geographic mobility race and wage differentials abstract this paper analyzes the relationship between geographic mobility and earnings we present an equilibrium search model that yields differences between the reservation wages of mobile and immobile workers the expected wages of mobile workers exceed those of immobile workers due to partial sorting across high and low paying firms an extension to visibly distinct groups with different immobile proportions yields statistical discrimination against immobile group members using combined displaced workers files we find that mobility positively affects earnings and partially explains racial and ethnic earnings differentials to test for statistical discrimination we estimate separate earnings functions for union and nonunion workers

similarities and convergence in g 7 cycles this paper examines the properties of g 7 cycles using a multicountry bayesian panel var model with time variations unit specific dynamics and cross country interdependences we demonstrate the presence of a significant world cycle and show that country specific indicators play a much smaller role we detect di erences across business cycle phases but apart from an increase in synchronicity in the late 1990s find little evidence of major structural changes we also find no evidence of the existence of an euro area specific cycle or of its emergence in the 1990s

the economics of violence in natural states violence is key to understanding human interaction and societal development the natural state of societal organization is that a subset of the population capable of mustering organized large scale violence forms an elite coalition that restrains both violence and coercive appropriation we highlight key mechanisms underlying such natural states our results show that natural states either have a large elite coalition and a high tax rate or a weak elite and a high level of appropriation by a large group of violence specialists outside the elite termed warlords when output elasticity of effort is high it induces elite members to limit their tax rate which in turn promotes warlordism only when the elite coalition is small but still able to control a sizeable share of production as a result of its cooperative quality and a low decisiveness of conflict between elite and warlords do we find comparatively high levels of production and producer welfare our results imply that almost all natural states experience continuous coercion exercised by elite members and violence between elite coalitions and warlords we show that this is not a temporary out of equilibrium situation but a permanent phenomenon as can most conspicuously be observed in parts of sub saharan africa our model thus illustrates the rigidity of natural states

the real effects of financial integration abstract this paper shows how correlations in gdp fluctuations rise with financial integration finance serves to increase international correlations in both consumption and gdp fluctuations which explains the persistent gap between the two in the data a quantity puzzle the positive association between financial integration and gdp correlation constitutes a puzzle as theory suggests a negative relation if anything nevertheless it prevails in the data even after the effects of finance on trade and specialization are accounted for

two stage group rent seeking with negatively interdependent preferences the purpose of this paper is to compare the rate of rent dissipation in a group rent seeking contest in which rent seeking activities take place in two stages with those of a one stage individual contest specifically the effect of the extension by introducing rent seekers with negatively interdependent preferences is analyzed focusing on the relationship between contest structure and preference type we find that rent dissipation given absolute as opposed to relative payoff maximization is lower in a two stage contest than in a one stage contest given players with negatively interdependent preferences we find the reverse

bank integration and state business cycles we investigate how integration of bank ownership across states has affected economic volatility within states in theory bank integration could cause higher or lower volatility depending on whether credit supply or credit demand shocks predominate in fact year to year fluctuations in a state s economic growth fall as its banks become more integrated via holding companies with banks in other states as the bank linkages between any pair of states increase fluctuations in those two states tend to converge we conclude that interstate banking has made state business cycles smaller but more alike i introduction the united states banking system was once anything but united until 1978 every state in the union barred banks from other states so instead of one national banking system we had more like 50 little banking systems one per state 1 once states opened their borders to out of state banks bank holding companies marched in and bought up or merged with banks all over the country in 1975 just 10 percent of the bank assets in the typical state were owned by a multistate bank holding company by 1994 this interstate bank asset ratio had risen to 60 percent figure i our paper investigates how the advent of interstate banking integration in the united states has affected economic volatility within states with the united states balkanized banking system the fate of a state and its banks were closely tied as went the state so went the banks the farm price deflation in the early 1980s bankrupted many farmers and many farm banks falling oil prices in the mid 1980s wiped out a lot of texans and a lot of texas banks shocks to commodity prices probably caused these contractions but frictions in the banking sector may have aggravated them by allowing a freer flow of bank capital and lending among states we maintain that interstate banking will reduce the drag that banking frictions can have on economic contractions

