an empirical model of job to job transition with self selectivity the statistical relationship between accepted job duration and the job to job transition strategy chosen by job quitters is analyzed using parametric duration methods because job quitters can sort themselves between unemployed and employed search the labor market state occupied before acceptance of a new job must contain information about the search preferred strategy the results show that jobs preceded by unemployment tend to be shorter but also reveal a substantial amount of heterogeneity when the sample is split between those having comparative advantages in unemployed search and those with comparative advantages in employed search however even for those who have comparative advantages in unemployed search choosing unemployment does not seem to raise subsequent job duration

convergence to the law of one price without trade barriers or currency fluctuations using a panel of 51 prices from 48 cities in the united states we provide an upper bound estimate of the rate of convergence to purchasing power parity we find convergence rates substantially higher than typically found in cross country data we investigate some potentially serious biases induced by i i d measurement errors in the data and find our estimates to be robust to these potential biases we also present evidence that convergence occurs faster for larger price differences finally we find that rates of convergence are slower for cities farther apart however our estimates suggest that distance alone can only account for a small portion of the much slower convergence rates across national borders

migration age and earnings the special case of employee transfers the regional relocation of workers within firms is examined this aspect of migration has received little attention in spite of the routine occurance of employee transfers the existence of such transfers suggests that a portion of each worker s human capital is employer specific and readily transferrable across locations thus a different age profile for transfers than that for conventional migrants may be expected specially a model of employee relocation and the consequences of relocation on post transfer earnings is examined

price convergence in us cities a cointegration approach with two structural breaks this article investigates how the price indices of major cities of the us respond to the shock from a city and from monetary policy we find that the crisis of bretton woods system in 1968 and the oil crisis in 1974 should be incorporated as structural breaks in monetary policy variables and price indices using cointegration technique with structural break in our aggregated data we find that the average half life is 1 75 years which is closer to what some of others found in disaggregated data and that the interest rate is an effective tool for controlling cities price in short run

extended benefits and the duration of ui spells evidence from the new jersey extended benefit program abstract this paper examines the impact on the duration of unemployment insurance receipt of a politically motivated program that offered 13 weeks of extended benefits for 6 months in 1996 using state level data and individual administrative records from before during and after the program we find that it raised the fraction of claimants who exhausted their regular benefits by 1 3 percentage points had the program run long enough to affect claimants from the first day of their spell the fraction exhausting would have risen by 7 percentage points and the average recipient would have collected regular benefits for one extra week

monetary union price level convergence and inflation how close is europe to the usa abstract the pattern of price dispersion across european and us cities from 1990 to 2004 is documented there is a striking decline in dispersion for traded goods prices in europe most of which took place prior to the launch of the euro dispersion in the euro area is now quite close to that of the usa this evidence provides useful facts for future work assessing the importance of various developments in europe harmonization of tax rates convergence of incomes and labor costs liberalization of trade and factor markets and increased coherence of monetary policy

extended generalized purchasing power parity and optimum currency area in east asian countries this article extends the theory of generalized purchasing power parity g ppp by developing a model including foreign variables such as the real money supply output and interest rate a cointegration rank test with two structural breaks in the deterministic trend was adopted to selected asian countries with japan as the base country there were two cointegrating vectors and six common stochastic trends in the model the cointegrating vectors were estimated by the same approach used by pesaran et al 2000 the first cointegrating vector is interpreted as g ppp and the second one is interpreted as the extended g ppp according to g ppp these countries could form a single currency area the first stochastic trend is primarily driven by japan s real money supply the second third and fourth by the real exchange rates of the philippines singapore and thailand respectively the fifth by japan s output and the sixth by japan s government bond yields

