding of firms and countries’ decisions on trade, investment and innovation. To this purpose we will construct and estimate economic models with heterogeneous physical, human and natural capital. This heterogeneity is notably related to the age, cohort or vintage of capital, but not only to this. On the other hand, empirical evidence suggests that trade openness induces firms and countries to increase their innovation efforts. The project aims to evaluate the role played by the processes of creation and adoption of innovations in the global economy for the transmission of technical progress to productivity. The empirical exercise will use microeconomic data from the panel databases which contain information on the timing, size and type of investments carried out by firms and countries.

We consider a broad concept of capital that includes tangible and intangible physical investments, and among them, especially those of innovative nature which are key in the adoption process and thus, for the evolution of productivity gains. In particular we consider human capital investment as a complementary factor in the adoption process. The analysis of the relationship between innovative investments and the opening to trade is key to evaluate the consequences of all these investment processes. Moreover, the project consider the linkages between innovation and the stock of natural capital (natural resources and the environment), particularly related with debate on energy use and climate change.

The results will allow to pointing out the main factors determining firms’ decisions on investment in different types of capital as well as their innovative activity and, hence, identifying the main obstacles to innovation and technological diffusion among firms.
Given these results, it would be possible to provide a set of conclusions and guidelines for public policies regarding the promotion of technological progress and trade openess, as well as policies for sustainable growth and environmental policies.

"Conflicte Social i Polarització Econòmica, Ètnica i Religiosa"
RecerCaixa 2010, ACUP
Joan M. Esteban , Laia Balcells, Laura Mayoral, Stathis Kalyvas, Debraj Ray
The globalization process and the large scale migration flows precipitate deep changes in the income distribution and in the ethnic/religious polarization in of many countries. Higher heterogeneity —economic, ethnic or religious— significantly increases the risks of social conflict. This research project merges two research lines on civil conflict and social unrest coming from political science and economics. Our goal is the identification of the causes and the profile of social conflicts based on a quantitative approach. The project will permit to assess the role of poverty and of the ethnic and religious cleavages in the onset, intensity and modality of conflict. We shall work with a sample of 120 countries over the period 1960-2010. We expect that the result will permit an early warning on violent conflict.

"Training and Mobility Network for the Economic Analysis of Conflict" (TAMNEAC)
FP7-People-2010-ITN, European Community
IAE-CSIC Coordinator: Joan M. Esteban , DIW Berlin (Project Coordinator), Institute of Development Studies, Univ. Libre de Bruxelles, Oxford Policy Management Limited, Planet Guarantee, Consejo Superior de Investigaciones Científicas, Institut for Fredsforskning Stiftelse, Humboldt U. Berl
The overall objective of the Training and Mobility Network for the Economic Analysis of Conflict (TAMNEAC) is to train a young generation of professionals and researchers in tackling the challenges associated with mass violent conflict in developing countries. This training will range from rigorous research methods to knowledge-based policy responses and program implementation in conflict-affected countries.

TAMNEAC’s research will contribute to our understanding of the causes, processes, interactions of mass violent conflicts, as well as on the short- and long-term impacts that they have on individuals, households, communities, and states. This will effectively allow the linking of micro-level interactions that take place before, during, and after the outbreak of violent conflict with macro-level political processes. Recent outbreaks of violent conflict have put a strain on the European Union’s ability to engage effectively. In the future, the European Union will attempt to develop its capacities to anticipate and react to such conflicts, as outlined in the European Commission’s “Instrument for Stability Strategy Paper 2007-2011”. When considering challenges such as climate change, population growth, or the unequal exploitation of natural resources, the global potential for conflict will only increase, as will expectations upon the European Union to mediate and to prevent cycles of violence. TAMNEAC will play an important role in addressing these challenges.