financial globalization financial crises and contagion abstract two observations suggest that financial globalization played an important role in the recent financial crisis first more than half of the rise in net borrowing of the u s non financial sectors since the mid 1980s has been financed by foreign lending second the collapse of the u s housing and mortgage backed securities markets had worldwide effects on financial institutions and asset markets using an open economy model where financial intermediaries play a central role we show that financial integration leads to a sharp rise in net credit in the most financially developed country and to large asset price spillovers of country specific shocks to bank capital the impacts of these shocks on asset prices are amplified by bank capital requirements based on mark to market

caps on political lobbying the cost of political campaigns in the u s has risen substantially in recent years for example real spending on congressional election campaigns doubled between 1976 and 1992 steven d levitt 1995 there are many reasons why increased campaign spending might be socially harmful first increased spending means increased fund raising which may keep politicians from their legislative duties 1 second a lobbyist who makes a large campaign contribution may have undue influence on electoral outcomes on the shaping of legislation or on the outcome of regulatory proceedings 2 that is the socially preferred candidate or legislation may not prevail likewise a lobbyist involved in a regulatory matter or a competition for a government contract may benefit unduly from a legislator s intervention 3 third a perception that campaign contributions purchase influence may lead to increased tolerance of corruption in the private sector a desire to control campaign spending has spawned many initiatives to limit both campaign contributions and spending beginning with the passage of the federal election campaign act feca political action committees pacs can contribute at most 5 000 per election to a candidate while individuals can contribute at most 1 000 restrictions have also been put on in kind contributions making it more difficult to circumvent these limits 4 while direct restrictions on campaign spending have proven difficult to implement recent initiatives aim to impose voluntary spending limits and stricter limits on contributions 5 despite the existing legislation and the proposals to limit contributions little is known about the impact of contribution limits on aggregate expenditures while it is intuitively appealing that aggregate expenditures would drop we challenge that intuition here we study a lobbying game and show that a cap on individual lobbyists expenditures may have the perverse effect of increasing aggregate expenditures and loweri this abstract was borrowed from another version of this item

a new index of financial conditions we use factor augmented vector autoregressive models with time varying coefficients and stochastic volatility to construct a financial conditions index that can accurately track expectations about growth in key us macroeconomic variables time variation in the models parameters allows for the weights attached to each financial variable in the index to evolve over time furthermore we develop methods for dynamic model averaging or selection which allow the financial variables entering into the financial conditions index to change over time we discuss why such extensions of the existing literature are important and show them to be so in an empirical application involving a wide range of financial variables

production and conflict models versus rent seeking models a production and conflict p c model and a rent seeking rs model are compared for one group two groups and k groups adding a new agent enlarges the pie in the p c model but causes the fixed size pie to be allocated on one more rent seeker in the rs model the total production or rent is distributed within and between groups according to the within group and between group decisiveness productive and fighting efficiencies and group sizes play a role the collective action problem is more severe for the rs model as group size increases the ratio of within group to between group fighting increases marginally toward a constant for the p c model while it increases convexly for the rs model adding an additional agent to each of two groups is more detrimental to the utilities in rs groups than in p c groups while adding a second group of agents when there is already one group of agents gives the reverse result the severe between group fighting in the p c model for many groups causes the p c model to be preferable for few groups while the rs model is preferable for many groups applications are considered to intergroup migration inside versus outside ownership divestitures mergers and acquisitions multidivisional versus single tier firms and u form versus m form of economic organization

trade finance specialization and synchronization i investigate the determinants of business cycle synchronization across regions the linkages between trade in goods financial openness specialization and business cycle synchronization are evaluated in the context of a system of simultaneous equations the main results are as follows i specialization patterns have a sizable effect on business cycles most of this effect is independent of trade or financial policy but directly reflects differences in gdp per capita ii a variety of measures of financial integration suggest that economic regions with strong financial links are significantly more synchronized even though they also tend to be more specialized iii the estimated role of trade is closer to that implied by existing models once intra industry trade is held constant the results obtain in a variety of data sets measurement strategies and specifications they relate to a recent strand of international business cycle models with incomplete markets and transport costs and on the empir