purchasing power parity across mexican cities a panel data analysis this article presents three different unit root tests for panel data the main objective is to find the level of internal integration market through the purchasing power parity ppp evidence based in the balassa samuelson approach thus eight kinds of markets as tradable and nontradable goods for 16 main mexican cities during a 21 year period have been contrasted while two tests showed the ppp validity for seven markets the other rejected it the results obtained moreover feed the present controversy about which test is most appropriate to test the ppp as soon as it is highlighted new elements emerge to explain the half life analysis

understanding the costs of consumer durable adjustments this article examines whether adjustment frictions help account for the patterns of household consumption expenditures observed in the consumer expenditure survey namely that the variance of log durable expenditure is four times larger than that of log nondurable expenditure for annual data and this gap substantially widens for quarterly data estimating a structural model of household consumption with nondurable and durable goods with the simulated method of moments i find that the fixed costs associated with durable adjustments are important in matching the cross sectional moments using the estimated model i also examine the response of nondurable and durable expenditures to income shocks jel d12 d91 e21

cyclical dynamics in idiosyncratic labor market risk is individual labor income more risky in recessions this is a difficult question to answer because existing panel data sets are so short to address this problem we develop a generalized method of moments estimator that conditions on the macroeconomic history that each member of the panel has experienced variation in the cross sectional variance between households with differing macroeconomic histories allows us to incorporate business cycle information dating back to 1930 even though our data do not begin until 1968 we implement this estimator using household level labor earnings data from the panel study of income dynamics we estimate that idiosyncratic risk is i highly persistent with an annual autocorrelation coefficient of 0 95 and ii strongly countercyclical with a conditional standard deviation that increases by 75 percent from 0 12 to 0 21 as the macroeconomy moves from peak to trough

the effects of changes of the job offer arrival rate on the duration of unemployment generally it is acknowledged that changing the job offer arrival rate has two opposite effects on unemployment duration for a basic job search model sufficient conditions on the wage offer distribution have been derived ensuring that one of the effects dominates however these are not satisfied for the popular families of wage offer distributions here i show that the conditions can be weakened at virtually no cost the set of distributions satisfying the new conditions is considerably larger than the set previously established in particular it includes all wage offer distribution families that are popular in structural empirical research

is there a threat effect of labour market programmes a study of almp in the danish ui system this article focuses on unemployed individuals reaction to compulsory labour market programmes prior to participation in denmark after having received ui benefits for a given period of time continued benefits are made conditional on participation in a labour market programme i estimate individuals reaction to compulsory programmes using legislative changes in the duration of benefits period as identification i find that compulsory programmes do indeed motivate individuals to find employment prior to participation the effect is large and is even comparable in size to the effect of benefits exhaustion found in studies of american ui systems

the effects of asset purchases and normalization of u s monetary policy this paper examines changes in the effects of unconventional monetary policies in the united states to this end we estimate a markov switching var model with absorbing regimes to capture possible structural changes our results detect regime changes around the beginning of 2011 and the middle of 2013 before 2011 the u s large scale asset purchases lsaps had relatively large impacts on the real economy and prices but after the middle of 2013 their effects were weaker and less persistent in addition after the middle of 2013 which includes the monetary policy normalization period the asset purchase or balance sheet shocks had slightly weaker effects than during the early stage of the lsaps but stronger effects than during the late stage of the lsaps while interest rate shocks had insignificant effects on the real economy and prices finally our results suggest that the positive responses of durables and capital goods expenditures to interest rate shocks weakened the negative impacts of interest rate hikes after the middle of 2013 including the period of monetary policy normalization jel c32 e21 e52

