a liquidity based model of security design we consider the problem of the design and sale of a security backed by specified assets given access to higher return investments the issuer has an incentive to raise capital by securitizing part of these assets at the time the security is issued the issuer s or underwriter s private information regarding the payoff of the security may cause illiquidity in the form of a downward sloping demand curve for the security the severity of this illiquidity depends upon the sensitivity of the value of the issued security to the issuer s private information thus the security design problem involves a tradeoff between the retention cost of holding cash flows not included in the security design and the liquidity cost of including the cash flows and making the security design more sensitive to the issuer s private information we characterize the optimal security design in several cases we also demonstrate circumstances under which standard debt is optimal and show that the riskiness of the debt is increasing in the issuer s retention costs for assets

why does the economy fall to pieces after a financial crisis the worst fi nancial crisis in the history of the united states and many other he worst fi nancial crisis in the history of the united states and many other countries started in 1929 the great depression followed the second worst countries started in 1929 the great depression followed the second worst struck in the fall of 2008 and the great recession followed commentators struck in the fall of 2008 and the great recession followed commentators have dwelt endlessly on the causes of these and other deep fi nancial collapses have dwelt endlessly on the causes of these and other deep fi nancial collapses less conspicuous has been the macroeconomists concern about why output and less conspicuous has been the macroeconomists concern about why output and employment collapse after a fi nancial crisis and remain at low levels for several or employment collapse after a fi nancial crisis and remain at low levels for several or many years after the crisis this article pursues modern answers to that question it many years after the crisis this article pursues modern answers to that question it focuses on events in the united states since 2008 focuses on events in the united states since 2008 existing macroeconomic models account successfully for the immediate effects existing macroeconomic models account successfully for the immediate effects of a fi nancial crisis on output and employment i will lay out a simple macro model of a fi nancial crisis on output and employment i will lay out a simple macro model that captures the most important features of modern models and show that realistic that captures the most important features of modern models and show that realistic increases in fi nancial frictions that occurred in the crisis of late 2008 will generate increases in fi nancial frictions that occurred in the crisis of late 2008 will generate declines in real gdp and employment of the magnitude that occurred but this declines in real gdp and employment of the magnitude that occurred but this model cannot explain why gdp and employment failed to recover once the fi nancial model cannot explain why gdp and employment failed to recover once the fi nancial crisis subsided the model implies a recovery as soon as fi nancial frictions return to crisis subsided the model implies a recovery as soon as fi nancial frictions return to normal at the end of the article i will mention the ideas that are in play to explain normal at the end of the article i will mention the ideas that are in play to explain the persistent adverse effects of temporary crises but these ideas have not made their the persistent adverse effects of temporary crises but these ideas have not made their way into the mainstream model way into the mainstream model this article cites only a few of the many important contributions to the mainthis article cites only a few of the many important contributions to the mainstream model my paper hall 2009 contains many citations and the forthcoming stream model my paper hall 2009 contains many citations and the forthcoming new volume of the new volume of the handbook of monetary economics discusses the literature fully discusses the literature fully

how debt markets have malfunctioned in the crisis the financial crisis that began in 2007 is especially a crisis in debt markets a full understanding of what happened in the financial crisis requires investigation into the plumbing of debt markets during a financial crisis when funds often cannot be raised easily or quickly the fundamental values for certain assets can become separated for a time from market prices with consequences that can echo into the real economy this article will explain in concrete ways how debt markets can malfunction with deleterious consequences for the real economy after a quick overview of debt markets i discuss three areas that are crucial in all debt markets decisions risk capital and risk aversion repo financing and haircuts and counterparty risk in each of these areas feedback effects can arise so that less liquidity and a higher cost for finance can reinforce each other in a contagious spiral i will document the remarkable rise in the premium that investors placed on liquidity during the crisis next i will show how these issues caused debt markets to break down indeed fundamental values and market values seemed to diverge across several markets and products that were far removed from the toxic subprime mortgage assets at the root of the crisis finally i will discuss briefly four steps that the federal reserve took to ease the crisis and how each was geared to a specific systemic fault that arose during the crisis

