the inflation output trade off with downward wage rigidities the macroeconomic implications of downward nominal wage rigidi ties are analyzed via a dynamic stochastic general equilibrium model featuring aggregate and idiosyncratic shocks a closed form solution for a long run phillips curve relates average output gap to average wage inflation it is virtually vertical at high inflation and flattens at low inflation macroeconomic volatility shifts the curve outwards and reduces output the results imply that stabilization policies play an important role and that optimal inflation may be positive and dif fer across countries with different macroeconomic volatility results are robust to relaxing the wage constraint for example when large idiosyncratic shocks arise jel e23 e24 e31 e63

does the energy efficiency paradox exist technological progress and uncertainty we explain why firms may choose not to undertake investments inenergy saving technologies that appear profitable from a net presentvalue perspective as future technological advances are inherentlyuncertain and investments in new technology are at least partly irreversible it may pay to postpone investments in energy savingand wait for the arrival of improved varieties this insight casts doubton the existence of so called low hanging fruits in energy saving although we do not wish to deny that organisational failures may alsobe important failure to appreciate the underlying stochasticity oftechnological progress may obscure the insight that there is value inwaiting and costs involved in terminating the option to invest theappetite for low hanging fruits will be less when these costs areincorporated in the analysis we demonstrate that the effect of thearrival rate of new technologies on the adoption lag for a rational firmis ambiguous the same holds for the effect of the expected jump inefficiency of new technologies government policies aimed at enhancingthe adoption of new technologies through stimulation of r d maytherefore be counterproductive

downward nominal wage rigidity and the case for temporary infl ation in the eurozone abstract since the onset of the great recession in peripheral europe nominal hourly wages have not fallen from the high levels they had reached during the boom years this in spite of widespread in

granger predictability of oil prices after the great recession abstract real oil prices surged from 2009 through 2014 comparable to the 1970s oil shock period standard explanations based on monopoly markup fall short since inflation remained low after 2009 this paper contributes strong evidence of granger 1969 predictability of nominal factors to oil prices using one adjustment to monetary aggregates this adjustment is the subtraction from the monetary aggregates of the 2008 2009 federal reserve borrowing of reserves from other central banks swaps made after us reserves turned negative this adjustment is key in that granger predictability from standard monetary aggregates is found only with the swaps subtracted

beyond case studies barriers to energy efficiency in commerce and the services sector to assess the empirical relevance of various barriers to the diffusion of energy efficient measures we conduct econometric analyses for 19 sub sectors in the german commercial and services sectors results from estimating a separate logit model for each sub sector suggest that the most important barriers are the investor user dilemma and the lack of information about energy consumption patterns typically multiple types of barriers are found to be statistically significant but they vary considerably across sub sectors finally we discuss policy implications for the most relevant barriers

monetary policy in the presence of asymmetric wage indexation we study optimal monetary policy in the presence of asymmetric wage indexation we find that the monetary authorities do not react to small output shocks and that their reaction to large shocks is asymmetric insofar as they absorb positive shocks more than negative ones as a consequence we observe that asymmetric wage indexation can be contractionary it has ambiguous effects on expected inflation and welfare relative to an equivalent symmetric indexation optimal symmetric inflation however always outperforms optimal asymmetric indexation

normal markets market imperfections and energy efficiency abstract the conventional distinction between economic and engineering approaches to energy analysis obscures key methodological issues concerning the measurement of the costs and benefits of policies to promote the adoption of energy efficient technologies the engineering approach is in fact based upon firm economic foundations the principle of lifecycle cost minimization that arises directly from the theory of rational investment thus evidence that so called market barriers impede the adoption of cost effective energy efficient technologies implies the existence of market failures as defined in the context of microeconomic theory problems of imperfect information and bounded rationality on the part of consumers for example may lead real world outcomes to deviate from the dictates of efficient resource allocation a widely held contrary view that the engineering view lacks economic justification is based on the fallacy that markets are normally efficient