discrimination in an equilibrium search model i construct an equilibrium search model where some employers have a distaste for hiring minority workers and show that this bias results in economic discrimination against minority workers although only unprejudiced firms hire minority workers minority workers receive lower wages than workers not facing discrimination whenever any employers in the market have a distaste for minority workers one implication of the model is that gender or racial wage differentials understate the utility loss from discrimination in addition the wages of minority workers increase when their proportion increases in the labor market

distributing the green cards permanent residency and personal income taxes after the immigration reform and control act of 1986 abstract we explore how permanent residency affects personal income tax participation and net personal income tax payments using variation from the immigration reform and control act of 1986 irca which authorized the largest u s amnesty to date we exploit the timing and geographic unevenness of irca s legalization programs alongside newly digitized data on personal income taxes in california home to the majority of applicants green cards induced the previously unauthorized to file state income tax returns at rates comparable to other california residents while the new returns generated little additional revenue through the end of the 1990s they did raise the incomes of families with children through new claims of the federal earned income tax credit

gender differences in the labor market impact of irca s amnesty provisions how to address the current record high number of unauthorized workers within our borders has been a hotly debated topic although a number of studies have examined the effect of employer sanctions bansak and raphael 2001 deborah a cobb clark clinton r shields and b lindsey lowell 1995 and border enforcement pia orrenius and madeline zavodny 2003 only a handful have examined the impact of amnesty on newly legalized immigrants sherrie a kossoudji and deborah a cobb clark 2002 neeraj kaushal 2006 while amnesty is being considered a current solution to immigration concerns the impact of past amnesty programs on the labor market outcomes and economic well being of immigrants has not been documented widely and the analysis has been limited largely to men in this paper we examine whether amnesty a provision of the 1986 immigration reform and control act irca affected the labor market outcomes and wages of the legalized population the analysis is carried out by gender to address male and female differences in labor supply and earnings legalization was intended to bring undocumented workers out of the shadows which may have affected their well being by reducing workplace vulnerabilities increasing job mobility and improving working conditions sherrie a kossoudji and cobb clark 2002 using data from the legalized population survey lps and a comparison sample from the 1979 national longitudinal survey of youth nlys79 we develop a quasi experimental framework to assess the impact of irca s amnesty provisions on the legalized population gender differences in the labor market impact of irca s amnesty provisions

borders and business cycles abstract we document that business cycles of u s census regions are substantially more synchronized than those of european countries data from regions within european countries confirm a european border effect within country correlations are substantially larger than cross country correlations these results continue to hold after controlling for exogenous factors such as distance and size we consider the role of four factors that have received attention in the debate about emu sectoral specialization the level of trade monetary policy and fiscal policy we find that the lower level of trade between european countries explains most of the observed border effect

on the inappropriateness of collective rent seeking analysis when agents exert within group and between group efforts abstract the ratio of within group to between group fighting is shown to be unrealistically high for the collective rent seeking model when agents exert two efforts i e within group and between group efforts the ratio is more realistic for the production and conflict model six economics examples illustrate the unrealistic implications of rent seeking analysis

an analysis of the correlates of discrimination facing young hispanic job seekers this study examines the extent and correlates of discrimination faced by young accented hispanic males in chicago and san diego using the outcomes of job applications by matched pairs of anglo and hispanic job seekers this is one of the first examples of audits being used in the labormarket area the audit methodology provides a powerful basis for examining discriminatory hiring practices because it permits direct comparison of hiring outcomes for pairs of anglo and hispanic jobseekers with similar labor market qualifications in this paper we first present differences in anglo hispanic success rates in filing applications obtaining interviews and obtaining jobs this builds on the descriptive analysis presented in harry cross et al 1990 we then focus on the correlates of differential success in obtaining interviews and in subsequent job acquisition i the audit methodology

do european business cycles look like one abstract this paper provides a comprehensive framework to analyze business cycle features other than synchronization we use stationary bootstrap and model based clustering methods to analyze similarities and differences among the european cycles we find evidence that the length deep and shape of cycles differ across european countries and that these differences are not decreasing over time finally even though we find some correlation between business cycle synchronization and characteristics there is important information in the characteristics that is not captured by the synchronization measures