house price booms current account deficits and low interest rates one of the most striking features of the period before the great recession is the strong positive correlation between house price appreciation and current account defi cits not only in the united states but also in other countries that have subsequently experienced the highest degree of fi nancial turmoil a progressive relaxation of credit standards can rationalize this empirical observation lower collateral requirements facilitate access to external funding and drive up house prices the current account turns negative because households borrow from the rest of the world at the same time however the world real interest rate counterfactually increases the two key ingredients that reconcile a demand based explanation of house price booms and current account defi cits with the evidence on real interest rates are nominal interest rates lower than the predictions of a standard monetary policy rule in leveraged economies and foreign exchange rate pegs in saving countries

rating politics partisan discrimination in credit ratings in developed economies how does government partisanship influence sovereign credit ratings of developed countries given the convergence of fiscal and monetary outcomes between left and right governments in the past deca

the intragenerationally redistributive effects of the retirement insurance scheme in turkey before and after the 1999 reform the paper analyses the intragenerational redistribution generated by the retirement insurance scheme in turkey before and after the 1999 reform previous research shows that when a pension scheme s contribution and benefit schedules are proportional the existence of an intergenerational redistribution is a precondition for the existence of an intragenerational redistribution but that otherwise redistribution within a generation is possible without intergenerational redistribution the main finding of this work is that the existence of the intergenerational redistribution is still a precondition for the old pension scheme despite its disproportional benefit schedule under the assumptions used both of the schemes redistribute from high wage earners to low wage earners among women but redistribute differently among men among men the old scheme generates indeterminable transfers although the new scheme redistributes from low wage earners to high wage earners the analysis takes into account a hypoth

quality trade and growth abstract this paper analyzes the roles of product quality and increasing returns in international division of labor and economic development because the qualities of different intermediate goods are highly complementary in producing the quality of the final good a poor economy will choose to be in autarky if its average level of human capital is sufficiently low thus the heterogeneity of human capital may hamper the division of labor further by linking quality trade and growth this model simultaneously explains the east asian miracle and the empirical finding of conditional convergence

social security and retirement an international comparison this article concerns the following items 1 decline in labour force participation 2 social security benefit accrual and the implicit tax on work 3 the importance of the early retirement age 4 the implicit tax on work and labour force participation etc

the effect of incentive induced retirement on spousal retirement rates evidence from a natural experiment we identify quantify and explain the impact of incentive induced early retirement er of husbands on their wives probability to retire within 1 year using administrative data from the netherlands our identification strategy is based on a policy intervention by which targeted individuals working at the central government level became unexpectedly and temporarily eligible for very generous er benefits this retirement window of opportunity implied for interested workers that transitions from the current job into full retirement had to be effected swiftly and irreversibly we find that induced er of husbands increased their wives probability to retire by 10 percentage points this is a strong and robust local average treatment effect partly the effect runs through wives at ages when they may have been eligible for er programs themselves jel c26 j26 j120 j140

increasing returns product quality and international trade this paper examines the roles of quality and increasing returns in trade it implies that there is intense intra industry trade among economies with similar levels of per capita income which increases both the quality and the quantity of consumption however there may be no trade in manufactured goods between rich and poor countries because of the disparity in their optimal qualities of consumption and the high complementarity of the qualities of intermediate goods in production thus it helps explain the observed trade patterns moreover the model shows that a smaller country is more likely to engage in international trade

losses and gains to developing countries from the migration of educated workers this paper synthesizes and extends recent research on the new economics of the brain drain in a unified framework the paper shows that while recently identified adverse repercussions of the brain drain exacerbate the long recognized negative impact of the brain drain longer term consequences turn the brain drain into the harbinger of powerful gains these gains have been studied already in recent research or merit attention in future research

lending booms smart bankers and financial crises this paper develops a theory that explains why financial crises follow profitable lending booms when agents exhibit the availability heuristic and there is a long period of banking profitability all agents banks their investors and regulators end up in an availability cascade overestimating bankers risk management skills and underestimating the probability that observed outcomes are due to good luck consequently banks profitably invest in riskier assets subsequently if a public signal reveals that outcomes are luck driven investors withdraw funds liquidity evaporates and a crisis ensues a loan resale market improves liquidity but increases the probability of a crisis

bank credit risk grain production and the indian economy we generate measures of banking risk across indian states and examine the relationship between banking risk and economic production in india we find that banking risk co moves with total grain pro