consumer durables and inertial behaviour estimation and aggregation of s s rules for automobile purchases the s s model originally introduced in the study of inventories see arrow et al 1951 scarf 1959 has recently received renewed attention both in the durable consumption and in the investment and labour demand literatures caballero 1993 for instance appeals to these type of models to explain the time series properties of durable expenditure and in particular the persistence or slow adjustment of such a variable in this paper i model the purchase behaviour of automobiles by u s households as an s s rule i estimate a flexible specification of such a rule using a large microeconomic data set and study some of the aggregate implications of this type of inertial behaviour the paper is one of the first attempts at estimating directly the parameters of an s s rule using micro data because of this some of the methodological issues concerning the specification and the estimation of s s rules are relevant for many potential applications furthermore the paper is one of the first to discuss and quantify the aggregate implications of an s s rule estimated on micro data in the presence of non convex transaction costs a full and consistent characterization of individual behaviour is very hard and typically requires strong restrictions grossman and laroque 1991 prove that an s s rule is optimal for a consumption and investment problem under very special circumstances some of their results were extended by eberly 1991 and beaulieu 1993a b eberly 1991 in particular has derived some closed form solutions for durable consumption in the presence of transaction costs while caballero and engel 1994 construct a model of investment where an s s rule is optimal the main problem with these theoretical results is that it is only possible to show optimality of s s rules under very stringent conditions in particular a necessary condition to derive them is that the optimization problem faced by an individual consumer can be reduced to a problem with a single state variable unfortunately as pointed out by bar ilan and blinder 1992 even simple generalizations are extremely difficult to analyse

the impact of the potential duration of unemployment benefits on the duration of unemployment abstract this paper examines the impact of the potential duration of unemployment insurance ui benefits on unemployment in the united states first we use a large sample of household heads to examine differences in the unemployment spell distributions of ui recipients and nonrecipients sharp increases in the escape rate from unemployment both through recalls and new job acceptances are apparent for ui recipients around the time of benefits exhaustion such increases are not apparent at similar points of spell duration for nonrecipients second our analysis of accurate administrative data from 12 states indicates that a one week increase in potential benefit duration increases the average duration of the unemployment spells of ui recipients by 0 16 to 0 20 weeks

common stochastic trends in international stock markets abstract this paper presents evidence concerning the number of common stochastic trends in the equity markets of the u s japan england germany and canada monthly and quarterly data from january 1974 through august 1990 on morgan stanley s capital international indices are used to compute johansen 1990 tests for common trends the results indicate the presence of a single common trend driving these countries stock markets estimates of the factor loadings suggest that this trend is most important in the japanese market and least important in the canadian market to interpret this evidence the paper demonstrates that under weak conditions the unit root and cointegration structure of stock prices should mirror the unit root and cointegration structure of their dividend payments the paper tests this prediction by constructing national dividend series from capital international s dividend yield data as well as by using gnp data as with stock prices the evidence points to a single common trend although the stochastic properties and relative importance of this trend differs somewhat from the trend in stock prices

unemployment insurance and male unemployment duration in canada a model of unemployment duration is estimated with weekly micro data on canadian men entitlement provisions in the unemployment insurance program and demand conditions are found to have a significant effect on the probability of leaving unemployment the probability of a worker leaving unemployment declines with the duration of unemployment holding unemployment insurance entitlement constant when entitlement is allowed to vary the probability of leaving first falls and then generally rises with unemployment duration these results are robust with respect to allowing for person specific unobserved heterogeneity and alternative specifications of duration dependence

price index convergence among united states cities we study the dynamics of price indices for major u s cities using panel econometric methods and find that relative price levels among cities mean revert at an exceptionally slow rate in a panel of 19 cities from 1918 to 1995 we estimate the half life of convergence to be approximately nine years the surprisingly slow rate of convergence can be explained by a combination of the presence of transportation costs differential speeds of adjustment to small and large shocks and the inclusion of nontraded goods prices in the overall price index do price indices in major u s cities share a common trend and if so how quickly do they revert to that trend following a local shock to the price index to answer this question we study the dynamics of consumer price indices for 19 major u s cities over the period from 1918 to 1995 the panel time series methods we employ are now commonly used for studying real output growth rates and levels of real exchange rates across countries we estimate that price index divergences across u s cities are temporary but surprisingly persistent with a half life of nearly nine years our research has two primary motivations first we hope to gain a better understanding of the sources of persistence in the deviations from purchasing power parity ppp found in studies of national price indices and exchange rate data second and more importantly we see the european monetary union as having many similarities to the united states and believe that studying the behavior of prices across u s cities will help us in understanding the likely nature of inflation convergence in the euro area the european central bank s stated inflation objective is a year on year change in the harmonized index of consumer prices hicp of not more than 2 but how large might we expect regional deviations from this euro area wide average to be and how long are they likely to persist the lack of data prevents us from answering this question directly using european prices under monetary union instead we look to the united states a mature common currency area of similar regional diversity size and industrial development