“New Developments in Political Economy”
ECO2009-08820, Ministerio de Ciencia e Innovación
Clara Ponsatí , Enriqueta Aragonès, Josep Colomer, Hannes Felix Mueller, Borek Vasicek, Humberto Llavador, A. Postlewaite, Thomas Palfrey, Paola Manzini, Micael Castanheira, Santiago Sánchez Pagès
This project brings together researchers in Economics, Game Theory and Political Science under a joint research agenda of new contributions to the analysis and design of political institutions with the tools of Political Economics, that is, the study of political institutions by the methods for analysis of competitive behavior developed in Economics.
We will develop studies of the strategic interactions among the agents involved in political competition and negotiations, that is, candidates, parties, and voters. Our work-plan encompasses specific projects that will advance our understanding of democratic institutions along three main research avenues:

1- Proposing models of electoral competition that allow to discuss how and why issues become salient in a campaign, and to explore the fundamental role of promises and rhetoric.
2- Addressing the design of voting rules and electoral systems, with focus on their efficiency and durability, and on the mechanisms that promote quality in the election of leaders.
3- Developing models of bargaining and coalition formation aiming to explore the links between negotiations and political processes, and the effect of voting rules over negotiated outcomes.

“Labor Markets and Public Policies: Recent Trends and Perspectives"
ECO2009-07958, Ministerio de Ciencia e Innovación
Ana Rute Cardoso , Begoña Domínguez, Rosario Crinò, Hugo Rodríguez, Ioana Cosmina, Daniel S. Hamermash, Paul Gimaraes, José Varejao

This research project focuses on critical developments taking place in the economy, with a focus on the labor market, to provide enhanced understanding of trends in employment, productivity, the dynamics of social cohesion, the impact of public policies and the interaction between financial and economic systems. We therefore focus on a set of issues elected as key policy areas at the European level, under the Lisbon Strategy, which aims at promoting sustainable growth and employment while guaranteeing social cohesion.

Our research is organized as follows. We depart from a set of factors that are shaping the future of labor: demographic changes (ageing population and rising female participation); increased internationalization (flows of goods, capital and people); technological progress; changes in education and training systems; changes in the financial system. Within this framework, we analyze the labor market as the arena where labor supply and demand interact, under the mediation of institutions, to focus on the role played by the following actors and policies in promoting economic adjustment:
- company policies: recruitment and pay policies, outsourcing of services, export behavior
- workers’ mobility
- trade union action
Government policies, in particular educational policies, fiscal and monetary policies, and labor market regulations.

“New Solutions to Old Problems”
ECO2009-12695, Ministerio de Ciencia e Innovación
Sjaak Hurkens , Esther Hauk, Martin Meier, Nir Vulkan, Navin Kartik

The aim of the project is to address various relatively old and known problems from new and different angles. In particular, Esther Hauk will consider oligopoly without imposing an exogenous timing schedule. She will also address the phenomenon of terrorism as a rational strategy. Sjaak Hurkens will consider mainly issues of telecom regulation of termination tariffs. Other topics to be addressed are the effect of personal and private deadlines on bargaining outcomes (joint with Nir Vulkan,with a possible application to negotiating with criminals and terrorists) and the effect of morals and ethics (in particular, in relation to lying and truth-telling) on communication, deception, signalling and contracts. The latter will be in collaboration with Navin Kartik. Finally, Martin Meier will address the issue of how to formally model and analyze unawareness which could lead to a well-founded concept of incomplete contracts.

Microeconomia Teòrica i Aplicada, Grup de Recerca Consolidat
2009 SGR 1420, Generalitat de Catalunya
Roberto Burguet , Ramon Caminal, Heiko Gerlach, Esther Hauk, Sjaak Hurkens
The interaction of agents in different socio-economic contexts is the group's general research field. In the past, the group has studied several issues regarding the performance of markets, strategic games, the interdependence of preferences and strategic interaction, as well as more specialized issues relative to financial markets and urban and regional economics. After the restructuring of the group and the change of some of the members, we open new sub-lines. Thus, in the general field of the strategic interaction of economic agents, and besides continuing developing the research lines already mentioned, we will pay attention to the strategic use of research and development activities in the market, to information and its strategic communication.

Conflicte, Cohesió Social i Polítiques Públiques, Grup de Recerca Consolidat
2009 SGR 1142, Generalitat de Catalunya
Joan Mª Esteban , Clara Ponsatí, Flip Klijn, Martin Meier, Laura Mayoral, Laia Balcells, Joaquin Naval, Michelle Pistollato, Riste Gjorgjiev, Alessandra Conte
This project studies social integration and the functionality of democracy as means to channel conflicts of interests in society. Specifically, it analyzes the design of policies and mechanisms leading to social cohesion. To this effect, the project will set up a model of social interaction in which the existence of opposing interests is at the center stage. Collective decisions will be conditioned by the threat of conflict triggered by any of the relevant social groups. We shall address issues concerning collective decision making ---and the working of democracy--- as well as the role of individual interactions in achieving social cohesion. We use the questionnaire information from the World Values Survey to compute individual political, religious and ethnic attitudes and aggregate levels of social polarization. We hope to contribute to the literature of early warnings of conflict. We shall also aim at explaining individual political attitudes as resulting from socio-economic status and religiosity, as well as the more traditional factors such as education, gender, age, or size of town of residence.