the impact of pension schemes on saving in israel israeli micro and macro data indicate that consumption smoothing is limited and thus pension savings increase private and national savings since private savings rates are to a great extent unequal across different income groups saving is almost exclusively concentrated in the upper two quintiles

what does a financial shock do first international evidence in this paper we attempt to evaluate the quantitative impact of financial shocks on key indicators of real activity and financial conditions we focus on financial shocks as they have received wide attention in the recent literature and in the policy debate after the global financial crisis we estimate a panel var for 21 advanced economies based on quarterly data between 1985 and 2011 where financial shocks are identified through sign restrictions we find robust evidence that financial shocks can be separately identified from other shock types and that they exert a significant influence on key macroeconomic variables such as gdp and particularly investment but it is unclear whether these shocks are demand or supply shocks from the standpoint of their macroeconomic impact the financial development and structure of a given country is found not to matter much for the intensity of the propagation of financial shocks moreover we generally find that these shocks play a role not only in crisis times but also in normal conditions finally we discuss the implications of our findings for monetary policy fabio fornari and livio stracca

inequality reducing properties of composite taxation abstract on the one hand we know that the more progressive a tax schedule the more equally distributed the after tax incomes u jakobsson j public econ 5 1976 161 168 on the other hand most tax systems involve a complex procedure where individual incomes are successively subjected to different rounds of taxation we study in the paper the inequality reducing properties of the composition of different taxation schemes and we identify necessary and sufficient conditions for after tax inequality to decrease when the degree of progressivity of one element or more of the tax system is increased for the sake of generality we assimilate the set of income distributions with the space of probability measures over an interval of the real line and any function that associates after tax incomes to before tax incomes is viewed as a taxation scheme this general approach proves to be particularly powerful when investigating the restrictions the egalitarian principle imposes on the set of admissible taxation schemes journal of economic literature classification numbers d31 d63 h24

shadow economies size causes and consequences using various methods the size of the shadow economy in 76 developing transition and oecd countries is estimated average size varies from 12 percent of gdp for oecd countries to 23 percent for transition countries and 39 percent for developing countries increasing taxation and social security contributions combined with rising state regulations are driving forces for the increase of the shadow economy especially in oecd countries according to some findings corruption has a positive impact on the size of the shadow economy and a growing shadow economy has a negative effect on official gdp growth

the effects of openness trade orientation and human capital on total factor productivity abstract we study the effects of openness trade orientation and human capital on total factor productivity for a pooled sample of developed and developing countries total factor productivity emerges from a parsimonious specification of the aggregate production function potential determinants of total factor productivity include measures of openness trade orientation and human capital higher openness benefits total factor productivity outward oriented countries experience higher total factor productivity over and above the positive effect of openness human capital generally contributes positively to total factor productivity in poor countries however human capital interacts with openness to achieve a positive effect

from traditional db to notional dc systems the pension reform process in sweden italy and germany this paper provides a critical review of the pension reform strategy that turns defined benefits db public pay as you go systems into notional defined contribution ndc systems we show that properly designed ndc public pension systems contain powerful economic and political mechanisms that may facilitate pension reform but that the distinction between public ndc and db systems is more ambiguous than usually claimed jel h55 j14 j26

macroeconomics and monetary economics the redistribution recession how labor market distortions contracted the economycasey b mulligan oxford and new york oxford university press 2012 pp xii 351 isbn 978 0 19 994221 3 jel 2013 0070

systemic risk and bank business models textabstractin this paper we decompose banks systemic risk into two dimensions the risk of a bank bank tail risk and the link of the bank to the system in financial distress systemic linkage based on extreme value theory we estimate a systemic risk measure that can be decomposed into two subcomponents reflecting these dimensions empirically we assess the relationships of bank business models to the two dimensions of systemic risk the observed differences in these relationships partly explain why micro and macroprudential perspectives sometimes have different implications for banking regulation

have standard vars remained stable since the crisis small or medium scale vars are commonly used in applied macroeconomics for forecasting and evaluating the shock transmission mechanism this requires the var parameters to be stable over the evaluation and forecast sample or to explicitly consider parameter time variation the earlier literature focused on whether there were sizable parameter changes in the early 1980s in either the conditional mean or variance parameters and in the subsequent period till the beginning of the new century in this paper we conduct a similar analysis but focus on the effects of the recent crisis using a range of techniques we provide substantial evidence against parameter stability the evolution of the unemployment rate seems particularly different relative to its past behavior we then discuss and evaluate alternative methods to handle parameter instability in a forecasting context while none of the methods clearly emerges as best some techniques turn out to be useful to improve the forecasting performance