in search of a euro effect big lessons from a big mac meal we investigate whether the adoption of the euro was accompanied by an increase in prices in member countries and whether it promoted goods market arbitrage in the form of faster convergence to a common price by comparing the experience of eurozone countries to non euro european countries in a difference in differences specification we net out effects on prices unrelated to the euro we conclude that a there is no evidence of significant price increases associated with the adoption of the euro even for food items and b there is little systematic evidence of a significant improvement in goods market integration following the euro s introduction

a bivariate duration model for job mobility of two earner households abstract in recent years we have observed an increasing interest in the job mobility patterns of employed persons a new issue in this context is the mutual dependence of job mobility choice of workers who belong to the same household in the present paper we focus on bivariate duration models of stock sampled data in which dependence is induced through mixing we apply the estimation method on the basis of an empirical study on the mutual dependence of job mobility of workers belonging to a two earner household in the netherlands an interesting empirical result is that the marginal willingness to pay for a reduction in commuting time in a two wage earner household is higher than that usually found for single earner workers

permanent income liquidity and adjustments of automobile stocks evidence from panel data a recent article by bernanke 1984 tests the rational expectations permanent income hypothesis using panel data on automobile expenditures he finds no evidence refuting the hypothesis this paper incorporates a threshold adjustment process into bernanke s model estimations based on a subset of the data used by bernanke reveal evidence that resale market imperfections and credit market constraints have important effects on automobile expenditures

durable goods an explanation for their slow adjustment at the microeconomic level durable purchases are often discontinuous and relatively large this feature has the potential to explain why aggregate expenditure on durables responds only slowly relative to the frictionless permanent income model to wealth and other aggregate innovations in this paper i develop new results on the problem of dynamic aggregation of stochastically heterogeneous units which help to characterize the connection between microeconomic behavior and aggregate dynamics in the presence of nonconvex adjustment costs using these results and splitting postwar u s aggregate durable purchases into different subcategories and time periods i provide further support for the view that lumpy microeconomic purchases play an important role in explaining the time series behavior of aggregate expenditure on durable goods

the method of endogenous gridpoints with occasionally binding constraints among endogenous variables we show how the method of endogenous gridpoints can be extended to solve models with occasionally binding constraints among endogenous variables very efficiently we present the method for a consumer problem with occasionally binding collateral constraints and non separable utility in durable and non durable consumption this problem allows for a joint analysis of durable and non durable consumption in models with uninsurable income risk which is important to understand patterns of consumption saving and collateralized debt we illustrate the algorithm and its efficiency by calibrating the model to us data

does environmental concern change the tragedy of the commons factors affecting energy saving behaviors and electricity usage electricity consumption produces private goods such as heat for homes but fossil fuel consumption impacts the public goods of clean air and water while self interests can increase usage social interests such as global climate change can impact an individual s attitude toward energy consumption this paper examines the tragedy of the commons using household data and compares the impact of self and social interests in predicting electricity consumption using both stated and observed behavioral data the results show that self interests have a greater impact on energy saving behaviors and electricity use we extend the analysis to control for an individual s environmental concern and perceived behavioral impact finding similar results and supporting the notion that the tragedy of the commons occurs regardless of a person s perception or environmental concern these findings may explain why pro environmental attitudes do not necessarily lead to pro environmental behaviors and it contributes to our understanding of the motivating factors for energy savings and electricity use by examining both stated and observed behaviors policies aimed at electricity reduction may have a greater impact if they focus on private interests such as pricing rebates subsidies and taxes rather than social interests alone