forty years of oil price fluctuations why the price of oil may still surprise us it has been forty years since the oil crisis of 1973 74 this crisis has been one of the defining economic events of the 1970s and has shaped how many economists think about oil price shocks in recent years a large literature on the economic determinants of oil price fluctuations has emerged drawing on this literature we first provide an overview of the causes of all major oil price fluctuations between 1973 and 2014 we then discuss why oil price fluctuations remain difficult to predict despite economists improved understanding of oil markets unexpected oil price fluctuations are commonly referred to as oil price shocks we document that in practice consumers policymakers financial market participants and economists may have different oil price expectations and that what may be surprising to some need not be equally surprising to others

getting into the energy efficiency scene does corporate social responsibility matter for energy efficiency in smes a growing body of literature argues that improving energy efficiency is an essential step that firms must take to mitigate climate change issues it is assumed that corporate social responsibility

separations sorting and cyclical unemployment abstract this paper establishes a new fact about the compositional changes in the pool of unemployed over the us business cycle using microdata from the current population survey for the years 1962 2012 it documents that in recessions the pool of unemployed shifts toward workers with high wages in their previous job and that these shifts are driven by the high cyclicality of separations for high wage workers the paper finds that standard theories of wage setting and unemployment have difficulty in explaining these patterns and evaluates a number of alternative theories that do better in accounting for the new fact jel e24 e32 j31 j63 j64

energy conservation investment do consumers discount the future correctly we argue that the apparently high discount rates attributed to investors making energy conservation investments are not irrational or the result of some market failure rather they may result from an investor recognizing that many conservation investments entail substantial sunk costs in the presence of these costs and uncertainty over future conservation savings consumers should use a higher hurdle rate for investment than if there were no uncertainty simulations suggest that the hurdle rate should be about four times greater than the standard rate an implication of our model is that tax subsidies for the purchase of conservation capital are likely to be ineffective we discuss alternative policy approaches which are more likely to increase energy efficient investment namely mandatory efficiency standards and energy taxes

investment in technological innovations an option pricing approach abstract this paper develops a model of the optimal investment strategy for a firm confronted with a sequence of technological innovations we incorporate many of the most important characteristics of real world technology markets for example we permit innovations to be stochastic in their arrival times and their profitability we also incorporate learning so that firms adopting current innovations become better able to benefit from future innovations the model yields four distinct investment strategies the model is then used to predict actual firm policy these implications are discussed and compared with observed firm behavior

the efficiency paradox bureaucratic and organizational barriers to profitable energy saving investments abstract the paradox of why profitable energy saving investments are not undertaken continues to provoke debate the underlying phenomenon might be called the efficiency paradox because it represents a case in which business firms which are often presumed or taken axiomatically to be economically efficient make decisions that do not maximize profits new data from one of the us environmental protection agency s voluntary pollution prevention programs enables this paradox to be explored statistically the data show that both the level and variation in returns to lighting upgrade investments cannot be explained by standard economic models substantial gains in energy efficiency can be achieved without sacrificing profitability both economic and organizational factors account for some of the variation in observed returns to these investments but the results suggest a need for improved and more comprehensive theories of the investment behavior of firms and other organizations

determinants of energy efficiency investments in the us this paper analyses decisions on energy efficiency ee investments by small and medium manufacturing enterprises in the us which have received assessment from the department of energy doe the results confirm the importance of payback time and investment costs as the main determining factors in deciding whether to invest in energy efficiency such investment recommendations are frequently not implemented even though they apparently entail major advantages and give rise to considerable energy savings the data show results which are compatible with a series of elementary valuation processes limited to availability of information far removed from other more academically ambitious methods such as net present value npv and the real options ro method the paper analyses the impact of the primary resource streams electricity natural gas other energy waste and others physical situation of firms in line with their geographical locations in different us states and changes over time from 1984 to 2009 ee investment decisions are analysed here using probit models whose parameters are calibrated on the basis of the information held in the industrial assessment centres iac database the results suggest various ideas to improve policies for promoting investment in ee specially the iac programme

evidence on the validity of cross sectional and longitudinal labor market data this article investigates error properties of survey reports of labor market variables we use the panel study of income dynamics psid validation study a two wave panel survey of workers employed by a large firm that shared its detailed payroll records individuals reports of annual earnings are fairly accurate errors are negatively related to true earnings reducing bias due to measurement error when earnings are used as an independent variable biases are moderately larger for changes in earnings earnings per hour are less reliably reported than annual earnings biases in estimating earnings functions are relatively small but those in labor supply functions may be important