economic determinants of workers retirement decisions the landscape for older workers has changed dramatically in recent decades governments have made cuts to public pension programs private pensions have shifted from defined benefit to defined contribution plans equity and housing markets have been unusually volatile and workers have experienced declining morbidity and mortality at the same time the labor force participation rate for older men and women has been rising over the past two decades implying later retirement are these phenomena related this paper reviews the large and growing body of literature exploring the economic determinants of workers retirement decisions including public and private pensions wealth and savings health and health insurance and labor demand

incentive effects of social security on labor force participation evidence in germany and across europe abstract all across europe old age labor force participation has declined dramatically during the last decades this secular trend coincides with population aging the european social security systems therefore face a double threat retirees receive pensions for a longer time while there are less workers per retiree to shoulder the financial burden of the pension systems this paper shows that a significant part of this problem is homemade most european pension systems provide strong incentives to retire early the correlation between the force of these incentives with old age labor force participation is strongly negative the paper provides qualitative and econometric evidence for the strength of the incentive effects on old age labor supply across europe and for the german public pension program

the dynamics of smithian growth this paper analyzes the evolution of an economy where growth is driven by increased specialization caused by the geographical expansion of markets it proves that such smithian growth exhibits generic threshold behavior below a critical density of transport linkages the economy is split into isolated local markets with limited specialization above the critical density these markets begin to fuse into a large economywide market causing growth to accelerate this allows an explicit test of the consensus among historians of sung dynasty china that the economic revolution during that period was a result of commercialization caused by the creation of a national waterway network

economic determinants of workers retirement decisions economic determinants of workers retirement decisions the landscape for older workers has changed dramatically in recent decades governments have made cuts to public pension programs private pensions have shifted from defined benefit to defined contribution plans equity and housing markets have been unusually volatile and workers have experienced declining morbidity and mortality at the same time the labor force participation rate for older men and women has been rising over the past two decades implying later retirement are these phenomena related this paper reviews the large and growing body of literature exploring the economic determinants of workers retirement decisions including public and private pensions wealth and savings health and health insurance and labor demand

how can we explain the persistence of the great recession a balanced stability approach the great recession gr brings about a stalemate in macroeconomics on the one hand while describing the immediate effects of the gr standard models fail to account for its persistence on the other heterodox approaches do not regain consensus as they fail to devise an alternative method for capturing the deep causes of the gr that account for its persistence in a systematic way this paper fills this gap by proposing a new framework called balanced stability approach unlike standard macro which takes stability for granted it provides a balanced assessment of stability considering both threats and opportunities for phenomena such as the so called new economy ne on a par on these grounds the paper draws the conclusion that the persistence of the gr is due to a low level of aggregate demand rooted in the structural changes generated by the ne

the employment effects of credit market disruptions firm level evidence from the 2008 9 financial crisis this article investigates the effect of bank lending frictions on employment outcomes i construct a new data set that combines information on banking relationships and employment at 2 000 nonfinancial firms during the 2008 9 crisis the article first verifies empirically the importance of banking relationships which imply a cost to borrowers who switch lenders i then use the dispersion in lender health following the lehman crisis as a source of exogenous variation in the availability of credit to borrowers i find that credit matters firms that had precrisis relationships with less healthy lenders had a lower likelihood of obtaining a loan following the lehman bankruptcy paid a higher interest rate if they did borrow and reduced employment by more compared to precrisis clients of healthier lenders consistent with frictions deriving from asymmetric information the effects vary by firm type lender health has an economically and statistically significant effect on employment at small and medium firms but the data cannot reject the hypothesis of no effect at the largest or most transparent firms abstracting from general equilibrium effects i find that the withdrawal of credit accounts for between one third and one half of the employment decline at small and medium firms in the sample in the year

