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How do technical change and technological distance influence the size of the Okun’s Law coefficient?
Get PDFHow does technical change influence the size of the Okun’s Law coefficient? Using a nonlinear version of Okun’s Law augmented with technical change and technological distance, we show that the impact of output movements on unemployment variations is influenced by the imitation or innovation
origins of technical chang
Liquidity, moral hazard and bank crises
Get PDFBank crises, by interrupting liquidity provision, have been viewed as
resulting in welfare losses. In a model of banking with moral hazard,
we show that second best bank contracts that improve on autarky ex
ante require costly crises to occur with positive probability at the interim
stage. When bank payoffs are partially appropriable, either directly via
imposition of fines or indirectly by the use of bank equity as a collateral, we
argue that an appropriately designed ex-ante regime of policy intervention
involving conditional monitoring can prevent bank crises
A Simple Characterization of Dynamic Completeness in Continuous Time
Get PDFThis paper investigates dynamic completeness of financial markets in which the underlying risk
process is a multi-dimensional Brownian motion and the risky securities dividends geometric
Brownian motions. A sufficient condition, that the instantaneous dispersion matrix of the relative dividends is non-degenerate, was established recently in the literature for single-commodity,
pure-exchange economies with many heterogenous agents, under the assumption that the intermediate flows of all dividends, utilities, and endowments are analytic functions. For the current setting, a different mathematical argument in which analyticity is not needed shows that a slightly weaker condition suffices for general pricing kernels. That is, dynamic completeness obtains irrespectively of preferences, endowments, and other structural elements (such as whether or not the budget constraints include only pure exchange, whether or not the time horizon is finite with lump-sum dividends available on the terminal date, etc.
Irish Land Bonds: 1891-1938
Get PDFThis paper introduces a new database on Irish land bonds listed on the Dublin
Stock Exchange from 1891 to 1938: it outlines the nature of these bonds and presents
data on their size, liquidity and market returns. These government-guaranteed
bonds arose during a period when the possibility of Irish secession from the United
Kingdom appeared ever more likely, and were used to finance the transfer of land
ownership from landlords to tenants in Ireland (North & South). Movements in the
prices of these bonds can help to understand how financial markets responded to
events in the early economic and political history of the Irish Free State, including
Irish partition, Independence, Civil War and de facto default. Understanding these
issues has contemporary relevance for regions in Spain (Catalonia, Euskadi), Great
Britain (Scotland) and Belgium (Flanders)
The rise and fall of piecework–timework wage differentials: market volatility, labor heterogeneity, and output pricing
Get PDFBased on detailed payroll data of blue collar male and female labor in Britain’s engineering and metal working industrial sectors between the mid-1920s and mid-1960s, we provide empirical evidence in respect of several central themes in the piecework-timework wage literature. The period covers part of the heyday of pieceworking as well as the start of its post-war decline. We show the importance of relative piece rate flexibility during the Great Depression as well as during the build up to WWII and during the war itself. We account for the very significant decline in the differentials after the war. Labor market topics include piecework pay in respect of compensating differentials, labor heterogeneity, and the transaction costs of pricing piecework output
Currency Issues and Options for an Independent Scotland
Get PDFIn this paper we take on the role of a ‘virtual consultant’ to a potentially independent Scotland. What should the exchange rate regime of an independent Scotland look like? We argue that the current proposal of the Scottish government to remain part of the sterling zone is doomed to failure, both because it falls short of a full political and monetary union and because it fails to recognize the reality of the Scottish economy post independence. We argue that the only tenable solution for an independent Scotland is to have a separate currency and for this currency to have some flexibility against Scotland’s main trading partners. One option offered here is managed
float or crawl against a basket of currencies
Who is the fairest of them all? The independent effect of attractive features and self-perceived attractiveness on cooperation among women