2009 SGR 896, Generalitat de Catalunya
Ana Rute Cardoso , Javier Polavieja, Ada Ferrer, Jesús Fernández-Huertas, Rosario Crinò, Lídia Farré, Francesco Fasani
The major aims of the Research Group on Migrations are:
- to contribute to a better understanding of the growing international migration flows and its multidimensional implications on the origin and destination countries, namely on labor market outcomes, economic growth, the social security system, the educational system, and social attitudes;
- to consolidate a team of researchers who are equipped with the most adequate theoretical and empirical tools to provide world class contributions to the scientific analysis of the issue;
- to inform the policy debate and contribute to enhance decision-making, while disseminating information to the general public;
- to take advantage of the multidisciplinary specialization of the members of the group, who already have joint work in progress, to improve our understanding of these phenomena;
- to contribute to establish the Institute for Economic Analysis as a focal point in the international study of migrations, consolidating the links to an international network of researchers in the field.

The work of the Group is structured along six major research lines:
- migrant selection and economic development;
- immigrants’ choice of destination location;
- immigration and the labor market;
- immigration and performance of the educational system in destination countries;
- public finance under increasing migration flows and population ageing;
- social attitudes towards immigration in the destination societies.

Economia Política
2009 SGR 1126, Generalitat de Catalunya
Josep M. Colomer , Enriqueta Aragonès, Alessandra Bonfiglioli, Olivier Dagnelie, Hannes Mueller
This Group deals with the relations between economics and politics. First, it uses analytical tools initially developed mainly by economists for the study of traditional subjects of other disciplines, particularly politics. Second, it addresses the relations between economic structures and decisions and political institutions. More specifically, the Group studies political institutions and institutional design, change and reform, especially regarding electoral and voting rules, division of powers and federalism, as well as political participation, electoral strategies, economic growth and inequality. Both fundamental and applied research is developed. An annual Workshop on the Political Economy of Democracy is being held since 2008.

Macroeconomia, Política Fiscal i Monetària, Grup de Recerca Consolidat
2009 SGR 885, Generalitat de Catalunya
Albert Marcet , Ángel de la Fuente, Begoña Domínguez, Hugo Rodríguez, Marcelo Soto, Tatiana Dahlhaus
Our work is in several topics on macroeconomics, specially about the implications for fiscal and monetary policy, both from a theoretical and applied perspective. We have studied the optimal tax and debt policy along the business cycle; the implications of movements in the quantity of money on inflation and velocity; convergence of regions and countries to a similar level of income; the system of regional financing; and the efficiency effects of taxes on capital flows.

“Economic Growth and Public Policies (3)”
ECO2008-04837, Ministerio de Ciencia e Innovación
Ángel de la Fuente , Olivier Dagnelie, Marcelo Soto, Maria Gundin, Isabel Busom

This project analyzes the determinants of economic growth in two samples of economies, the Spanish regions and the member countries of the OECD, within the framework of modern growth theory, with special attention to the role of human capital and public investment policies. It also covers some issues related with public finances in the autonomic state, with the design and evaluation of R&D policies and with the development of LDCs. The issues to be studied include the private and social returns to investment in education, the impact of regional policies, the determinants of investment and job creation, the design of the regional financing system and the territorial implications of the public budget, the contribution of foreign aid to the development of poor countries and the functioning of informal financial markets in developing countries. The results will be of interest to policymakers, especially those with responsibilities in the areas of regional and growth policy.

“Studies in Microeconomics: Experimental Economics, Bilateral Matching Mechanisms and Subjective Well-Being”
ECO2008-04784, Ministerio de Ciencia e Innovación
Jordi Brandts , Flip Klijn, Ada Ferrer, Klaus Abbink, David Cooper, Arthur Schram, Enrique Fatas

The project brings together three research lines in the field of microeconomics:
1. Experimental studies on the economy and the society.
2. Theoretical and experimental studies on bilateral matching mechanisms.
3. Studies focused on the evaluation of subjective well-being.