ppp strikes back aggregation and the real exchange rate we show the importance of a dynamic aggregation bias in accounting for the ppp puzzle we prove that the aggregate real exchange rate is persistent because its components have heterogeneous dynamics established time series and panel methods fail to control for this using eurostat data we find that when heterogeneity is taken into account the estimated persistence of real exchange rates falls dramatically its half life for instance may fall to as low as eleven months significantly below the consensus view of three to five years

the determinants of black white differences in early employment careers search layoffs quits and endogenous wage growth this paper studies the transition from school to full time employment and subsequent labor mobility during the first five postschooling years for several recent cohorts of black and white male terminal high school graduates using unique data from the 1979 youth cohort of the national longitudinal surveys of labor market experience a constrained optimization model of labor force dynamics is implemented empirically integrating features of models previously described in the literature the estimates of the model provide quantitative evidence on underlying structural differences in labor market constraints faced by blacks and whites for example while blacks have overall a substantially smaller wage return to work experience and face a less disperse wage offer distribution blacks face a higher probability of receiving job offers

expenditure on durable goods a case for slow adjustment for more than a half a decade the fact that expenditure on durables can be well approximated by a random walk has remained a hidden puzzle challenging almost any theory in which agents smooth the use of their wealth this paper shows that once a nonparsimonious approach is used or lower frequencies of the data are examined the fact itself disappears changes in expenditures on durables reveal a degree of reversion consistent with the permanent income hypothesis pih although this reversion occurs at a rate significantly slower than what is suggested by a frictionless pih model

attrition in panel survey data and the estimation of multi state labor market models in the analysis of labor market transitions spells that are incomplete due to panel survey attrition are treated as spells that are subject to independent right censoring it is likely however that the unobserved characteristics affecting individual transitions on the labor market are related to those affecting the attitude toward survey participation in that case the transition rate estimates are inconsistent in this paper we analyze the relation between durations spent in labor market states and the duration of panel survey participation by explicitly modeling and estimating both stochastic processes we use multi state multi spell models which allow for stochastically related unobserved determinants

supply side hysteresis the case of the canadian unemployment insurance system abstract this paper presents results from a 1971 natural experiment carried out by the canadian government on the unemployment insurance system at that time the generosity of the ui system was increased dramatically we find some evidence that the propensity to collect ui increases with a first time exposure to the new ui system hence as more individuals experience unemployment their lifetime use of the system increases this supply side hysteresis effect may explain why unemployment has steadily increased over the 1972 1992 period even though the generosity of unemployment insurance did not

unemployment insurance and job durations seasonal and non seasonal jobs the authors use regional and individual variation in unemployment insurance ui parameters to estimate the impact of ui incentives on job durations in doing so they distinguish between seasonal and nonseasonal jobs the authors find evidence of substantial tailoring of job durations to ui incentives in seasonal but not in nonseasonal jobs even for seasonal jobs adjusting ui parameters has small impacts on average job duration except in high unemployment regions increasing the ui entrance requirement leads to some job lengthening but also to the creation of more very short jobs

unemployment duration stigma and re employment earnings a nonstationary model of individual labor market histories where the distribution of wages offers depends on elapsed unemployment duration and where unemployment compensation is claimed for a limited period only is estimated from sample information on completed unemployment duration accepted earnings and accepted job duration and can identify movements in the reservation wages induced by human capital loss from those caused by benefit exhaustion the results indicate that individuals seem to be much more sensitive to benefit exhaustion than human capital loss the estimated structural parameters provide an explanation for the existence of a statistical relationship between continuous unemployment and accepted job durations