Get PDFThe present paper analyzes the extent to which attractiveness-related variables affect cooperative behavior in women. Cooperativeness is evaluated through a Prisoner's Dilemma Game (PDG). We consider several morphometric variables related to attractiveness: Fluctuating Asymmetry (FA), Waist-Hip Ratio (WHR, Body Mass Index (BMI) and Facial Femininity (FF). These variables have been shown to predict human behavior. We also include as a control variable a score for Self-Perceived Attractiveness (SPA). We test differences in these variables according to behavior in the PDG. Our results reveal that low FA women cooperate less frequently in the PDG. We also find that women with lower WHR are more cooperative. This result contradicts the expected relation between WHR and behavior in the PDG. We show that this effect of WHR on cooperation operates through its influence on the expectation that participants hold on the cooperative intent of their counterpart. In addition, we show that the effect of attractive features on cooperation occurs independently of the participants' perception of their own appeal. Finally, we discuss our results in the context of the evolution of cooperative behavior and under the hypothesis that attractiveness is a reliable indicator of phenotypic quality
Suppliers of Priors: A Theory of Retailing Inspired by the Market for Chinese Antiquities
Get PDFAdverse selection may thwart trade between an informed seller, who knows the
probability p that an item of antiquity is genuine, and an uninformed buyer, who does not
know p. The buyer might not be wholly uninformed, however. Suppose he can perform a
simple inspection, a test of his own: the probability that an item passes the test is g if the item is genuine, but only f < g if it is fake. Given that the buyer is no expert, his test may have little power: f may be close to g. Unfortunately, without much power, the buyer's test will
not resolve the difficulty of adverse selection; gains from trade may remain unexploited.
But now consider a "store", where the seller groups a number of items, perhaps all with
the same quality, the same probability p of being genuine. (We show that in equilibrium the
seller will choose to group items in this manner.) Now the buyer can conduct his test across a
large sample, perhaps all, of a group of items in the seller's store. He can thereby assess the
overall quality of these items; he can invert the aggregate of his test results to uncover the
underlying p; he can form a "prior". There is thus no longer asymmetric information between
seller and buyer: gains from trade can be exploited. This is our theory of retailing: by
grouping items together - setting up a store - a seller is able to supply buyers with priors, as
well as the items themselves.
We show that the weaker the power of the buyer�s test (the closer f is to g), the greater the
seller�s profit. So the seller has no incentive to assist the buyer � e.g., by performing her own
tests on the items, or by cleaning them to reveal more about their true age.
The paper ends with an analysis of which sellers should specialise in which qualities. We
show that quality will be low in busy locations and high in expensive locations
Mafia in the ballot box
Get PDFWe study the impact of organized crime on electoral competition. Assuming
that the mafia is able to bring votes to the supported party in exchange
of money, we show that (i) the strongest party is willing to pay the
highest price to secure mafia services; (ii) the volume of electoral trade with
the mafia increases with political competition and with the efficiency of the
mafia.
Studying in detail parliamentary elections in Sicily for the period 1946-
1992, we document the significant support given by the Sicilian Mafia to
the Christian Democratic party, starting at least from the 1970s. This is
consistent with our theoretical predictions, as political competition became
much tighter during the 1970s and the Sicilian mafia experienced an extensive
centralization process towards the end of the 1960s, which increased
substantially its control of the territory. We also provide evidence that in
exchange for its electoral support the mafia got economic advantages for its
activities in the construction industry
The Spillover Effects of Monitoring: A Field Experiment.
Get PDFWe provide field experimental evidence of the effects of monitoring in
a context where productivity is multi-dimensional and only one dimension
is monitored and incentivised. We hire students to do a job for us. The
job consists of identifying euro coins. We study the effects of monitoring
and penalising mistakes on work quality, and evaluate spillovers on non-
incentivised dimensions of productivity (punctuality and theft). We .nd
that monitoring improves work quality only if incentives are large, but
reduces punctuality substantially irrespectively of the size of incentives.
Monitoring does not affect theft, with ten per cent of participants stealing
overall. Our setting also allows us to disentangle between possible theoretical mechanisms driving the adverse effects of monitoring. Our .ndings
are supportive of a reciprocity mechanism, whereby workers retaliate for
being distrusted