1,721,110 research outputs found
Robust control in a sticky information economy
Full text linkThis paper analyzes the behavior of a central bank under strong ("Knightian") uncertainty when the short run trade-off between output and inflation is represented by the Sticky Information Phillips Curve recently proposed by Mankiw and Reis (2002). By solving the robust control problem analytically, this paper elucidates the economic mechanisms at play in a sticky information economy and shows how and why the robust monetary policy in this economy differs from the optimal one identi fied by Ball, Mankiw and Reis (2005)
Search frictions and labor market dynamics in a real business cycle model with undeclared work
No full textWe study the effects of undeclared work (UDW) on labor market dynamics in a real business cycle (RBC) model with search and matching frictions in the labor market. Distinction is made between the wages paid and the hours worked in regular and in undeclared types of activity. Calibrating the model on the US economy, we show that a greater size of UDW implies lower average employment, higher volatility of employment and lower volatility of regular wages. These volatilities are affected by the steady-state ratio between the minimum value of the regular wage that can be accepted by a worker and the maximum value that can be paid by a firm in the Nash bargaining process, which occurs when a labor match is realized. The greater the ratio, the higher the volatility of employment and the lower the volatility of wages. We demonstrate that, due to a social stigma attached to UDW, an increase in undeclared hours raises this ratio by reducing the numerator less than the denominator. This suggests that the introduction of UDW may improve the ability of RBC models to match the empirical volatilities of labor market variables
Enhancing bank transparency: What role for the supervision authority?
No full textWe apply a three-tier hierarchical model of regulation, developed along the lines of Laffont and Tirole (1993), to an adverse selection problem in the corporate bond market. The bank brings the bonds to the market and informs the potential buyers about the bond risks; a unique benevolent public authority aims at maximising investors' welfare. The main goal is to investigate whether this unique authority is able to fully inform the market on a firm's true credit worthiness when banks, in order to recover doubtful credits, favour the placement of bonds issued by levered firms by concealing their true risk. By establishing the necessary conditions that allow optimal sanctions to produce the first best equilibrium, we show that the core problem of adverse selection in the corporate bond market does not lie so much in the benevolence of the delegated monitoring system, but rather in the possibility of affecting and sanctioning a firm's behavior
Tax evasion and Prospect Theory in a OLG economy
No full textThis paper presents a simple Overlapping Generation Model (OLG), augmented with Prospect Theory elements in the spirit of al-Nowaihi and Dhami (2007). The model tackle several open questions in the analysis of tax evasion and compliance decisions. In particular, the paper presents a new and complementary approach to address tax compliance decision in a OLG economy with behavioral components. Our main results are the following: there exists an equilibrium with a tax evasion level which can be coherent with the empirical estimates for the US economy; for our calibrations we find that the relationship between the tax rate and the evasion rate is a positive one (i.e., the model offers a solution to the Yitzhaki puzzle); we can highlight the role played in the context of tax evasion by an essential component of Prospect Theory, the framing effect, which was precluded to simple individual choice models
Il nuovo modello di previsione dei flussi del mercato del lavoro FGB-MDL: aspetti di metodo e di struttura
No full textPolitiche di contrasto al lavoro non dichiarato: punire, curare o prevenire?
No full textThe aim of this paper is to evaluate the relative effects of deterrence, prevention, curative and commitment policy measures on the size of undeclared work in Italy. To this aim, we insert this type of work into a dynamic general equilibrium model with moonlighting production, tax evasion and search frictions in the labor market calibrated on the Italian economy. The first type of policies is represented by the sanction applied to the firm being caught employing undeclared work; the second approach is encapsulated in active labor market policies targeted at improving the efficiency of declared work; the curative measures are exemplified by cuts in the labor tax rate and the commitment policies by measures able to influence the social stigma on undeclared work. The main result we reach is that all these approaches reduce the average undeclared share of output, but that deterrence and commitment policies also produce a negative effect on stationary output and employment. The active labor market approach is the one to prefer, because it produces the sharper fall in average undeclared work while stimulating stationary output and employment
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