inflation dynamics when inflation is near zero this paper discusses the likely evolution of u s inflation in the near and medium term on the basis of 1 past u s experience with very low levels of inflation 2 the most recent japanese experience with deflation and 3 recent u s micro evidence on downward nominal wage rigidity our findings question the view that stable long run inflation expectations and downward nominal wage rigidity will provide sufficient support to prices such that deflation can be avoided we show that an inflation model fitted on japanese data over the past 20 years which accounts for both short and long run inflation expectations matches the recent u s inflation experience quite well while the model indicates that u s inflation might be subject to a lower bound it does not rule out a prolonged period of mild deflation going forward in addition our micro evidence on wages suggests no obvious downward rigidity in the firm s wage costs downward rigidity in individual wages notwithstanding as a consequence downward nominal wage rigidity may provide little offset to deflationary pressures in the current u s situation despite some circumstantial evidence that this channel might have been at work in the past

oil and the macroeconomy since world war ii all but one of the u s recessions since world war ii have been preceded typically with a lag of around three fourths of a year by a dramatic increase in the price of crude petroleum this does not mean that oil shocks caused these recessions evidence is presented however that even over the period 1948 72 this correlation is statistically significant and nonspurious supporting the proposition that oil shocks were a contributing factor in at least some of the u s recessions prior to 1972 by extension energy price increases may account for much of post opec macroeconomic performance

reinforcing separate spheres the effect of spousal overwork on men s and women s employment in dual earner households this study examines whether long work hours exacerbate gender inequality as working long hours becomes increasingly common a normative conception of gender that prioritizes men s careers over women s careers in dual earner households may pressure women to quit their jobs i apply multilevel models to longitudinal data from the survey of income and program participation to show that having a husband who works long hours significantly increases a woman s likelihood of quitting whereas having a wife who works long hours does not appear to increase a man s likelihood of quitting this gendered pattern is more prominent among workers in professional and managerial occupations where the norm of overwork and the culture of intensive parenting are strong furthermore the effect is stronger among workers who have children findings suggest that overwork can reintroduce the separate spheres arrangement consisting of breadwinning men and homemaking women to many formerly dual earner households

exploring the role of households hurdle rates and demand elasticities in meeting danish energy savings target abstract the eu s energy efficiency directive eed sets a binding target for energy savings in eu member states the eed further requires member states to perform ex ante evaluations of energy efficiency policies implemented to achieve these savings however ex ante evaluation of energy efficiency policies is difficult as it requires detailed modelling of end users investment and energy demand behaviour this paper details the danish interact modelling approach for ex ante evaluation of energy efficiency policies directed at residential heating interact integrates the energy system model times dk into a computable general equilibrium framework the paper explores the potential for meeting denmark s eed target through a policy induced increase in households investments in energy efficiency retrofits the paper considers the effect of energy efficiency policies on households investment behaviour by applying different levels of hurdle rates on households investments in energy efficiency retrofits the paper shows that reducing the hurdle rate from 25 to 4 could meet more than a third of danish energy saving requirements for the period 2021 2030 this result includes a direct rebound effect of 31 finally the paper demonstrates that reducing the hurdle below 10 has a substantial negative impact on households disposable income making such policy less viable from a policy perspective

implied discount rate and payback threshold of energy efficiency investment in the industrial sector the industrial sector is responsible for about a third of the energy usage in the united states and there is significant energy saving potential from the industrial sector however the phenomenon of energy efficiency gap the scenario in which cost effective energy efficient technologies enjoy only limited market success appears frequently in the industrial sector this article tries to explain this efficiency gap in the industrial sector by empirically estimating the implied discount rates and payback thresholds industrial firms use to evaluate their energy efficiency investments using the industrial assessment centers iac database from 2002 to 2011 with more than 30 000 energy efficiency recommendations this article builds structural models of firms evaluation of an energy efficiency project the model results show that the implied discount rates of medium to small industrial firms range from 40 to 45 and the average payback threshold is about 9 months