international trade and business cycles is vertical specialization the missing link within academic and policy circles it is a given that international trade is important in transmitting business cycles from one country to another most analyses of the effects of the 1997 1998 asia currency crisis on the world economy focused on the trade linkages between the asian crisis countries and the rest of the world with mounting evidence of a slowdown in u s growth questions have already been raised about the effect of a reduction in u s imports on emerging economies indeed the metaphor when the u s sneezes europe catches a cold is often invoked to highlight the importance of these linkages recent empirical research has reaffirmed the above wisdom by finding that pairs of countries with stronger international trade linkages tend to have more highly correlated business cycles the goal of this paper is to examine whether these findings can be explained by standard international business cycle models we focus on the model by david backus et al 1994 which is the workhorse two good internationalbusiness cycle model in the backus et al 1994 model trade is induced by an armington aggregator which combines domestic and foreign intermediate goods to produce the final good while the aggregator has the drawback of forcing the specialization pattern to be determined in advance flying in the face of trade theory it has been very useful in quantitative and empirical applications we add transportation costs to the model in order to be consistent with the empirical research frankel and rose 1998 clark and van wincoop 2001 which deals with the endogeneity of trade by employing instrumental variables such as distance and adjacency we simulate the model and compute the effect of different transportation costs different trade intensities on the correlation of business cycles our main result is that the standard international business cycle model cannot deliver results that are quantitatively consistent with the recent empirical work in a world of fully integrated asset markets the model delivers a qualitatively counterfactual result as high trade intensity is associated with lower businesscycle correlations under portfolio autarky the model delivers increased correlations as trade intensity increases but the increased correlation is only a fraction of what it is in the data we then introduce the idea that an increasing amount of trade is vertical or fragmented countries increasingly specialize in particular stages of a good s production sequence as opposed to producing the entire good allowing for more of this back and forth trade might lead to greater business cycle correlation responsiveness to stronger trade ties however we find that adding the simplest form of vertical specialization to the model also falls short

has the euro mediterranean partnership affected mediterranean business cycles summary we date turning points of the reference cycle for 19 mediterranean countries and analyze their structure and interdependencies fluctuations are volatile and not highly correlated across countries recessions are deep but asynchronous the distribution of output losses in recessions spread out heterogeneities across countries and regions are substantial cyclical fluctuations are poorly related to trade and financial linkages mediterranean cycles are time varying but their evolution is not linked with the euro mediterranean partnership process copyright 2013 john wiley sons ltd

distributional conflict in organizations abstract hierarchy can function as an instrument to channel influence activities or power struggles in organizations contrary to what has frequently been argued we show that multi divisional organizations may involve lower influence costs than single tier organizations even though they offer more scope for organizational conflict and have more executives that can be influenced these benefits derive from two effects first part of the conflict in multi divisional organizations takes place on the division level where a small number of agents fight over only a fraction of the overall prize second by grouping agents into common divisions multi divisional organizations create free rider problems in rent seeking our model sheds new light on the desirability of divestitures and the transition from the u to the m form by us corporations in the 1920s

dynamics of global business cycle interdependence abstract in this paper we provide a comprehensive analysis of the time varying interdependence among the economic cycles of the major world economies during the post great moderation period we document a significant increase in the global business cycle interdependence occurred in the early 2000s such increase is mainly attributed to the emerging market economies since their business cycles became more synchronized with the rest of the world around that time moreover we find that the increase in global interdependence is highly related to decreasing differences in sectoral composition among countries

illegal immigration border enforcement and relative wages evidence from apprehensions at the u s mexico border we examine illegal immigration in the united states from mexico over the period 1976 1995 one challenge is that we do not observe the number of individuals that attempt to enter the united states illegally we only observe the number of individuals apprehended attempting to cross the u s mexico border illegally based on a simple migration model we postulate the existence of an apprehensions function which expresses apprehensions at the border as a function of illegal attempts to cross the border and u s border enforcement effort we find that a 10 decrease in the mexican real wage leads to a 7 5 to 8 8 increase in apprehensions at the border excerpt

global business cycles convergence or decoupling we analyze the evolution of the degree of global cyclical interdependence over the period 1960 2008 using a dynamic factor model we decompose macroeconomic fluctuations in output consumption and investment into a global factor factors specific to country groups and country specific factors we find that during 1985 2008 there is some convergence of business cycle fluctuations among industrial economies and among emerging market economies surprisingly there is a concomitant decline in the relative importance of the global factor we conclude that there is evidence of business cycle convergence within each of these two groups of countries but divergence or decoupling between them