consumption dynamics during recessions when will durable expenditures respond strongly to economic stimulus we build from micro evidence and show that in a heterogeneous agent business cycle model with xed costs of durable adjustment responsiveness is substantially dampened during recessions our model estimates imply that during the great recession durable expenditures were half as responsive to additional stimulus as during the boom in the 1990s this procyclical responsiveness is driven by changes in the distribution of households desired durable holdings over the cycle we directly test our model by estimating this distribution empirically using psid micro data and nd that the distribution in the data moves cyclically as predicted in addition to this micro evidence we also provide support for our model s procyclical responsiveness using aggregate time series data and we show this time series evidence is inconsistent with simpler models featuring smooth adjustment costs

search benefits and entitlement in a simultaneous analysis of unemployment duration and search intensity we estimate a non structural search model accounting explicitly for two features of the benefit system benefit level and time remaining until exhaustion of the entitlement period residual entitlement special attention is paid to the number of search contacts as an indicator for search intensity to assess the effect of the benefit level and residual entitlement on the number of search contacts we estimate a poisson model our results suggest that benefits work through a reduction of search efforts whereas residual entitlement is effective mainly through the reservation wage

price convergence in the european car market this article examines price convergence in the european union eu car market over the period 1995 to 2005 we find that there is a clear evidence of price convergence among the eu15 countries but not before 1999 moreover countries of the economic and monetary union emu started convergence previously to the eu15 as a whole finally exchange rate changes have significantly contributed to price dispersion over time across countries the results provide significant evidence that trade liberalization and the emu have enhanced the process of regional integration in the european automobile industry even though there is room for further measures to promote integration

impulse response analysis of cointegrated systems abstract impulse response or dynamic multiplier analysis of vector autoregressive systems with cointegrated variables is considered the asymptotic distribution of the responses estimated with johansen s 1988 maximum likelihood procedure is derived the results are illustrated with an analysis of a west german money demand system the investigation shows that a direct interpretation of the cointegration relations may be difficult or misleading thereby the virtue of impulse response analysis for applied work is illustrated

does a common currency lead to more price equalization the role of psychological pricing points abstract we analyze prices from four countries around the introduction of the euro prices of a good in two locations are more likely to be identical if prices are psychological and set in the same currency these rounding effects are not important in explaining the size of price differences in the full sample however

what can us city price data tell us about purchasing power parity abstract we study the dispersion of absolute price levels for us cities since 1918 by absolute price levels we mean price indices that measure the cost of a given consumption basket at each point in time we find strong evidence that city price levels converge over time and that the dispersion of price levels is lower for us cities than between oecd countries we argue that price level convergence for us cities will produce bilateral real exchange rate nonstationarity in this case however nonstationarity is not evidence against purchasing power parity ppp rather it is the consequence of improved market integration

heterogeneity and unemployment dynamics many previous articles have studied the contribution of inflows and outflows to the cyclical variation in unemployment but ignored the critical role of unobserved heterogeneity across workers thi

measuring consumption smoothing in cex data this paper proposes and implements a new method of measuring the degree of consumption smoothing using data from the consumer expenditure survey the structure of this survey is such that estimators previously used in the literature are inconsistent simply because income is measured annually and consumption is measured quarterly we impose an ar 1 structure on the income process to obtain a proxy for quarterly income through a projection on annual income by construction this proxy gives rise to a measurement error which is orthogonal to the proxy itself as opposed to the unobserved regressor leading to a consistent estimator we contrast our estimates with the output of two estimators used in the literature we show that while the flrst ols estimator tends to overstate the degree of risk sharing the second iv estimator grossly understates it

purchasing power parity and the role of traded goods evidence from eu states in this paper the debate on purchasing power parity ppp is considered by providing results with disaggregated price data from european countries the disaggregation of the price data is important because it allows for the consideration of goods that are likely tradable e g fruits with goods that are not tradable e g hotel rooms the european focus is important because these results are able to shed light on the effect of the type of exchange rate regime member of exchange rate mechanism erm or not