market based incentives we study optimal incentives in a principal agent problem in which the agent s outside option is determined endogenously in a competitive labor market in equilibrium strong performance increases the agent s market value when this value becomes sufficiently high the threat of the agent s quitting forces the principal to give the agent a raise the prospect of obtaining this raise gives the agent an incentive to exert effort which reduces the need for standard incentives like bonuses in fact whenever the agent s option to quit is close to being in the money the market induced incentive completely eliminates the need for standard incentives

union contracts and the life cycle permanent income hypothesis this paper isolates households in the psid whose heads can be matched to particular long term union contracts with high confidence the author uses use published information on these contracts to construct a household specific measure of expected wage growth he finds that predictable wage movements are significantly correlated with consumption changes contrary to neoclassical consumption theory the author finds that consumption responds more strongly to predictable income declines than to predictable income increases this asymmetry is inconsistent with liquidity constraints and myopia but is qualitatively consistent with models in which preferences exhibit loss aversion copyright 1995 by american economic association

downward nominal wage rigidity in canada evidence from micro level data we assess the importance of downward nominal wage rigidity dnwr in canada using both firm and worker level microdata in particular we analyze employer level administrative data from the major wage settlements mws and household based survey data from the survey of labour income dynamics slid

a regional analysis of flows into and out of the uk national minimum wage this article utilizes the panel element of the uk labour force survey lfs to identify for individual regions total inflows and outflows and hazards for those individuals paid at or below the national minimum wage nmw in particular it examines the extent and direction of the correlation between low pay inflows and outflows and the economic cycle further it examines the impact of regional variations in the bite of the nmw on regional flows into and out of the nmw

nominal vs real wage rigidities in new keynesian models with hiring costs a bayesian evaluation abstract the inclusion of labor market frictions in the new keynesian dsge model overcomes the main drawbacks of the baseline framework in this paper we show that this extended model by assuming real wage rigidities does not replicate the correct wage dynamics and the negative conditional correlation between technology shocks and employment observed in the data known as the productivity employment puzzle we show also that these empirical limitations can be overcome by replacing real wage rigidities with nominal wage rigidities without sacrificing other appealing features of the model we adopt a bayesian perspective to estimate the dynamic properties of the model with real wage rigidities and compare them with those of the model with nominal wage rigidities we show that the evidence favors this latter construction

investment in energy efficiency do the characteristics of firms matter the literature on energy efficiency provides numerous examples of apparently profitable technologies that are not universally adopted yet according to the standard neoclassical theory of investment profit maximizing firms should undertake all investments with a positive net present value the standard theory also holds that the discount rate for computing the present value of a project should be the return available on other projects in the same risk class and therefore should not depend on characteristics of the firm this model as applied to energy saving investments is tested by examining whether firms characteristics influence their decision to join the environmental protection agency s voluntary green lights program a discrete choice regression is estimated over a large sample of participating and nonparticipating firms missing values in the data matrix are replaced with multiple imputations from a distribution estimated using the expectation maximization algorithm the results show that 1 sub

fiscal stimulus with learning by doing using a bayesian svar analysis we document that an increase in government purchases raises private consumption the real wage and total factor productivity tfp while reducing inflation each of these facts is hard to reconcile with both neoclassical and new keynesian models we extend a standard new keynesian model to allow for skill accumulation through past work experience following chang gomes and schorfheide 2002 an increase in government spending increases hours and induces skill accumulation and higher measured tfp and real wages in subsequent periods future marginal costs fall lowering future expected inflation and through the monetary policy rule the real interest rate consumption increases as a result

barriers within firms to energy efficient investments abstract many investments in energy efficiency fail to be made despite their apparent profitability internal hurdle rates are often set at levels higher than the cost of capital to the firm reasons for these practices include bounded rationality principal agent problems and moral hazard the policy implication is that government can simultaneously improve overall energy efficiency and increase private sector productivity by providing informational and organizational services that go beyond the traditional regulatory framework