“Market Performance and Competition Policy"
ECO2008-01850, Ministerio de Ciencia e Innovación
Roberto Burguet , Ramon Caminal, Rosella Nicolini, Heiko Gerlach

The present project refers to the study of some key aspects of markets and how they influence in their performance. First, R&D, and the strategic use of this activity together with the incentives to pursue innovations or the location patterns that result from it. Second, the exchange of information among potential competitors and related antitrust and regulation issues. Finally, the implications of multimarket interactions and decisions of firms. We will study several questions in this framework, both applied and theoretical. In the first line, we will study the incentives for R&D implied by public policy in Spain, the strategic choice of R&D portfolio by firms, and how incentives for labor pooling affect the location patterns in R&D-intensive industries. In the second line, we will study several questions that relate to information channels in the market through which collusion can be sustained or entry deterred, the effect of investigation efforts on the incentives for self reporting, or how to organize class-action litigation. Also, we will take the issue of policy towards provision of linguistic variety as a good viriety, given market failures in this regard. This connects to the third line, where we will study multimarket interaction. In particular, we will study how risk variation affects the location of output. Finally, and in this multimarket framework, we will take up again the question of how multimarket interaction affects the sustainability of collusion.

"Fiscal and Monetary Policy and Financial Markets"
ECO2008-04875, Ministerio de Ciencia e Innovación
Albert Marcet , Sarolta Laczó, Alessandra Bonfiglioli, Jesús Fernández-Huerta, Davide Debortoli, Ester Faia, Juan Pablo Nicolini, Klaus Adams, Marek Jarocinski

Our objective is to study the efects of fiscal and monetary policy in dynamic stochastic models with microfoundations. We introduce various kinds of financial market imperfections. In some studies we impose rational expectations and in other we assume learning about expectations. We also study empirically the issues at hand and design some econometric tools for this purpose. The topics under study are:
- Fiscal and Monetary Policy
- Financial Markets
- Econometric Models of Business Cycles
- Human capital, inequality, immigration and welfare state

"An Inquiry into Health and Safety at Work: A European union Perspective"
Ada Ferrer-i-Carbonell , U. Aberdeen, U. de Bourgogne, Baltic Int. Centre for Economic and policies studies, HYDRAULIS, Centre National de la Recherce Scientifique, The Instite for Economic Analysis, National and Kapodistrian University of Athens, U. of Amsterdam, Welsh Econ

The HealthatWork project aims to review current knowledge and issues related to the economic impact of health at work, to assemble, organise, analyse and synthesise data from national projects and surveys, and to recommend future actions for research and policy development aiming at improving health and safety at work in a changing labour market environment in the European Union in an era of ageing populations, feminised labour markets and increased incidence of Small and Medium Enterprices (SMEs). This is achieved through co-ordinated reviews, the development of common databases regarding indicators of health and safety at work in the participant countries and the associated GIS analysis capability. In addition, a pilot study aiming at designing appropriate data collection protocols is designed to explore the appropriateness of small scale surveys, using purpose-build questionnaire, to determine the preference setting of both employers and employees with regard to health and safety at work and to highlight the cost and benefits of investing in improving the health and safety at work.

“Modeling and Implementation of Optimal Fiscal and Monetary Policy Algorithms in Multi-Country Econometric Models”
Albert Marcet , Other institutions participants: CEPREMAP, London Metropolitan University, CFS-Frankfurt University, Commission of the European Communities-Directoratre General JRC, University of Surrey