do the economies of specialization justify the work ethics an examination of buchanan s hypothesis buchanan 1991 1994 proposes an interesting hypothesis explaining the prevalence of an ethic encouraging more work economies of specialization mean that more division of labour may increase productivity if everyone works more it increases the extent of the market which enables higher degree of division of labour and hence higher productivity individual choice between leisure and work thus results in a sub optimal level of work one way to counteract this is to maintain a work ethic this chapter examines the validity and significance of this hypothesis in the yang ng framework of inframarginal analysis a simultaneous artificial decrease in preference for leisure by all individuals decreases intrinsic utility evaluated at the original preference however using a more realistic model allowing for both home and firm market production developed by ng and zhang 2005 and discussed in chapter 9 a strong support is provided for buchanan s hypothesis as a shift in preference by everyone from leisure to market goods produced under increasing returns average cost pricing increases utility even if evaluated in accordance with the original preference buchanan s thesis probably has more relevance in ancient times when the work ethics originated but is less significant in the current world of global trade where the billions of individuals involved is sufficient to sustain specialization without artificial encouragement of additional work effort on the contrary the competition for relative standing the materialistic bias caused by our accumulation instinct and advertising and the environmental disruption of material production and consumption suggest that the discouragement of long working week may be more conducive to welfare

why it is possible that wages and pensions can increase simultaneously in an aging and stagnating economy this article investigates the possibilities and restrictions of inter generational income development for ageing and stagnating economies in a first step the basic logic of ageing will be investigated in a simple dynamic model in particular the investigation points out the existence of the demographic distribution mass and its meaning for inter generational income development it proves that the demographic distribution mass makes it possible for wages and pensions to grow simultaneously in an ageing and stagnating economy in a second step the development of wages and pensions is simulated for the german case through to the year 2050 it is demonstrated that under normal circumstances it can be expected that the burden from ageing can almost always be over compensated by the economic growth of the respective year against this background ageing appears to be rather a problem of acceptance and income distribution than that of real income reductions

issues in pension economics in the past several decades pension plans have become one of the most significant institutional influences on laborand financial markets in the u s in an effort to understand the economic effects of this growth the national bureau of economic research embarked on a major research project in 1980 issues in pension economics the third in a series of four projected volumes to result from thsi study covers a broad range of pension issues and utilizes new and richer data sources than have been previously available the papers in this volume cover such issues as the interaction of pension funding decisions and corporate finances the role of pensions in providing adequate and secure retirement income including the integration of pension plans with social security and significant drops in the u s saving rate and the incentive effects of pension plans on labor market behavior and the implications of plans on labor market behavior and the implications of plans for different demographic groups issues in pension economics offers important empirical studies and makes valuable theoretical contributions to current thinking in an area that will most likely continue to be a source of controversy and debate for some time to come the volume should prove useful to academics and policymakers as well as to members of the business and labor communities

a microeconomic mechanism for economic growth this paper constructs a dynamic general equilibrium model in which economic growth is explained by the evolution of the division of labor the relationships among the accumulation of human capital the evolution of the division of labor endogenous comparative advantage trade dependence the market structure and economic growth are investigated

gdp dynamics and unemployment changes in developed and developing countries abstractwe design a new specification of okun s model that takes the following features into account estimation of the relation in first differences the possible lagged effect of gdp dynamics on

what produces a hidden economy an international cross section analysis by economists the phenomenon has been discussed for a long time by politicians and the public in mediterranean countries such as italy where it is known as lavoro nero and in developing countries it is however quite new for it to be seriously studied by professional economists gutmann s estimate 14 that the hidden economy currently comprises at least 10 of officially measured gnp in the united states has received wide attention in the press and in congressional committees feige 8 comes up with a corresponding figure of 33 of gnp for 1978 and has more recently lowered it to 27 of official gnp for the same year 9 these two authors as well as many others point to the revolutionary consequences 15 16 of the existence of a hidden economy of such size in particular the official statistics provide mistaken signals to the public decisionmakers they are led to think that there is wide spread unemployment because of the official unemployment statistics while in fact a considerable amount of those unemployed do indeed work similarly there may be an underestimate of the rate of growth in income and an overestimate of the rate of inflation the importance of the untaxed hidden economy for public revenues is obvious the official measures leaving out or considering only in part the hidden economy may also lead to systematically biased estimates of econometric models at the micro and macro level the present study pursues three purposes the first is to identify problem areas of future economic policy both with respect to the causes producing and the countries being affected by a hidden economy it turns out that in several countries the problems created by a rising hidden economy are expected to be so significant that policy makers are well advised to direct their attention to the subject