international business cycles world region and country specific factors the paper investigates the common dynamic properties of business cycle fluctuations across countries regions and the world we employ a bayesian dynamic latent factor model to estimate common components in macroeconomic aggregates output consumption and investment in a 60 country sample covering seven regions of the world the results indicate that a common world factor is an important source of volatility for aggregates in most countries providing evidence for a world business cycle we find that region specific factors play only a minor role in explaining fluctuations in economic activity we also document similarities and differences across regions countries and aggregates jel f41 e32 c11 c32

dissecting the cycle a methodological investigation following burns and mitchell we define the cycle as a pattern in the level of aggregate economic activity an algorithm to locate turning points is developed as is a new measure of pro cyclicality a link between turning points and the moments of the series is established thereby providing the statistical foundation that burns and mitchell s work lacked using these tools we are able to dissect cycles in terms of the contributions made by trend growth volatility serial correlation and non linear effects we dissect several models and find little evidence that certain non linear effects are important to the nature of business cycles

internal rent seeking works councils and optimal establishment size abstract using a microeconomic model and data from the establishment panel of the german institute for employment research we analyze the optimal establishment size against the background of rent seeking workers and the influence of works councils the theoretical part shows that establishment size has not only a discouragement effect on the level of individual rent seeking but also a quantity effect as the number of rent seekers increases the interplay of both effects together with technological considerations determines whether the employer chooses an inefficiently small or large establishment size introduction of a works council restores efficient establishment size although it is purely used as rent seeking device whether the employer benefits from a works council or not depends on the degree of contract incompleteness and the degree of worker coordination via a works council the empirical part indicates dominance of the discouragement effect over the quantity effect in establishments without works council as theoretically predicted works councils are beneficial by disentangling rent seeking and production issues thus eliminating the influence of the two rent seeking effects

amnesty programs and the labor market outcomes of undocumented workers i investigate the effect of the 1997 nicaraguan adjustment and central american relief act nacara on employment and earnings of undocumented foreign born men from nicaragua cuba guatemala and el salvador who were eligible for amnesty under the act i find that nacara had a modest effect on the employment of these men raised their real wage by 3 percent and weekly earnings by 4 percent estimates show that nacara raised the wage of the target group without a high school degree by a statistically insignificant 1 percent and of those with high school or higher education by a statistically significant 5 percent

auctionin entry into tournaments a research tournament model with heterogeneous contestants is presented for a large class of contests the optimal number of competitors is two this insight makes designing the tournament easier and highlights the importance of selecting highly qualified contestants while customary uniform price and discriminatory price auctions are intuitively appealing mechanisms for solving this adverse selection problem in practice they generally will not be efficient mechanism for selecting contestants instead we propose an alternative auction format that is equally simple to implement and efficiently selects the most qualified contestants to compete regardless of the form of contestant heterogeneity

the demand for hours of labor direct evidence from california california s longstanding requirement that most women receive time and a half pay for workhours beyond eight in one day was extended to men in 1980 analyzing current population survey data from 1973 1985 and 1991 we find that this overtime penalty substantially reduced the amount of daily overtime worked by california men relative to men in other states comparisons that use women to control for california specific shocks show even stronger effects the estimates imply a price elasticity of demand for overtime hours of at least 20 5

immigration reform and the earnings of latino workers do employer sanctions cause discrimination this paper investigates whether employer sanctions for hiring undocumented workers introduced by the 1986 immigration reform and control act irca adversely affected the hourly earnings of latino workers in the southwestern u s we exploit the staggering of the sanctions and employee verification requirements across sectors to estimate this effect in particular irca s employer sanctions provisions were not extended to agricultural employers until two years after their imposition on non agricultural employers hence latino agricultural workers provide a control group against which to compare changes in the wages of latinos in non agricultural employment we find substantial pre post irca declines in the hourly earnings of latino non agricultural workers relative to latinos in agriculture this pattern however is considerably stronger for latino men than latina women we do not observe similar inter sectoral shifts in relative wages among non latino white workers in fact the relative wage changes for non latino white workers are of the opposite sign finally the pre post irca relative decline in latino non agricultural wages reverses the pre irca trend where we observe the relative earnings of latino non agricultural workers increasing