interpreting panel data on job tenure tenure responses in the panel study of income dynamics psid and the national longitudinal surveys are often inconsistent with calendar time these inconsistencies pose special problems in the psid because job changes cannot be identified directly so researchers must infer them from error ridden tenure data we use alternative rules for partitioning psid data into jobs and then estimate several wage and mobility models to assess the sensitivity of parameter estimates to the partitioning method we also assess the importance of replacing raw tenure data with imputed measures that are internally consistent

the internal economics of the firm evidence from personnel data we analyze twenty years of personnel data from one firm the hierarchical structure is quite simple and stable career movements suggest that the employee s rate of learning and the firm s learning about ability are important there are promotion fast tracks exit rates vary little with tenure or salary the firm has personnel policies like those described in the internal labor markets literature although several theoretical preconditions for ilms such as ports of entry and exit are lacking job levels are important to compensation but there is also substantial individual variation in pay within levels our companion paper in this issue explores the wage policy of this firm

oil and the macroeconomy since the 1970s economists have long been intrigued by empirical evidence that suggests that oil price shocks may be closely related to macroeconomic performance this interest dates back to the 1970s the 1970s were a period of growing dependence on imported oil unprecedented disruptions in the global oil market and poor macroeconomic performance in the united states thus it was natural to suspect a causal relationship from oil prices to u s macroeconomic aggregates since then a large body of work has accumulated that purports to establish this link on theoretical grounds and to provide empirical evidence in its support we do not attempt a comprehensive survey of this literature but rather provide an idiosyncratic synthesis of what we view as the key issues in this debate and the insights gained over the last 30 years the timing seems right for such an account although the experience of the 1970s continues to play an important role in discussions of the link between oil and the macroeconomy there have been a number of new oil price shocks since the 1970s notably the 1986 collapse of oil prices and the 2000 boom in oil prices as well as the oil price increases associated with the 1990 1991 gulf war and the 2003 iraq war given this richer case history we are arguably in a better position than two decades ago to distinguish the idiosyncratic features of each oil crisis from the systematic effects increases in oil prices have been held responsible for recessions periods of excessive inflation reduced productivity and lower economic growth in this paper we review the arguments supporting such views first we highlight some of the conceptual difficulties in assigning a central role to oil price shocks in explaining

resuscitating the wage channel in models with unemployment fluctuations higher wages all else equal translate into higher inflation more rigid wages imply a weaker response of inflation to shocks this view of the wage channel is deeply entrenched in central banks views and models of their economy in this paper we present a model with equilibrium unemployment which features three distinctive properties first using a search and matching model with right to manage wage bargaining a proper wage channel obtains second accounting for fixed costs associated with maintaining an existing job greatly magnifies profit fluctuations for any given degree of wage fluctuations which allows the model to reproduce the fluctuations of unemployment over the business cycle and third the model implies a reasonably low elasticity of steady state unemployment with respect to changes in benefits the calibration of the model implies low profits but does not require a small gap between the value of working and the value of unemployment for the worker

robust contracts with one sided commitment abstract we consider a robust contract with limited commitment in continuous time in which the principal firm is ambiguity averse and seeks robust decisions first we find the existence of limited commitment not only attenuates the negative effect of model uncertainty on the firm value but also makes the firm less pessimistic moreover concerns regarding model misspecification motivate the firm to increase the worker s exposure to the productivity shocks via the optimal contract finally our theoretical model predicts that the combination of limited commitment and ambiguity generates both right skewness and decreases in the wage dynamics as the empirical data