This project contributes to the evaluation of macroeconomic policy by advancing the analysis of optimal fiscal and monetary policy in monetary union such as the European one. This work will result in the addition of new numerical tools, specially designed for the computation of optimal policy in large macro-econometric models. Such multi-country models are necessary to take into account the diversity of the countries making now the European Union. These new tools for the computation of optimal policy will be added to DYNARE, a public domain platform for the simulation and estimation of dynamic stochastic general equilibrium models (DSGE), that is increasingly used in policy making institution and in academic research alike. New models are proposed to analyze the contribution of optimal policy to smooth shocks in a union of heterogeneous countries with rigidities in labor and financial markets. In that framework, special attention is given to the dynamics of public debt. Systematic models comparison is made possible thanks to a database of macroeconomic models currently in use in policy making institutions around the world. New numerical tools are added to DYNARE that provide the computation of optimal policy, either under commitment, in a timeless perspective or under discretion, for a general class of nonlinear models. Particular attention is given to correct linear quadratic approximation of these models.Extensions are proposed to deal with partial information. These tools shall also permit to perform Bayesian estimation of models under the assumption that the policies followed were optimal. Special emphasis is placed on the definition of priors. Given the complexity of the numerical computations, we stress speed of computation and the development of parallel algorithms. Altogether, this project should represent a very significant step forward towards better models and better tools for the formulation of macroeconomic policies.

"Consolidating Economics"
CONSOLIDER-INGENIO 2010, CSD 2006-00016, Ministerio de Educación y Ciencia
Programme Research project “Consolidating Economics” financed by the Spanish Ministry of Education and Science Ander the Consolider-Ingenio 2010 Programme. The research team is formed by the following Spanish Institutions: Department of Economics (Universitat Pompeu Fabra); Unit of Economic Analysis (Universitat Autònoma de Barcelona); Instituto de Análisis Económico (CSIC); Department of Economic Analysis (University of Alicante); Centre de Recerca en Economia Internacional (CREI); Centro de Estudios Monetarios y Financieros (CEMFI, Madrid); Department of Economics, Department of Business and Department of Economic History (Universidad Carlos III, Madrid); Sector Público-Sector Privado Group, IESE; Applied Economy Studies Foundation (FEDEA, Madrid); Law and Sociology Group (UPF, Barcelona); Political Sciences (CSIC)

The main objectives of the research Project are:
1- Foster and project economics research in different areas of science, both theoretical and applied, where a position of internacional prestige has already been attained.
2- Increase the bibliometric impact of the research team during the next half-decade by about 25% over what has been achieved during 2001-2005.
3- Create or strengthen interdisciplinary links that will also lead to research projects and publication.
4- Develop a Spanish institution, the Barcelona Graduate School of Economics (Barcelona GSE), to support and foster postgraduate teaching, particularly the already existing doctorate programmes at UAB and UPF, in close collaboration with the ongoing PhD programmes at UC3M and UAM.
5- Carry out actions to promote and structure economics research in Spain on a level of global prestige.
6- Increase activities to foster international co-operation and projection, aimed particularly at Europe and Latin America.

"Strategic Behavior and Conflict Resolution in Economic and Political Institutions"
SEJ2006-02079, Ministerio de Educación y Ciencia
Clara Ponsatí Obiols , Enriqueta Aragonès, David Rodríguez, Tahir Ozturk, József Sákovics, Santiago Sánchez, Andrew William Postlewaite, Thomas Palfrey, Paola Manzini

This research project aims to contribute to the study of the functioning of economic and political institutions, and its impact on the resolution of conflicts among strategic agents. Our goal is to explore the institutional factors that foster welfare through the efficient resolution of conflicts, analyzing which social situations are more prone to confrontation and which procedures and institutions stimulate more effectively the search for consensus.

Institutions are enduring systems of social constraint on human behavior. Economic analysis and Game theory have developed a rigorous methodology for evaluating proposals to analyze and reform social institutions. Our goal is to contribute to this frontier of knowledge with new research developments along two main lines of inquiry.

Our first avenue of research will address negotiation procedures between parties at conflict. We will contribute to the analysis of bargaining problems with incomplete information; we will study (inter)mediation mechanisms, and their impact in the efficient performance of markets and other institutions that require the resolution of bilateral conflicts among the actors. Along this line of work we will develop subprojects addressing:
a) The Robust Optimal Bargaining
b) The impact of third parties, mediators, arbitrators and stakeholders.
c) Applications to market regulation.

Our second line of research belongs to the field of political economics, and will focus on the analysis of conflict resolution in democratic political processes. The research that we propose on this front concerns the analysis of strategic interactions among actors involved in elections, candidates, parties and voters. Within this line we propose four different subprojects:
d) Campaign Rhetoric.
e) Participatory Democracy.
f) Voting as making a statement.
g) Government Formation.

