nonmonetary effects of the financial crisis in propagation of the great depression this paper examines the effects of the financial crisis of the 1930s onthe path of aggregate output during that period our approach is complementary to that of friedman and schwartz who emphasized the monetary impact of the bank failures we focus on non monetary primarily credit related aspects of the financial sector output link and consider the problems of debtors as well as those of the banking system we argue that the financial disruptions of 1930 33 reduced the efficiency of the credit allocation process and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand evidence suggests that effects of this type can help explain the unusual length and depth of the great depression this abstract was borrowed from another version of this item

inequality in the globalizing asia this article investigates the impact of globalization on the inequality of asia it is the first attempt to examine 11 asian countries panel data allowing nonlinearity between globalization and inequality from 1960 to 2003 with robustness check we also survey the literature on growth globalization and inequality and reflect their endogenous relationships to our article we found the significant turning point of globalization at which inequality starts decreasing as further globalization proceeds it will offer us policy implications for the ongoing process of globalization in the asian economies

a meta analytic reassessment of the effects of inequality on growth this paper develops a meta analysis of the empirical literature that estimates the effect of inequality on growth it covers studies published in scientific journals during 1994 2014 that examine the impact on growth of inequality in income land and human capital distribution we find traces of publication bias in this literature as authors and journals are more willing to report and publish statistically significant findings and the results tend to follow a predictable time pattern over time according to which negative and positive effects are cyclically reported after correcting for these two forms of publication bias we conclude that the high degree of heterogeneity of the reported effect sizes is explained by study conditions namely the structure of the data the type of countries included in the sample the inclusion of regional dummies the concept of inequality and the definition of income in particular our meta regression analysis suggests that cross section studies systematically report a stronger negative impact than panel data studies the effect of inequality on growth is negative and more pronounced in less developed countries than in rich countries the inclusion of regional dummies in the growth regression of the primary studies considerably weakens such effect expenditure and gross income inequality tend to lead to different estimates of the effect size land and human inequality are more pernicious to subsequent growth than income inequality is we also find that the estimation technique the quality of data on income distribution and the specification of the growth regression do not significantly influence the estimation of the effect sizes these results provide new insights into the nature of the inequality growth relationship and offer important guidelines for policy makers

forward induction in the battle of the sexes games this paper provides experimental evidence on forward induction as a refinement criterion in the basic extensive form one of the two players chooses to play a battle of the sexes game or to receive a certain payoff according to forward induction choosing to play the game is a signal about intended action though the presence of the outside option changes play we find only limited support for the forward induction hypothesis the effects of the outside option also reflect the creation of a focal point through the asymmetry created by offering the outside option to one of the two players jel c72

income distribution political instability and investment abstract this paper successfully tests on a sample of 71 countries for the period 1960 85 the following hypotheses income inequality by fuelling social discontent increases sociopolitical instability the latter by creating uncertainty in the politico economic environment reduces investment as a consequence income inequality and investment are inversely related since investment is a primary engine of growth this paper identifies a channel for an inverse relationship between income inequality and growth we measure socio political instability with indices which capture the occurrence of more or less violent phenomena of political unrest and we test our hypotheses by estimating a two equation model in which the endogenous variables are investment and an index of socio political instability our results are robust to sensitivity analysis on the specification of the model and the measure of political instability and are unchanged when the model is estimated using robust regression techniques

an evolutionary interpretation of van huyck battalio and beil s experimental results on coordination this paper proposes an adaptive interpretation of the results of some recent experiments with repeated tacit coordination games these experiments revealed several behavioral regularities including a systematic discrimination between strict nash equilibria in certain games that appear to be driven by strategic uncertainty and are not explained by traditional equilibrium refinements the observed patterns of discrimination correspond closely to predictions based on maynard smith s notion of evolutionary stability an adaptive model in the spirit of the evolutionary dynamics but recognizing the important differences between learning in human populations and evolution promises to yield a unified explanation of the results journal of economic literature classification numbers 020 026

