support@economics.utoronto.ca (IT Support) support@economics.utoronto.ca (IT Support) Tue, 24 Feb 2026 15:14:42 EST Department of Economics, University of Toronto en-ca 720 Research https://www.economics.utoronto.ca/index.php/index/research/workingPapers Working Papers http://www.dev.economics.utoronto.ca/templates/images/rss_deptlogo.jpg https://www.economics.utoronto.ca/index.php/index/research/workingPapers http://www.economics.utoronto.ca/index.php/index/research/workingPaperDetails/819 http://www.economics.utoronto.ca/index.php/index/research/workingPaperDetails/819 Wed, 4 Feb 2026 00:00:00 EST We propose a fast algorithm for computing the GMM estimator in the BLP demand model (Berry, Levinsohn, and Pakes, 1995). Inspired by nested pseudo-likelihood methods for dynamic discrete choice models, our approach avoids repeatedly solving the inverse demand system by swapping the order of the GMM optimization and the fixed-point computation. We show that, by fixing consumer-level outside-option probabilities, BLP’s market-share–mean-utility inversion becomes closed-form and, crucially, separable across products, yielding a nested pseudo-GMM algorithm with analytic gradients. The resulting estimator scales dramatically better with the number of products and is naturally suited for parallel and multithreaded implementation. In the inner loop, outside-option probabilities are treated as fixed objects while a pseudo-GMM criterion is minimized with respect to the structural parameters, substantially reducing computational cost. Monte Carlo simulations and an empirical application show that our method is significantly faster than the fastest existing alternatives, with efficiency gains that grow more than proportionally in the number of products. We provide MATLAB and Julia code to facilitate implementation. http://www.economics.utoronto.ca/index.php/index/research/workingPaperDetails/818 http://www.economics.utoronto.ca/index.php/index/research/workingPaperDetails/818 Sat, 31 Jan 2026 00:00:00 EST Contrary to popular belief, the rise of China over the past half century was not driven by industrial or mercantilist policies. The economy grew fastest when the government played a more passive role, allowing market forces and bottom-up initiatives from farmers, local officials, and private entrepreneurs to shape economic development. China’s vast size and extensive markets created strong incentives for entrepreneurial innovation. However, the government remained committed to preserving its political system and a dominant state sector, imposing clear limits on private sector and market development. Whenever private entrepreneurs sought to push these boundaries, the government responded forcefully. Over the last five decades, China’s economic trajectory has been shaped by the tension between these two forces. http://www.economics.utoronto.ca/index.php/index/research/workingPaperDetails/817 http://www.economics.utoronto.ca/index.php/index/research/workingPaperDetails/817 Fri, 30 Jan 2026 00:00:00 EST We study the sectoral reallocation of employment over time and across countries, with a focus on the rise of services. We document substantial changes in the ratio of aggregate employment to working-age population across countries that are not systematically related to productivity growth or income levels, yet tightly linked to the rise in services employment. We assess the quantitative contribution of changes in aggregate employment to the rise of services using an otherwise standard model of sectoral reallocation calibrated to time-series for the United States. The calibrated model implies a high elasticity of changes in aggregate employment to services: a one percentage point change in aggregate employment generates on average a 0.7 percentage point change in services employment. The implication is that actual changes in aggregate employment account for one-third of the rise in services, on average across countries, and up to one-half in countries with sustained employment increases. http://www.economics.utoronto.ca/index.php/index/research/workingPaperDetails/816 http://www.economics.utoronto.ca/index.php/index/research/workingPaperDetails/816 Mon, 26 Jan 2026 00:00:00 EST We study bilateral trade when private information arrives sequentially: the buyer learns her signal before the seller. In private values, this timing asymmetry restores efficiency: the efficient trade rule is implementable by a direct mechanism that is incentive compatible, exact budget balanced, and individually rational (interim for the buyer and ex ante for the seller). With interdependent values, efficiency can fail. We give primitive feasibility conditions and show that they hinge on how the seller’s cost responds to the buyer’s signal in the trading region. Allowing disclosure of the buyer’s report does not expand implementability. http://www.economics.utoronto.ca/index.php/index/research/workingPaperDetails/815 http://www.economics.utoronto.ca/index.php/index/research/workingPaperDetails/815 Thu, 22 Jan 2026 00:00:00 EST We propose a new framework for studying optimal insurance under information asymmetry within the Stackelberg game framework. In this setting, a monopolistic insurer faces uncertainty regarding a customer's loss distribution or risk attitude. The customer is assumed to follow a mean–variance preference in continuous time, while the insurer sets premiums through a risk loading based on the expected loss. An optimal menu is explicitly derived for a general class of aggregate loss models. Our approach connects with the extensive literature on optimal insurance demand, stemming from the seminal work of Arrow (1963), and leads to an interesting finding: a nonlinear pricing structure for risk-type uncertainty versus a linear pricing structure for risk-attitude uncertainty. Specifically, if an insurer is uncertain about a customer's risk type and seeks to elicit this information, the risk loading (premium minus expected loss) is set lower for high-risk individuals to encourage them to select the corresponding contract. In contrast, if the insurer is only uncertain about the customer's risk attitude, no such discounts---in terms of risk loading---are provided. This reveals that information about customers' risk types is more valuable than information about their risk attitudes. Additionally, we compare our optimal menu with the worst-case contract derived from the maxmin expected utility, we find that our optimal menu increases the insurer's expected profit and enhances the likelihood of trading. http://www.economics.utoronto.ca/index.php/index/research/workingPaperDetails/814 http://www.economics.utoronto.ca/index.php/index/research/workingPaperDetails/814 Fri, 9 Jan 2026 00:00:00 EST More often than not in summarizing the level of and variation in outcomes, the Mean or Median are the focus, however, as the most frequently observed outcome, there are good reasons for using the Mode in that role. Its pertinence for that purpose hinges on the extent to which it differs from the other centrality statistics and its prominence or “Peakedness” in the distributional density profile. Peakedness is usually calibrated using Pearsons Kurtosis quotient however, that measure has been shown to be more about the fatness of a distribution’s tails rather than its Peakedness. Here, generic probabilistically based measures of the extent to which location points differ and the extent to which distributions are peaked, suitable for any discrete or continuous potentially multidimensional data environment are proposed together with modally focused analogues of Pearsons Relative Variation and Kurtosis measures, appropriate for distributions which are not symmetric unimodal. Applications in five very different distributional environments demonstrate the usefulness and general applicability of these new measures.