money output and inflation in the longer term major industrial countries 1880 2001 i introduction the empirical role of money growth in the macroeconomy has been studied by many researchers using different data and methods the most prominent studies focusing on the quantity theory of money are those of friedman and schwartz 1963 1982 using data averaged over the phases of the business cycle in order to capture longer run movements with u s and u k data back to 1867 the study by mccandless and weber 2001 is a representative example for a different approach for 110 countries in the post wwii period longer run growth rates are approximated by growth of a variable over a 30 year period average growth rates 1 the problem with phase averaging is that it does not deal with possible nonstationarity of the data 2 the problem with growth averages over long periods while informative to a degree is that they have limitations too it is impossible to assess the timing of movements in these variables 3 in the frequency domain the long run is associated with frequency zero which in our terminology is the long run trend previous studies in the frequency domain on the long run neutrality of money at zero frequency include the studies of lucas 1980 and geweke 1986 the theory of spectral analysis provides a rigorous framework for extracting specific frequency bands from the data instead of considering only frequency zero stock and watson 1998 applied the band pass filter of baxter and king 1999 to extract cycles frequency bands for u s data and focused on the business cycle and on mostly the post wwii period christiano and fitzgerald 2003 proposed an improved band pass filter and provided an application to the longer run relation of money and inflation for bands of 8 20 years and 20 40 years in the united states from 1900 to 1997 4 the usefulness of monetary aggregates for conducting monetary policy has been seriously called into question because of the instability of money demand a prominent empirical study is that of estrella and mishkin 1997 recent mainstream new keynesian models have no explicit role for money woodford 2008 a contrasting view is that the longer term role of money is still of relevance for monetary policy the european central bank explicitly emphasizes a supporting role that monetary aggregates should play in order to provide an anchor for inflation expectations hafer haslag and jones 2007 issing 2006 king 2002 nelson 2003 christiano motto and rostagno 2007 provided a theoretical new keynesian model where inflation expectations lose their anchor unless money is monitored and reacted to also beck and wieland 2008 presented a new keynesian model where cross checking with money growth movements improves inflation control similarly assenmacher wesche and gerlach 2006 2007 found a significant role for a low frequency low pass filtered component of money in the empirical new keynesian phillips curve equation 5 in the spirit of friedman 1961 we use long time spans so that our results are unlikely to be because of a specific policy rule in place in a given period we have 122 years of annual data from 1880 to 2001 before the introduction of the euro in 2002 we have real gross domestic product gdp money and consumer price indices cpis with no gaps for 11 industrialized countries 6 the countries included in our study differ in such terms as their institutions fiscal and monetary policies and economic growth rates nonetheless at least in peace time they were similar in generally having comparatively free markets in which prices and interest rates were determined our aim is to apply analytic methods that are free from economic and statistical models as much as possible in order to explore empirical regularities or stylized facts in the data also the focus of our research is the longer run we employ band pass filters to pick out cycles from each time series that last 8 40 years that is the longer term component

technology adoption decisions under irreversibility and uncertainty an ex ante appproach empirical results demonstrate that uncertainty about costs and requirements for environmental compliance is an important determinant of dairy producers investment behavior ex ante forecasting of how uncertainty and irreversibility are likely to affect producers responsiveness to agricultural technologies has implications for the design of environmental policies simulation modeling methods are described the empirical analysis focuses on texas producers propensity to adopt free stall dairy housing free stall investments offer advantages for both productivity augmentation and pollution abatement yet uncertainty and irreversibility are obstacles to adoption implications of this ex ante paradigm for policy design and implementation are discussed

international debt deleveraging i provide a framework for understanding debt deleveraging in a group of nancially integrated countries during an episode of international deleveraging world consumption demand is depressed and the world interest rate is low reecting a high propensity to save if exchange rates are allowed to oat deleveraging countries can depreciate their nominal exchange rate to increase production and mitigate the fall in consumption associated with debt reduction the key insight of the paper is that in a monetary union this channel of adjustment is shut o and therefore the falls in consumption demand and in the world interest rate are amplied hence monetary unions are especially prone to hit the zero lower bound on the nominal interest rate and enter a liquidity trap during deleveraging in a liquidity trap deleveraging gives rise to a union wide recession which is particularly severe in high debt countries the model suggests several policy interventions that mitigate the negative impact of deleveraging on output in monetary unions

how high are option values in energy efficiency investments high implicit discount rates in consumers energy efficiency investments have long been a source of controversy in several recent papers hassett and metcalf argue that the uncertainty and irreversibility attendant to such investments and the resulting option value account for this anomalously high implicit discounting using their model and data we show that to the contrary their analysis falls well short of providing an explanation of this pattern