sustainable management of renewable resources an experimental investigation in continuous time abstractthis study addresses one of the most basic questions in renewable resource management the ability of economic agents to exploit a renewable resource in an efficient and sustainable manner in a laboratory experiment subjects are presented with renewable resource extraction problems where optimal management will lead to a stable steady state a test of sustainability of the extraction practices shows that extraction behaviour results in steady states only 56 of the time the mode of the steady state distribution coincides with the optimal steady state extraction the trade off between accruing a higher payoff in the present and sustaining the resource for future exploitation leads to suboptimal behaviours such as initial overextraction of the resource compared to the optimal extraction policy costly downward adjustment of the extraction later in time and settling down for lower long run resource and extraction the suboptimal behaviours lead to 17 loss in efficiency on average in terms of th

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

separating the hawks from the doves evidence from continuous time laboratory games human players in our laboratory experiment received ow payos over 120 seconds each period from a standard hawk dove bimatrix game played in continuous time play converged closely to the symmetric mixed nash equilibrium under a one population matching protocol when the same players were matched in a two population protocol with the same bimatrix they showed clear movement towards an asymmetric and very inequitable pure nash equilibrium of the game these ndings support distinctive predictions of evolutionary game theory

that s how we roll an experiment on rollover risk abstract we design a continuous time experiment to study how different short term credit maturities interact with the state of the economy we find that when the economy is in a boom long maturities stabilize the credit market yet when in a downturn such maturities increase the likelihood of credit freezes this result has important regulatory implications as it suggests that a policy aimed at reducing maturity mismatch in short term credit markets might backfire during a recession

complementarities and comovements short run interindustry comovement may be due either to common shocks or to complementarities that progagate shocks across sectors this paper assesses the importance of input output linkages aggregate activity spillovers and local activity spillovers to comovement in postwar u s manufacturing i find that input output linkages and local activity spillovers are important to comovement while aggregate activity spillovers are not important i find that complementarities are important to aggregate volatility even after i remove observable aggregate shocks from the data local spillovers are particularly important explaining between 15 and 36 percent of manufacturing employment volatility the importance of local spillovers stems from the fact that industries that cluster together in space also comove through time contrary to the marshallian idea that industries with negatively correlated fluctuations should cluster together in order to stabilize local demand

equilibrium selection with coupled populations in hawk dove games theory and experiment in continuous time abstract standard one and two population models for evolutionary games are the limit cases of a uniparametric family combining intra and intergroup interactions our setup interpolates between both extremes with a coupling parameter for the example of the hawk dove game we analyze the replicator dynamics of the coupled model we confirm the existence of a bifurcation in the dynamics of the system and identify three regions for equilibrium selection one of which does not appear in common one and two population models we also design a continuous time experiment exploring the dynamics and the equilibrium selection the data largely confirm the theory

sources of output fluctuations in the united states during the inter war and post war years abstract this paper attempts to decompose the sources of fluctuations in industry output into 1 an aggregate national shock 2 industry group specific shocks and 3 idiosyncratic factors the empirical methodology is the engle watson dynamic mimic model the work is motivated as an attempt to compare empirically aggregate single factor theories of the cycle with real business cycle theories emphasizing technology shocks disaggregate data from the inter war and post war periods are examined conclusions on the relative importance of the various shocks seem to be dependent on the period being considered the single index theory of the cycle seems more appropriate for the inter war period

a new data set measuring income inequality this article presents a new data set on inequality in the distribution of income the authors explain the criteria they applied in selecting data on gini coefficients and on individual quintile groups income shares comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect inter temporal and international comparability based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality they do find a strong positive relationship between growth and reduction of poverty