rational contagion and the globalization of securities markets this paper argues that globalization may promote contagion by weakening incentives for gathering costly information and by strengthening incentives for imitating arbitrary market portfolios in the presence of short selling constraints the gain of gathering information at a fixed cost may diminish as markets grow moreover if a portfolio manager s marginal cost for yielding below market returns exceeds the marginal gain for above market returns there is a range of optimal portfolios in which all investors imitate arbitrary market portfolios and this range widens as the market grows numerical simulations suggest that these frictions can have significant implications for capital flows in emerging markets

distributional conflict and jurisdictional organization abstract this paper explores the endogenous formation of jurisdictions assuming the political process is a costly fight to acquire shares of the gnp pie in such a setting the stability of a unified jurisdiction is not necessarily determined by the preferences of the richest member region we also show that a system of federalism is especially significant in ameliorating distributional competition and conflict less resources are spent in aggregate on appropriative activities under a hierarchical system of federalism than in a unified jurisdiction with a single central government

the social selection of flexible and rigid agents people differ in how they respond to their environment some individuals treat each situation as unique and tailor their behavior accordingly while others respond in the same manner regardless of the situation the authors objective is to explore how social systems select from such a heterogeneous population a class of simple hierarchical systems is considered which encompasses some features of corporations and electoral systems a selection process operates on this population which results in successful agents going on to compete against equally successful agents for further advancement the author characterizes the population dynamics and the type of agent that ultimately dominates copyright 1998 by american economic association

determinants of business cycle comovement a robust analysis abstract this paper investigates the determinants of business cycle comovement between countries our dataset includes over 100 countries both developed and developing we search for variables that are robust in explaining comovement using the approach of leamer amer econom rev 73 1983 31 variables considered are i bilateral trade between countries ii total trade in each country iii sectoral structure iv similarity in export and import baskets v factor endowments and vi gravity variables we find that bilateral trade is robust however two variables that the literature has argued are important for business cycles industrial structure and currency unions are found not to be robust

on the formation of alliances in conflict and contests this paper examines the problem of the formation of alliances in conflict and more generally in contests with three players each player possesses an exogenous strategic endowment e g arms efforts rent seeking activity the outcome of contests including those between any alliances of players is governed by a contest success function csf in the three person one cake problem an alliance between two players against the third one will form if and only if the csf has an increasing returns characteristic when an alliance forms there is a tendency to be formed by the weaker players against the strongest player similar tendencies exist in other three person problems that i examine

the third round of euro area enlargement are the candidates ready abstract in this paper we study the readiness of bulgaria croatia and romania to adopt the common monetary policy of the ecb in the context of the third round of euro area enlargement following the optimal currency area oca theory literature we focus on the coherence of economic shocks between candidate countries on the one hand and the euro area on the other and analyse the relevance of euro area shocks for key macroeconomic variables in these countries our results based on a novel empirical approach show that the overall importance of those shocks that are relevant for the ecb is fairly similar in candidate countries and the euro area the cost of joining the euro area should therefore not be pronounced at least from the aspect of the adoption of the common counter cyclical monetary policy this conclusion holds for all three candidates despite important differences in their monetary and exchange rate regimes

proposal power and majority rule in multilateral bargaining with costly recognition this paper studies a sequential bargaining model in which agents expend efforts to be the proposer in equilibrium agents effort choices are influenced by the prize and cost effects the endogenous prize is 9

coming out of the shadows learning about legal status and wages from the legalized population the 1986 immigration reform and control act irca granted amnesty to approximately 1 7 million long term unauthorized workers in an effort to bring them out of the shadows and improve their labor market opportunities an analysis of wages using panel data for a sample of legalized men provides evidence that wage determinants are structurally different after amnesty for them but not for the comparison group as measured during the same time periods the wage penalty for being unauthorized is estimated to range from 14 to 24 the wage benefit of legalization under irca was approximately 6