structural breaks in international tourism demand are they caused by crises or disasters it is recognised that the tourism industry is vulnerable to some form of crises or disaster however despite the attention given to the nature and consequences of tourism crises and disasters there is a gap in the literature regarding the ex post detection of these events in this article we estimate both the number and date of structural breaks in international tourism arrival series for 25 countries and madeira island using the bai and perron 1998 structural break test we compare the date of tourism crises and disasters to the dating of these structural breaks we observe that tourism crises and disasters are largely consistent with the dates of breaks therefore this method allows us to solve a gap in the tourism industry related to the correct allocation of negative shocks in international tourism arrival demand to crisis or disaster phenomena

search and matching frictions and optimal monetary policy abstract a recent literature has merged the new keynesian and the search and matching frameworks which has allowed the former to analyze the joint dynamics of unemployment and inflation this paper analyzes optimal monetary policy in this kind of hybrid framework i show that zero inflation is optimal when all wages are nash bargained in every period and the economy s steady state is efficient in the more realistic case in which nominal wage bargaining is staggered a case against price stability arises in response to real shocks the central bank should use price inflation so as to avoid excessive unemployment volatility and excessive dispersion in hiring rates for a plausible calibration the welfare loss under the zero inflation policy is about three times as large as under the optimal policy

on the stability of money demand abstract we show that regulatory changes that occurred in the banking sector in the early 1980s that considerably weakened regulation q can explain the apparent instability of money demand starting in the same period we evaluate the effects of the regulatory changes using a model that goes beyond aggregates as m1 and treats currency and different deposit types as alternative means of payments we use the model to construct a new monetary aggregate that performs remarkably well for all the period 1915 2012

financial crises and exchange rate policy this paper studies exchange rate policy in a small open economy model featuring an occasionally binding collateral constraint and fisherian deation the goal is to evaluate the performance of alternative exchange rate policies in sudden stop prone economies the key element of the analysis is a pecuniary externality arising from frictions in the international credit markets which creates a trade o between price

a review of optimal energy policy instruments on industrial energy efficiency programs rebound effects and government policies abstract industrial energy efficiency programs ieeps are defined as one of the most popular government policies that aim to reduce energy consumption in industrial energy intensive sectors in this paper we review and classify the most important academic studies that have addressed the environmental and economic aspects of ieeps using a systematic review the classification of energy policy instruments has been developed based on an analytical approach we discuss also the outputs benefits and barriers of ieeps besides a comprehensive argument about the restrictive policies on the rebound effects made after the implementation of these programs the results disclose that china usa and sweden are the most addressed countries on ieeps and their applications in this regard incentive energy policies e g voluntary agreements and subsidies have been applied more than others in the last decade furthermore most of the reviewed studies emphasize energy price reform as an effective practical policy while a few analytical methods can be seen to help policy makers determine the optimal levels of decision variables finally according to the state of the art analysis the authors provide some novel recommendations to improve the performance of ieeps using some restrictive policies on the negative impacts of rebound effects

downward nominal wage flexibility real or measurement error this paper presents a new method to correct for measurement error in wage data and applies this method to address an old question how much downward wage flexibility is there in the united states we apply standard methods developed by bai and perron to identify structural breaks in time series data applying these methods to wage histories allows us to identify when each person experiences a change in nominal wages the length of the period of constant nominal wages is left unrestricted and is allowed to differ across individuals as are the size and direction of the nominal wage change we apply these methods to data from the survey of income and program participation the evidence we provide indicates that the probability of a cut in nominal wages is substantially overstated in data that are not corrected for measurement error

factors influencing commercial buildings to obtain green certificates abstractidentifying the key factors that influence commercial buildings decision to obtain voluntary green certificates is essential to building sustainability enhancement using commercial buildings in the state of new york multinomial logit and nested logit models demonstrate that there is a significant correlation between the characteristics of commercial buildings such as square footage lot size and years built and green certification more interestingly if a commercial building is occupied by its owner likelihood of green certification is actually smaller this finding not only confirms that ongoing energy savings are heavily discounted when deciding whether to incur the upfront cost of green certification but also suggests that the rental premium enjoyed by green buildings is likely greater in terms of present value than the expected operating cost savings another explanation could be that investor owners must operate in a competitive market for tenants while owner occupiers do not operate