measuring high frequency income risk from low frequency data abstract we estimate a monthly income process using annual longitudinal household level income data in order to understand the nature of income risk faced by households at high frequency and to provide an input for models that wish to study household decision making at higher frequency than available data at both frequencies idiosyncratic earnings shocks have a highly persistent component at monthly frequency transitory shocks account for most of the earnings variance at annual frequency the persistent component is dominant we apply our estimates in the context of a standard incomplete market model and show that decision making frequency per se makes a small difference

bayesian estimation and smoothing of the baseline hazard in discrete time duration models this paper proposes a bayesian approach for estimating and smoothing the baseline hazard in a discrete time hazard model the hazard model is specified as a multiperiod probit model and estimated using a gibbs sampler with data augmentation the baseline hazard specification is smoothed using the smoothness priors introduced by shiller 1973 the methods proposed in this paper are then used to study the effect of canadian unemployment insurance eligibility rules on employment durations from new brunswick canada

is unemployment insurance addictive evidence from the benefit durations of repeat users the author finds evidence that the past occurrence of a spell of insured unemployment lengthens the duration of future spells descriptive statistics from canadian administrative data covering mid 1971 to early 1990 suggest that unemployment insurance ui claimants tend to spend a longer and longer time collecting benefits with each additional claim they make this finding contradicts the implication of static neoclassical models that successive ui spells should be of the same length the author hypothesizes that the stigma attached to receiving unemployment benefits erodes with each new ui claim an individual files

some estimates of the effects of unemployment insurance on re employment duration abstract this paper examines how re employment spell durations are affected by the potential unemployment benefit period an ex ante notion and benefit exhaustion an ex post notion the extent to which benefit duration affects re employment duration is found to depend on the nature of the separation

effects of manpower policies on duration dependence in re employment rates the example of sweden in contrast to the evidence from other countries swedish studies of the transition from unemployment to employment have consistently reported a non negative duration dependenice in the hazard this study examines the extent to which this results from large scale labour market programmes a limited duration of unemployment benefits or differences among available jobs the labour market programmes are here found to be the primary factor behiind the earlier swedish results the programmes thus pick up those with the worst employment prospects thereby postponing a decrease in the re employment probability among job searchers this in turn generates an on average constant duration dependence

climbing out of poverty falling back in measuring the persistence of poverty over multiple spells this paper investigates the persistence of poverty over individuals life times using a hazard rate approach that accounts for multiple spells of poverty and incorporates spell duration individual and household characteristics and unobserved heterogeneity the findings highlight the importance of considering multiple spells in an analysis of poverty persistence with half of those who end poverty spells returning to poverty within four years accounting for multiple spells shows that approximately 50 percent of blacks and 30 percent of whites falling into poverty in some year will have family income below the poverty line in five or more of the next ten years

unemployment insurance unemployment durations and re employment wages abstract we develop an empirical model to estimate the impact of ui on unemployment duration and re employment wages the model estimates the ui receipt unemployment duration and re employment wage equations simultaneously incorporates unobserved heterogeneity variables in each equation and allows them to be correlated the nlsy79 data is used to estimate the model some results are found in support of the positive effect of ui on re employment wages

adjustment of consumers durables stocks evidence from automobile purchases this paper tests an optimal s s rule in household durable purchases and examines directly the resulting aggregate expenditure dynamics the observed decision rule responds to income uncertainty and growth as predicted by an s s model resulting from transactions costs tests against liquidity constraints find that about half the households purchase according to an optimal s s rule aggregating the s s rule over households produces a cross section distribution of durables holdings the empirical distribution is similar to that predicted theoretically as is its response to aggregate shocks furthermore simulations of aggregate expenditure based on the household distribution exhibit dynamics consistent with those observed in the 1980s