a model under siege a case study of the german retirement insurance system this study evaluates the positive and negative features of the german public pension system and discusses three reasons for its increasing perceived and real difficulties maturation negative incentive effects and the problems of demographic change the german system in its current form may be able to limp through the coming decades but will cease to be the exemplary bismarckian machine that has created generous retirement incomes at reasonable tax rates current policy proposals are insufficient and a few but incisive design changes and some degree of prefunding could rescue the many positive aspects of the german retirement insurance system

reforming social security assessing the effects of alternative funding strategies population ageing implies that the large pay as you go social security programmes implemented in many oecd economies will run into severe financial problems by means of a numerical overlapping generations model this paper investigates the intergenerational welfare effects of a transition to funded security programmes such programmes imply permanent increases in the welfare of the young and unborn generations it is demonstrated that the size of the welfare gains varies significantly between alternative funding strategies a nonindividualized funding strategy characterized by increased government asset accumulation triggers considerable welfare gains through increased asset returns in the future even larger welfare gains may be realized by an individual funding strategy characterized by increased asset accumulation accompanied by an adoption of actuarial supplementary pensions i e actuarial supplementary pensions combined with a fixed minimum pension which reduces future tax distortions drastically

do changes in demographic characteristics explain declining male employment rates examination of the australian case using a propensity score re weighting decomposition approach using australian data spanning the period from 1981 to 2001 we apply a propensity score re weighting decomposition approach to investigate the extent to which the large decline in the male employment population rate over this period can be attributed to changes in socio demographic characteristics we find that changes in observed characteristics account for little of the aggregate decline however changes in characteristics are found to be important for population sub groups in particular changes in partner status and partner employment status have acted to decrease employment rates of younger males but increase employment rates of older males a further finding is that holding observed characteristics constant there has been a very large decline in the employment rate of 55 64 year olds with bachelor degree qualifications in the course of applying the decomposition method we illustrate that validity of inferences depends on appropriate specification of the reweighting function

how much is transfer and how much is insurance in a pay as you go system the german case pay as you go pension systems provide insurance against longevity related old age poverty and related risks they are commonly also used as instruments for redistribution this paper provides several estimates of the insurance and transfer share of the german public pension system estimating these shares is important because they are indicative of taxation related deadweight losses and influence public acceptance of the pension system we also disentangle intragenerational from intergenerational transfers although our estimate of intragenerational transfers is smaller than recent semi official estimations such transfers create substantial deadweight losses intergenerational transfers are much larger thereby contributing to strong negative participation incentives for the younger generation jel classification h55 j26

an empirical study of age discrimination in norway and germany using a questionnaire and a sample of students and personnel managers we establish the existence of age discrimination in the hiring process in germany and norway as expected age discrimination is more prominent in germany where the hiring probability of equally qualified applicants is reduced by about 22 percentage points due to an age differential of 14 years as opposed to only 12 percentage points in norway within both countries the tendency to discriminate does not differ between students and personnel managers and does not depend on the age of the decision maker the phenomenon of unemployment among older workers is characterized less by the risk of becoming unemployed than by the problem of remaining unemployed and failing to find new work frerichs and naegele 1998 p 59

does raising the early retirement age increase employment of older workers two pension reforms in austria increased the early retirement age era from 60 to 62 for men and from 55 to 58 25 for women we find that raising the era increased employment by 9 75 percentage points among affected men and by 11 percentage points among affected women the reforms had large spillover effects on the unemployment insurance program but negligible effects on disability insurance claims specifically unemployment increased by 12 5 percentage points among men and by 11 8 percentage points among women the employment response was largest among high wage and healthy workers while low wage and less healthy workers either continued to retire early via disability benefits or bridged the gap to the era via unemployment benefits taking spillover effects and additional tax revenues into account we find that for a typical birth year cohort a one year increase in the era resulted in a reduction of net government expenditures of 107 million euros for men and of 122 million euros for women

the division of labor coordination costs and knowledge this paper considers specialization and the division of labor a more extensive division of labor raises productivity because returns to the time spent on tasks are usually greater to workers who concentrate on a narrower range of skills the traditional discussion of the division of labor emphasizes the limitations to specialization imposed by the extent of the market we claim that the degree of specialization is more often determined by other considerations especially emphasized are various costs of coordinating specialized workers who perform complementary tasks and the amount of general knowledge available