"A New Microeconomic Perspective on Incentives and Constraints in the Public and Private Sector"
SEJ2006-01717, Ministerio de Educación y Ciencia
Jacobus Petrus Hurkens , Esther Hauk, Nir Vulkan, Navin Kartik

In this project we try to understand the impact of certain constraints that we believe to be realistic and relevant, but that have been ignored in previous research. We will also try to understand the impact of relaxing certain constraints that we believe to be unrealistic (in some specific contexts), but that have been imposed in previous research. We will consider a wide variety of theoretical models, ranging from political economy and public procurement to bargaining and industrial organization. We also intend to run laboratory experiments and to contrast our theoretical findings with empirical data.
Examples of the first type of constraints that will be considered are time constraints (deadlines) in bargaining models, limited liability in procurement, avoiding social up-rise and disorder on political decision making, and endogenous participation constraints in markets and contracts. One of the fundamental constraints imposed in mechanism design is the incentive compatibility constraint, which by the revelation principle is equivalent to the truth telling constraint. Recent experimental research has shown, however, that people often do tell the truth even if it is not incentive compatible in the classical sense. We will try to understand empirically when and why this is the case and propose alternatives to the standard incentive compatibility constraints that take the empirical findings into account in theoretical models.

"Socio-Economic Interactions: Models, Estimation and Evidence"
(SEJ2006-00369), Ministerio de Educación y Ciencia
Joan Mª Esteban , L. Mayoral, D. Ray, M. Coles, M. Ellman, M. Francesconi, C. Telmer, A. Booth, E. Field

Topics of our ongoing research:
• Taxation, education and female labour participation rate (Booth, Coles, Gong)
• Family organization and Education (Booth, Coles, Francesconi)
• Education, Marriage and Surnames (Booth, Coles, Francesconi, Guell, Telmer)
• Labour market institutions and marriage (Coles, Francesconi)
• Optimal employment policy (Coles, Field, Guell)
• Personnel practices and labor market institutions (Guell)
• Polarization and social mobility (Esteban, Ray)
• Extensions of a measure of polarization (Esteban, Ray)
• Identity and groups (Esteban, Mayoral)
• Endogenous sentiments (Cervellati, Esteban)
• Redistribution and Public Expenditure (Esteban)
• Ethnic Conflict (Esteban, Ray)
• Measuring and testing persistence in socioeconomic variables (Mayoral)
• Testing for structural breaks under general alternatives (Mayoral)
• Combining macro and micro data for forecasting purposes (Mayoral)
• Dimensionality reduction in large dimensional panels (Mayoral)
• Determinants of social polarization by countries (d'Ambrosio, Esteban, Mayoral, Ray)
• Social polarization and conflict (Esteban, Mayoral, Ray, Schneider)

"Experimental Economics at the Institute for Economic Analysis"
SEC2002-01352, Ministerio de Ciencia y Tecnología
Jordi Brandts , Paul Pezanis, Klaus Abbink, Gary Bolton, Gary Charness, Arthur Schram and David Cooper

The project proposes the conduct of a series of laboratory experiments. The aim of the project is to study, in detail, human behavior in a number of simplified economic and social situations. We are specifically interested in improving our understanding of the workings of different types of markets, of the social aspects of human motivation and of the type of strategic behavior followed by, boundedly rational, human actors.

The experiments are organized in the following blocks:

1. Experimental studies on auctions and other market institutions
2. Interdependent preferences: beyond "homo oeconomicus"
3. Analysis of strategic behavior: market entry and bargaining
4. Organizational behavior.

"Experimental and Theoretical Analysis of Organizations, Social Preferences and Markets"
SEJ2005-01690, Ministerio de Educación y Ciencia
Jordi Brandts , Flip Klijn, David Cooper, Klaus Abbink, Enrique Fatas

The project proposes the conduct of a series of laboratory experiments and of theoretical studies. The aim of the project is to study, in detail, human behavior in a number of simplified economic and social situations. We are specifically interested in improving our understanding of the workings of organizations, of the social aspects of human motivation and of markets.