global banks and crisis transmission abstract we study the effect of financial integration through banks on the transmission of international business cycles in a sample of 18 20 developed countries between 1978 and 2009 we find that in periods without financial crises increases in bilateral banking linkages are associated with more divergent output cycles this relation is significantly weaker during financial turmoil periods suggesting that financial crises induce co movement among more financially integrated countries we also show that countries with stronger direct and indirect financial ties to the u s experienced more synchronized cycles with the u s during the recent 2007 2009 crisis we then interpret these findings using a simple general equilibrium model of international business cycles with banks and shocks to banking activity the model suggests that the relation between integration and synchronization depends on the type of shocks hitting the world economy and that shocks to global banks played an important role in triggering and spreading the 2007 2009 crisis

common value contests with asymmetric information abstract we consider two player perfectly discriminatory common value contests or all pay auctions in which one player knows the value of the contested object with certainty and the other knows only its prior distribution we show among other things that in equilibrium the players win with equal probability this contrasts with a large class of imperfectly discriminatory contests in which the uninformed player wins with a strictly greater probability than the informed player

the economics of immigration this literature review concerns the impact of immigration on the economy of the host country focusing on the experience of the united states the emphasis is on the period from the 1970s to the 1990s the author shows that research earlier in this period generally concluded that the economic effects of immigration were positive but that more recent research on later migrations have generally concluded that immigration may be having an adverse effect on the earnings of native unskilled workers and be placing an increased burden on welfare programs the importance of such economic analysis for the formulation of appropriate migration policies is stressed

group contests with internal conflict and power asymmetry we investigate simultaneous inter and intra group conflict in the shadow of within group power asymmetry and complementarity in members group conflict efforts a more symmetric group faces a higher degree of internal conflict and might expend more effort in external conflict when the group conflict effort technology is highly complementary depending on the degree of complementarity the stronger player s relative contribution to external conflict might be higher in a more asymmetric group and as a result it is possible for the weaker player to earn a higher payoff in the absence of any complementarity the rent dissipation is non monotonic with the within group power asymmetry

are internal capital markets efficient using segment information from compustat we find that the investment by a segment of a diversified firm depends on the cash flow of the firm s other segments but significantly less than it depends on its own cash flow the investment by segments of highly diversified firms is less sensitive to their cash flow than the investment of comparable single segment firms the sensitivity of a segment s investment to the cash flow of other segments does not depend on whether its investment opportunities are better than those of the firm s other segments

immigration policy and employment assimilation in the united states we examine the impact of immigration policy on the employment propensity and assimilation of immigrants using a pooled cross section of the 1994 2004 current population surveys cps the results are generally consistent with positive immigrant employment assimilation a blinder oaxaca style decomposition shows that the foreign born obtain more employment primarily through human capital acquisition and changes in labour market conditions rather than higher returns to observable skills as sometimes seen in wage studies in addition our analysis suggests that immigration policies may influence both labour demand and supply incentives and are associated with structural shifts in the labour market

how organizational structure can reduce rent seeking in multi tiered organizations individuals can engage in unproductive rent seeking activities both within and between the divisions of the organization nevertheless a multi tiered organizational structure can induce efficiency gains by decreasing rent seeking we present a model of production and simultaneous internal and external rent seeking assuming a logistic contest success function in equilibrium there is generically either internal or external rent seeking but not both a multi tiered organization leads to less rent seeking and higher welfare even though the production technology gives no reason for any specific organizational structure our findings constitute a new efficiency rationale for multi tiered organizations

trends in the well being of american women 1970 1995 this paper examines the trends in the well being of american women over the last 25 years a time of significant changes in the relative economic status of women and in the labor market as a whole a broad range of indicators are considered to capture changes in women s well being in the family as well as in the labor market for virtually all age and education groups substantial evidence is obtained of rising gender equality in labor market outcomes notably labor force participation wages and occupational distributions broad evidence is also found of greater gender parity within married couple families as the housework time of husbands increased relative to wives and the relative wages of wives rose compared to their husbands however parallel to the recent evidence of the declining labor market position of lower skilled men there has been a similar deterioration in the economic status of less educated women especially high school dropouts their labor force participation rates and wages have risen at a much slower pace than those of more highly educated women while their incidence of single headship has increased much more rapidly these findings for less educated women serve to underscore the widening gap between more and less skilled americans of both sexes as well as to emphasize its broad dimensions