shocks stocks and socks smoothing consumption over a temporary income loss we investigate how households in temporarily straitened circumstances due to an unemploy ment spell cut back on expenditures and how they spend marginal dollars of unemployment insurance ui benefit our theoretical and empirical analyses emphasize the importance of allowing for the fact that households buy durable as well as non durable goods the theoretical analysis shows that in the short run households can cut back significantly on total expenditures without a significant fall in welfare if they concentrate their budget reductions on durables we then present an empirical analysis based on a canadian survey of workers who experienced a job separation exploiting changes in the unemployment insurance system over our sample period we show that cuts in ui benefits lead to reductions in total expenditure with a stronger impact on clothing than on food expenditures our empirical strategy allows that these expenditures may be non separable from employment status the effects we find are particularly strong for households with no liquid assets before the spell started these qualitative findings are in precise agreement with the theoretical predictions jel d11 d12 d91 j65 2009 by the european economic association

idiosyncratic shocks and the role of nonconvexities in plant and aggregate investment dynamics we examine a model of lumpy investment wherein establishments face persistent shocks to common and plant specific productivity and nonconvex adjustment costs lead them to pursue generalized s s investment rules we allow persistent heterogeneity in both capital and total factor productivity alongside low level investments exempt from adjustment costs to develop the first model consistent with available evidence on establishment level investment rates reassessing the implications of lumpy investment for aggregate dynamics in this setting we find that they remain substantial when factor supply considerations are ignored but are quantitatively irrelevant in general equilibrium the substantial implications of general equilibrium extend beyond the dynamics of aggregate series while the presence of idiosyncratic shocks makes the time averaged distribution of plant level investment rates largely invariant to market clearing movements in real wages and interest rates we show that the dynamics of plants investments differ sharply in their presence thus model based estimations of capital adjustment costs involving panel data may be quite sensitive to the assumption about equilibrium our analysis also offers new insights about how nonconvex adjustment costs influence investment at the plant when establishments face large and weakly persistent idiosyncratic productivity shocks consistent with existing estimates we find that nonconvex costs do not cause lumpy investments but act to eliminate them

analysis of the long term relationships of the underlying rates of inflation in the emu member states the aim of this paper is to analyse whether or not there is a long term stable equilibrium relationship between the underlying rates of inflation of the member states that have adhered to economic and monetary union emu this longterm equilibrium represents an essential requirement for compliance with the convergence criterion of price stability through which it is possible to guarantee the maintenance of the levels of relative competitiveness of these member states to that end the concept of underlying inflation is defined obtained on the basis of the trend cycle component of the consumer price series having first eliminated the calendar and easter effects as well as the outliers from these original series after applying a bivariate cointegration test to these components essentially pessimistic conclusions are obtained with respect to compliance with the said stability criterion

unemployment insurance rules joblessness and part time work developed and under general conditions an increase in the disregard is shown to increase both the part time and overall re employment hazards data from the current population survey s displaced worker supplements are used to test these predictions estimates from a competing risks model with correlated risks and time varying coefficients shows that increasing the disregard significantly increases the conditional probability of part time re employment during the first three months of joblessness

welfare benefits and the duration of welfare spells evidence from a natural experiment in canada abstract this paper uses a major reform of the welfare program implemented in the province of quebec canada in 1989 to analyze the impact of benefits on the length of welfare spells an important feature of this reform was the abolishment of discrimination based on age that applied to benefits as a result the monthly benefits of single individuals aged less than 30 increased from 173 to 425 1986 an increase of over 145 to assess the impact of the reform we estimate a series of semi parametric hazard models analogous to the regression approach to difference in differences estimation the estimated duration elasticities with respect to benefits for single men and women aged 22 29 are 0 25 and 0 28 respectively

evidence on the purchasing power parity in a panel of cities evidence is provided on the ppp hypothesis using a sample of 50 spanish cities for a long time period through the application of panel data unit root tests although results suggest non rejection of the ppp short run deviations as measured by half lives indicate that real factors might be causing a slow rate of convergence to a common price index even in highly integrated economies