The experiments are organized in the following blocks:

1. Behavior in organizations
2. Interdependent preferences: beyond "homo oeconomicus"
3. Experimental and theoretical studies of markets

"Contracts and Markets: New Issues"
SEJ2005-01427, Ministerio de Educación y Ciencia
Ramon Caminal , Roberto Burguet, Giacinta Cestone, Rosella Nicolini, Martin Perry, Adina Oana Claici, Lionel Artigue

The goal of this project is to study how the structure of contracts or the pricing policies affect the performance of markets, and its efficiency both from a dynamic and a static point of views. According to this general goal, we consider four different types of issues: the management by monopolistic firms of long-run customer-supplier relationships; the efficient allocation of licenses; the localization of economic activities; and the relationship between internal capital markets and entry and competition in multi-market industries. The project builds on the previous experience of the members of the team on those areas. The final goal is to provide a theoretical framework that specifies the sources of market failures and the potential role of the state in various situations, ranging from the design of mechanisms for the allocation of licenses, the public management of firm location, or antitrust policy concerning customer relationships or mergers with conglomerate characteristics.

"Economic Growth and Public Policies
SEJ2005-06357, Ministerio de Educación y Ciencia
Ángel de la Fuente , Marcelo Soto, Isabel Busom, Juan Antonio Duro

The project analizes the dynamics of growth in the regions of Spain and in the OECD countries within the framework of modern growth theory, with special attention to the impact of public policies (at the regional, national and community levels) on the evolution of income and the location of economic activity and population. The issues to be studied include the analysis of the sources of growth and regional inequality at the aggregate and sectoral levels, techniques for the estimation of growth models, the determinants of investment and employment creation, the analysis of migration flows and the effects of various public policies, including investment in infrastructure, education and R&D and various aspects of EU and regional government financing. The results will be of interest to policymakers, especially those with responsibilities in the areas of regional and development policy.

"Fiscal and Monetary Policy under Uncertainty"
SEJ2005-05971, Ministerio de Educación y Ciencia
Albert Marcet , Ester Faia, Juan Pablo Nicolini, Ricardo Praça Cavaco, Marek Jarocinski

Our objective is to study the efects of fiscal and monetary policy in dynamic stochastic models with microfoundations, when both private agents and the government face uncertainty. In some studies we impose rational expectations and in other we assume learning about expectations. The topics under study are:

Part 1) Fiscal policy.
a) Composition of government debt (Debt Management) with endogenous capital
b) Government debt with capital taxes
c) Optimal fiscal policy with temporary credibility
d) Inflation differentials and diverse labor and commodity markets in the EMU

Part 2) Monetary policy
a) The relationship between inflation and the quantity of money under learning
b) Interest rate policy and the stock market
c) The interaction between monetary and fiscal policy in the EMU

Part 3) Econometric Study of business cycles
a) Estimation of econometric models in differences, applications
b) Estimation of long dependence models (ARMA and fractionally integrated), applications
c) Optimal short sample estimators, applications.

Part 4) Wealth distribution and mobility
a) Nutrition curves and mobility in wealth distribution

"Polarization and Conflict"
506084, European Community (FP6-2002 CITTZENS-2)
Joan M. Esteban , Local team: Clara Ponsatí, Enriqueta Aragonès, Melvyn Coles, Joan Esteban, Flip Klijn, Marta Reynal-Querol
Other institutions participants: London School of Economics, Universitá Bocconi, IGIER, Universität Konstanz, IDEI-Université de Toulouse I, University of Tel Aviv, University of Utrech, Centre for the Study of Civil War (CSCW), International Peace Research Institute, Oslo (PRIO)

The purpose of this multi-disciplinary research project is to promote and coordinate research on the conceptualization, modelling and measurement of polarization and conflict and the links between the two. We aim at contributing to identify the main forces leading to conflict, to provide tools and indicators for early warning, to understand the role of alternative forms of third party intervention such as mediation or arbitration in the reaching of an agreement, and to the design of post-conflict, viable agreements, including the system of political representation. In order to achieve this task, we will integrate the different approaches that have independently been developed in the different social sciences and will combine models with factual evidence. We expect the outcome be a multidisciplinary understanding of conflict in which the analytical models will be teste.