trade interdependence and the international business cycle a stochastic general equilibrium model of the world economy is developed to analyze the contribution of trade interdependence to international business cycles we test some of the implications of the model using data from ten major industrial countries and a variety of detrending techniques to calculate the cyclical component of output we find that the significance of trade in the transmission of economic disturbances across countries is not robust to the choice of the detrending method in general the role of trade interdependence is moderate and seem to have been stronger in the period before 1973

do rent seeking groups announce their sharing rules i introduction rent seeking can be seen all around us firms or coalitions of firms expend resources to influence government officials who have authority to award monopoly rights self interested pressure groups lobby for government subsidies foreign producers exert effort to avoid imposing tariffs or quotas on their products interest groups or lobbyists contribute to the election of politicians who promise to advance favorable legislation research and development rd then the groups announce their decisions simultaneously before choosing their sharing rules we examine the groups decisions on releasing sharing rule information their sharing rules and the effort levels and payoffs of the individual players in equilibrium we formally consider the following three stage game in the first stage each group decides and announces whether it will release to the rival group the information about its sharing rule which will be determined in the second stage in the second stage the players in each group jointly choose their sharing rule and then each group releases the information about its sharing rule if it decided to do so in the first stage in the third stage all the players in both groups choose their effort levels simultaneously and independently at the end of this third stage the winning player is chosen and the winner shares the prize with the other players in his group according to the sharing rule on which they agreed in the second stage solving the game we find the following first the case where both groups release their sharing rule information never occurs in equilibrium second the case where neither group releases its sharing rule information occurs only if the players are evenly matched third when the players are unevenly matched one group releases its sharing rule information and the other does not

sources and propagation of international output cycles common shocks or transmission abstract this paper studies the generation and transmission of international cycles in a multi country model with production and consumption interdependencies two sources of disturbance are considered and three channels of propagation are compared technology disturbances which are mildly correlated across countries are more successful than government expenditure disturbances in reproducing actual data the presence of a common component to the shocks and of production interdependencies appear to be crucial in quantitatively matching the properties of the data

currency unions and international integration this paper characterizes the integration patterns of international currency unions such as the cfa franc zone we empirically explore different features of currency unions and compare them to countries with sovereign monies by examining the criteria for mundellos concept of an optimum currency area we find that members of currency unions are more integrated than countries with their own currencies for instance we find that currency union members have more trade and less volatile real exchange rates than countries with their own monies business cycles are more highly synchronized across currency union countries than across countries with sovereign monies

the tyranny of inequality abstract when parties are very unequally endowed agreement may be very difficult to reach even if the specific transaction is easy to contract on and fungible resources can be transferred to compensate the losing party the very fungibility of the resource transferred makes it hard to restrict its use changing the amount the parties involved spend in trying to grab future rents this spill over effect can inhibit otherwise valuable transactions as well as enable otherwise inefficient transactions agreement typically breaks down when the required transfer is large and the proposed recipient of the transfer is relatively unproductive or poorly endowed we examine the implications of this model for a theory of the optimal allocation of property rights

clubmed cyclical fluctuations in the mediterranean basin we investigate the similarities of macroeconomic fluctuations in the mediterranean basin and their convergence a model with three geo political indicators covering the west the east and the mena portions of the mediterranean characterizes well the historical experience since the early 1980 convergence and divergence coexist in the region and are reversible except for the west domestic cyclical fluctuations are still due to national and idiosyncratic causes the outlook for the next few years looks rosier for the mena and the east blocks than for the west

international real business cycles we ask whether a two country real business cycle model can account simultaneously for domestic and international aspects of business cycles with this question in mind we document a number of discrepancies between theory and data the most striking discrepancy concerns the correlations of consumption and output across countries in the data outputs are generally more highly correlated across countries than consumptions in the model we see the opposite

does detrending matter for the determination of the reference cycle and the selection of turning points we examine the sensitivity of turning points classification to detrending and compare the implied cycles to those derived by nber or doc researchers two dating rules are considered turning point dates are broadly insensitive to detrending with one dating rule but not the other and many procedures generate false alarms and miss several common turning points with the latter one amplitude and duration properties are also sensitive detrending and dating rules the hodrick and prescott and a frequency domain filters are best in mimicing nber and doc cycles regardless of the dating rule used