optimal monetary policy and downward nominal wage rigidity in frictional labor markets empirical evidence suggests that nominal wages in the u s are downwardly rigid this paper studies the optimal long run inflation rate in a labor search and matching framework under the presence of downward nominal wage rigidity dnwr in this environment optimal monetary policy targets a positive inflation rate the annual long run inflation rate for the u s is around 2 percent positive inflation greases the wheels of the labor market by facilitating real wage adjustments and hence it eases job creation and prevents excessive increase in unemployment following recessionary shocks these findings are related to standard ramsey theory of wedge smoothing by following a positive inflation policy under sticky prices the monetary authority manages to reduce the volatility and the size of the intertemporal distortion significantly the intertemporal wedge is completely smoothed when prices are fully flexible since the optimal long run inflation rate predicted by this study is considerably higher than in otherwise neoclassical labor markets the nature of the labor market in which dnwr is studied can be relevant for policy recommendations

wage risk and the value of job mobility in early employment careers this paper shows that job mobility is a valuable channel that employed workers use to mitigate bad labor market shocks i estimate a model of wage dynamics jointly with a dynamic model of employmen

returns on investments in energy saving technologies under energy price uncertainty in dutch greenhouse horticulture conventional net presentvalue calculations evaluating the profitabilityof investments in energy saving technologies indutch horticultural outlays predict a muchhigher rate of adoption of these technologiesthan is actually observed this paper tries toexplain this gap by applying a real optionsframework hurdle rates for investments in twotypes of energy saving technology are estimatedusing simulated future revenue streams givenuncertainty regarding energy prices and energytax policies hurdle rates found in this wayare on average about 1 76 times the hurdlerates that result from net present valuecalculations furthermore this paper tests thepredictive value of the theory by estimating alogit model this model relates the incidenceof having invested in an energy savingtechnology to the difference between the returnon investment and the hurdle rate thepredictive power turns out to be encouraging as the statistical tests indicate that higherhurdle rates tend to reduce rates of technologyadoption

nominal contracting theories of unemployment evidence from panel data this paper examines economywide and sector specific responses of real wages to nominal shocks using micro panel data from the national longitudinal survey of young men the observed response patterns provide no support for nominal contracting theories of unemployment which predict that nominal surprises should be negatively correlated with real wages in fact both inflation and money growth surprises are found to be essentially uncorrelated with real wages either a real business cycle model or a model with rigidities in commodity prices could be consistent with these results copyright 1993 by american economic association

unemployment fluctuations match quality and the wage cyclicality of new hires we revisit the issue of the high cyclicality of wages of new hires we show that after controlling for composition effects likely involving procyclical upgrading of job match quality the wages of new hires are no more cyclical than those of existing workers the key implication is that the sluggish behaviour of wages for existing workers is a better guide to the cyclicality of the marginal cost of labour than is the high measured cyclicality of new hires wages unadjusted for composition effects key to our identification is distinguishing between new hires from unemployment versus those who are job changers we argue that to a reasonable approximation the wages of the former provide a composition free estimate of the wage flexibility while the same is not true for the latter we then develop a quantitative general equilibrium model with sticky wages via staggered contracting on the job search and heterogeneous match quality and show that it can account for both the panel data evidence and aggregate evidence on labour market volatility

real wage cyclicality in the eurozone before and during the great recession evidence from micro data we study the response of real wages to the business cycle in eight major eurozone countries before and during the great recession average real wages are found to be acyclical but this reflects in large part the effect of changes in the composition of the labour force related to unemployment variations over the cycle using longitudinal micro data from the echp and silc panels to control for composition effects we estimate the elasticities of real wage growth to unemployment increases between 0 6 and 1 over the period 1994 2011 composition effects have been particularly large since 2008 and they explain most of the stagnation or increase in the average wage observed in some countries from 2008 to 2011 in contrast at a constant labour force composition in terms of education and experience the figures indicate a significant decrease in average wages during the downturn particularly in countries most affected by the crisis overall there is no evidence of downward nominal wage rigidity during the great recession in most countries in our sample