income distribution and investment abstract after being the subject of a heated debate during the sixties and the seventies the relation between income distribution and growth has received renewed attention in recent years the new literature has focused on three channels whereby this relation can occur imperfections in capital markets voting on fiscal policy and political instability in all these approaches growth in or outside the steady state is the result of investment in physical or human capital therefore these theories can also be stated and tested in terms of the effects of income distribution on investment this has the double advantage of reducing the complexity of a necessarily brief survey and of bringing out more clearly the main elements of novelty in this literature so far empirical implementations of these theories have in general been restricted to reduced form regressions of growth or equivalently investment on income distribution and other variables in this survey i take a step further and test the three approaches by explicitly estimating the role of the imperfections in capital markets of government expenditure and of political instability in mediating the effects of income distribution on investment

income inequality government expenditures and growth this paper investigates the relationship between income inequality and growth by utilizing the recently published deininger squire data set most of the recent empirical growth literature suggests a negative relationship between inequality and growth on the basis of reduced form growth equations this is also found in the author s study some effort is made to discuss the argument behind the perceived negative relationship between inequality and growth according to the fiscal policy approach a high level of income inequality leads to a higher demand for redistribution which in turn affects growth through resource allocation out of investment or through incentive distorting taxes needed to fund the redistribution it is suggested that the last mentioned relationship between government expenditure and growth is more likely to be non linear positive with small amounts and negative with large amounts such a relationship however is only found for public goods thus government expenditure on law and ord

interest rates and expected future budget deficits in the united states several recent empirical studies have found no evidence of a positive association between interest rates and current and past budget deficits one possible explanation for this finding is that interest rates are related much more to the expectation of future budget deficits than to current and past budget deficits in this paper i investigate whether this explanation is valid finding no evidence that it is section ii briefly formulates and discusses the hypothesis under consideration stating some of its implications section iii presents the results of regressing the commercial paper rate moody s aaa bond rate and the ex post real commercial paper rate on current and past government spending budget deficits and real money supplies the regressions have been fitted to the entire sample of monthly data spanning the period between june 1908 and march 1984 and to 11

the role of international factors in the business cycle a multi country study abstract empirical research has been conducted on the various theories of the business cycle over many countries however very little research has attempted to undertake a multi country disaggregate investigation into the sources of output change this paper decomposes fluctuations in industry output in a particular country into 1 a nation specific shock 2 an industry specific shock 3 a common shock and 4 an idiosyncratic factor using a dynamic factor analysis state space approach the paper finds that the industry specific impulse explains a significant but small part of the variance of the forecast error this provides limited support for the disaggregated real business cycle paradigm

generalised taylor and generalised calvo price and wage setting micro evidence with macro implications the generalised calvo and the generalised taylor models of price and wage setting are unlike the standard calvo and taylor counterparts exactly consistent with the distribution of durations observed in the data using price and wage micro data from a major euro area economy france we develop calibrated versions of these models we assess the consequences for monetary policy transmission by embedding these calibrated models in a standard dynamic stochastic general equilibrium model the generalised taylor model is found to help rationalise the hump shaped and persistent response of inflation without resorting to the counterfactual assumption of systematic wage and price indexation

an inquiry into the sources of macroeconomic fluctuations abstract this paper attempts to decompose the sources of fluctuations in quarterly employment by industry and region into 1 an aggregate national shock 2 region specific shocks 3 industry specific shocks and 4 idiosyncratic factors the empirical analysis is motivated by a dynamic theory of the business cycle the empirical methodology is the engle watson dynamic mimic model implemented via the em algorithm the work is motivated as an attempt to compare empirically aggregate single factor theories of the cycle with real business cycle theories emphasizing industrial or regional shocks

real time tacit bargaining payoff focality and coordination complexity experimental evidence we conduct a bargaining experiment where interaction is tacit and payoffs are earned and cumulated in real time we test hypotheses about the interaction between the focal properties of payoffs and the complexity of coordinating on an intertemporal behavior that achieves them the general finding is that when a payoff focal outcome requires a complicated coordination scheme bargainers tend to settle on a simpler and sometimes inefficient behavior