"Macroeconomia, Política Fiscal i Monetària", Grup de Recerca Consolidat
2005 SGR 000976, Generalitat de Catalunya
Albert Marcet , Ángel de la Fuente, Marcelo Soto, Ramon Caminal, Melvyn Coles, Ricardo Flores, Ágnes Pinter, Concepción Román

"Microeconomia Teòrica i Aplicada", Grup de Recerca Consolidat
2005 SGR 00470, Generalitat de Catalunya
Jordi Brandts , Roberto Burguet, Rosella Nicolini, Jacobus Petrus Maria Hurkens, José Penalva, Mª Fernanda Rivas

"Conflicte, Cohesió Social i Polítiques Públiques", Grup de Recerca Consolidat
2005 SGR 00626, Generalitat de Catalunya
Joan M. Esteban , Clara Ponsatí, Enriqueta Aragonès, Flip Klijn, Martin Meier, Jesús Enrique Morales, Irina Prokofieva, Tahir Ozturk

Area network "Barcelona Jocs"
2003 XT0055, Generalitat de Catalunya
Clara Ponsatí
Other participants: Universitat Pompeu Fabra (Antonio Cabrales), CODE-Universitat Autònoma de Barcelona (Salvador Barberà), Universitat de Barcelona (C.Rafels), Universitat de Girona (Dolors Berga), Universitat Politècnica de Catalunya (Francesc Carreras)

This network has the purpose of doing periodically seminars about game theory and its economic implications. Two research papers will be presented in each session, one from a participant of one of the institutions of the network and the other one from a researcher of an external academic institution.

"Public Decisions and Social Cohesion"
SEC2003-01961, Ministerio de Ciencia y Tecnología
Joan Mª Esteban , Clara Ponsatí, Enriqueta Aragonès, Marta Reynal, David Rodríguez, Melvyn Coles, Debraj Ray, Thomas Palfrey, Itzhak Gilboa, Andrew William Postlewaite, David Schmeidler, Laurence Kranich

This project addresses two of the priority topics listed in the NP for Socioeconomics: economic and social integration and public decision-making.

There is an increasing concern among scientists and politicians about the degree of social cohesion and the functionality of democracy to give way to conflicts of interests. Indeed, the distribution of income in most countries shows higher degrees of polarization, showing an increasing social fragmentation. This weakens the social cohesion necessary to solve cooperatively opposing societal interests. This greater fragmentation also manifests itself in a lower degree of political participation among the excluded sectors of society. This in turn weakens the role of the political system as a mechanism favoring integration and participation.

The design of policies and social mechanisms conducive to cohesion has become high priority in Spain and in Europe at large. The aim of this research project is to analyze the interaction between public policies and social cohesion.

"Vertical Relationships and Contracts: Financing, Supply and the Role of Regulation"
SEC2003-08080-C02-02, Ministerio de Ciencia y Tecnología
Roberto Burguet , Juan José Ganuza, József Sákovics and Yeon Koo Che

The aim of this project is the study of vertical contractual relationships, i.e. relationships between customers and suppliers. This project will study the ways in which actors are chosen in an exchange, the contracts they choose to make the deal official and the ways of financing the agreement, paying special attention in how this relationship interacts with other vertical relationships. Policy conclusions related to regulation and intervention issues will be derived.

"Economic Growth and Public Policies"
SEC2002-01612, Ministerio de Ciencia y Tecnología
Ángel de la Fuente , Isabel Busom and Juan Antonio Duro

The project analizes the dynamics of growth in the regions of Spain and in the OECD countries within the framework of modern growth theory, with special attention to the impact of public policies (at the regional, national and community levels) on the evolution of income and the location of economic activity and population. The issues to be studied include the analysis of the sources of growth and regional inequality at the aggregate and sectoral levels, techniques for the estimation of growth models, the determinants of investment and employment creation, the analysis of migration flows and the effects of various public policies, including investment in infrastructure, education and R&D and various aspects of EU and regional government financing. The results will be of interest to policymakers, especially those with responsibilities in the areas of regional and development policy.

"Incomplete Contracts, Firm Management, and Market Performance"
SEC2002-02506, Ministerio de Ciencia y Tecnología
Ramon Caminal , Roberto Burguet, Giacinta Cestone

The goal of this project is to continue the analysis of the optimal design of incomplete contracts, in relation to firm management and organization as well as market performance. The project is organized along two separate but complementary lines. First, we will deal with labor contracting, procurement and vertical integration, and corporate governance (alliances between managers, stockholders and stakeholders). The second line includes the study of various types of markets: banking, cyclical goods and housing.