the kuznets process and the inequality development relationship abstract in his classic paper on economic growth and income inequality kuznets discussed the process of population shift from traditional to modern activities as the basis for a theory of distributional change during the course of development in this paper we present a formalization of the kuznets process conduct a general analysis of distributional change under this process and derive the functional forms of and conditions for a turning point in the inequality development relationship for six commonly used indices of inequality the functional form appropriate to each index is then estimated using cross section data on 60 developing and developed countries finally some extensions to the initial formalization of the kuznets process are considered

factor shares and savings in endogenous growth in models of steady investment driven growth an individual s propensity to save depends on how much of his income is drawn from accumulated factors of production capital rather than from nonaccumulated factors when agents are heterogeneous in this respect growth oriented policies have distributional consequences and in the absence of lump sum redistribution their implementation faces political constraints if the median voter is capital poor relative to the economy s representative agent political interactions tend to slow down growth when policy acts on capital s income share and tend to accelerate it when investment subsidies are the policy instrument of choice copyright 1993 by american economic association

distributive politics and economic growth a crude distinction between economics and politics would be that economics is concerned with expanding the pie while politics is about distributing it in this paper we analyze the relationship between the two we focus on how an economy s initial configuration of resources shapes the political struggle for income and wealth distribution and how that in turn affects long run growth our main conclusion is that inequality is conducive to the adoption of growth retarding policies we derive this result from a simple political economy model of growth and present cross country evidence consistent with it the key feature of our model is that individuals differ in their relative factor endowments we distinguish between two types of factors an accumulated factor called capital and a nonaccumulated factor called labor growth is driven by the expansion of the capital stock which is in turn determined by individual saving decisions long run growth is endogenous as the aggregate production function is taken to be linearly homogeneous in capital and productive government services taken together the provision of government services is financed by a tax on capital because government services are productive a small tax on

tax rates government expenditures and labor supply clarifying the record a central claim of supply side economics is that in general equilibrium the income effect of a change in the income tax rate washes out and only the substitution effect remains in the words of ehrenberg and smith 1985 there would be a substitution effect with no overall income effect and labor supply would increase the aggregate supply of labor curve then must be upward sloping p 160 emphasis in the original although there has been a substantial literature on this subject the literature is sometimes confused in this paper a simple model is used to sort through the literature correct mistaken assertions derive a new result and collect earlier results in a compact way

disaggregate stochastic trends in industrial production abstract several industries appear cointegrated at a highly disaggregated level but the cointegration is not sufficient to reduce the system to a single common trend instead the results indicate that ten common trends are present in the industrial production aggregate

gender differences in accepting and receiving requests for tasks with low promotability abstract gender differences in task allocations may sustain vertical gender segregation in labor markets we examine the allocation of a task that everyone prefers be completed by someone else writing a report serving on a committee etc and find evidence that women more than men volunteer are asked to volunteer and accept requests to volunteer for such tasks beliefs that women more than men say yes to tasks with low promotability appear as an important driver of these differences if women hold tasks that are less promotable than those held by men then women will progress more slowly in organizations jel i23 j16 j44 j71 m12 m51

real business cycles in this paper we demonstrate how certain very ordinary economic principles lead maximizing individuals to choose consumption production plans that display many of the characteristics commonly associated with business cycles our explanation is entirely consistent with i rational expectations ii complete current information iii stable preferences iv no technological change v no long lived commodities vi no frictions or adjustment costs vii no government viii no money and ix no serial dependence in the stochastic elements of the environment we also provide a completely worked out example of the type of artificial economy we have in mind the time series properties of the example exhibit some major features of observed business cycles although this type of model may not be capable of explaining all of the regularities in actual business cycles we believe that it provides a useful well defined benchmark for assessing the relative importance of factors e g monetary disturbances