the federal funds rate and the channels of monetary transmission the authors show that the interest rate on federal funds is extremely informative about future movements of real macroeconomic variables then they argue that the reason for this forecasting success is that the funds rate sensitively records shocks to the supply of bank reserves that is the funds rate is a good indicator of monetary policy actions finally using innovations to the funds rate as a measure of changes in policy the authors present evidence consistent with the view that monetary policy works at least in part through credit i e bank loans as well as through money i e bank deposits copyright 1992 by american economic association

do individual investors treat trading as a fun and exciting gambling activity evidence from repeated natural experiments we hypothesize that individual investors treat trading as a fun and exciting gambling activity implying substitution between this activity and alternative gambling opportunities to examine this hypothesis we study the lottery jackpots and the trading of individual investors in taiwan when the jackpots exceed 500 million taiwan dollars the trading volume decreases between 5 2 and 9 1 among stocks preferred by individual investors and between 6 8 and 8 6 among lottery like stocks the decline in individual buy volume is statistically indistinct from the decline in sell volume large jackpots are associated with less trading in options with high sensitivity to volatility

interfirm rivalry in a repeated game an empirical test of tacit collusion rivalry in the vancouver retail gasoline market is modeled as a repeated game service station demand cost and intertemporal reaction functions are estimated from daily data on individual station prices costs and sales these functions are then used to calculate noncooperative and cooperative solutions to the constitutent game and the actual outcome of the repeated game the actual outcome is found to be substantially less lucrative than the monopoly solution nevertheless all stations are better off than if they played their noncooperative strategies in every period copyright 1987 by blackwell publishing ltd

trading as gambling this paper offers evidence from three different samples consistent with investors substituting between playing the lottery and gambling in financial markets in the united states increases in the jackpots of the multistate lotteries powerball and mega millions are associated with significant reductions in small trade participation in the stock market california based discount brokerage clients and german discount brokerage clients are significantly less likely to trade during weeks with larger lottery prizes in the california and german lotteries respectively variation in lottery prizes affects speculative trading in more lottery like securities such as individual stocks and options but not trading in bonds and mutual funds trading that is likely associated with long term savings motives such as trading in retirement accounts does not respond to lottery jackpots either the negative relation between trading activity and jackpots is stronger for individuals who are more likely to play the lottery this paper was accepted by brad barber finance

product market competition and the industry price cost markup fluctuations abstract we examine the role played by imperfect competition in the response of markups to energy price and monetary changes we find i for concentrated industries markups increase with monetary expansion and decrease when energy prices increase the elasticity with respect to energy prices is greater than monetary changes ii for low concentration industries markups are virtually unaffected by monetary changes and the energy price elasticities are statistically insignificant iii markups are procyclical over the industry specific cycle and iv increased import competition lowers markups only in the concentrated industries the energy price increases decreases during the 1970s 1980s may have been a key factor contributing to the narrowing widening of the markup gap between high and low concentration industries we provide evidence that procyclical markups in concentrated industries are not being driven by differences in the degree of labor hoarding between low and high concentration industries

the identification of monetary policy disturbances explaining the liquidity puzzle abstract this paper examines recent work on the identification of monetary policy disturbances its main finding is that the empirical anomalies found in the literature reflect a failure to properly address the federal reserve s policy of accommodating reserve demand shocks a new method of identifying monetary policy using nonborrowed reserves is proposed using this specification policy has a strong persistent liquidity effect regardless of subsample policy granger causes output even in the presence of interest rates explaining approximately 49 of the variance in output at a two year horizon and the residual explanatory power of interest rates for output is negligible

behavioral biases of mutual fund investors we examine the effect of behavioral biases on the mutual fund choices of a large sample of us discount brokerage investors using new measures of attention to news tax awareness and fund level familiarity bias in addition to behavioral and demographic characteristics of earlier studies behaviorally biased investors typically make poor decisions about fund style and expenses trading frequency and timing resulting in poor performance furthermore trend chasing appears related to behavioral biases rather than to rationally inferring managerial skill from past performance factor analysis suggests that biased investors often conform to stereotypes that can be characterized as gambler smart overconfident narrow framer and mature

strategic pricing models and interpretation of price war data abstract price wars cartel breakdowns and other seemingly disequilibrium pricing phenomena are examined questions of interest include when do breakdowns occur how long do they last what determines their severity and are they characterized by increased cross sectional price dispersion and or temporal price volatility the first half of the paper explains how the choice of punishment strategy the specification of the stochastic shocks to the system and the assumptions regarding observability determine the pricing dynamics implicit in several theoretical price war models theories are classified into imperfect monitoring models in which players actions cannot be observed learning models in which structural parameters are unknown to the players and cyclical models in which observability is perfect but business cycles affect the difficulty of colluding the second half in contrast examines data on prices actually set by firms in industries which are subject to periodic wars when the models are confronted with the data we can see how well oligopoly theory explains the behavior of the firms in these industries the object of the exercise is not to pick a winner instead the role of industry characteristics in determining pricing dynamics is assessed and the reasons why simple models may fail to explain complex pricing patterns are examined finally directions for future research are suggested by the empirical regularities which are uncovered

migrant information job search and the remigration decision labor force migration poses two important questions for the economist the first concerns the nature magnitude and direction of labor force response to perceived earnings differentials over space the latter and more complex question concerns the effectiveness or efficiency of this response namely migration and other market mechanisms in reducing these earnings differentials over time both questions are addressed in this paper by examining relationships among 1 quality of information obtained prior to a move 2 search duration at the migration destination and 3 the likelihood of subsequent perhaps corrective remigration these relationships are analyzed using the human capital model of migration remigration and data from the 1970 u s census excerpt

symposium on mergers and antitrust m x ergers and acquisitions spark ongoing controversy in the economics profession and in society at large this is not surprising billion dollar deals not only involve a great deal of money but they often raise economic issues implicating capital and labor markets as well as the markets for the products sold by the merger partners because of this merger enforcement is probably the most widely known area of antitrust however economists who do not specialize in industrial organization generally have little understanding of the type of competitive analysis that forms the basis for merger enforcement by the antitrust authorities and the courts this is unfortunate not only does this analysis have important social implications but when formulated rigorously the analytic model used in antitrust represents a simple yet quite sophisticated microeconomic model of competition in the past ten years economics and economists have become far more important in antitrust the so called chicago school of antitrust has provided the intellectual rationale for a considerable loosening of antitrust law its intellectual leaders for example robert bork richard posner and frank easterbrook have become judges and soon may ascend to or already have joined the supreme court economists like james miller and george douglas have become federal trade commissioners and the staff economists at the commission and the department of justice have gained considerable influence

aggregate impact of different brand development strategies current branding literature investigates the spillover effects and extension effects due to the introduction of product extensions however no study so far has evaluated the aggregate market impact of these effects across different brand development strategies or accounted for the strategic decision to introduce the extension it is important to examine the above given the significant investments and the high failure rates associated with the introduction of new product extensions in this study we develop an analytical framework that derives revenue outcome due to an extension introduction as a function of spillover and extension effects we empirically estimate the above effects through a bayesian endogenous switching model that jointly models market shares of the extension and its parent brand along with the strategic decision to introduce the extension and the endogeneity in prices by using a data set that covers 155 extensions introduced across 20 u s geographic markets we obtain several new gen

lottery players stock traders the behavior of stock traders and lottery buyers can teach us about our common aspirations thoughts and emotions and help answer many questions of finance

oligopoly supergames some empirical evidence on prices and margins this paper is a panel data study on the behavior of prices and margins of oligopolies involved in repeated games the authors examine two supergame models which generate very different predictions about the cyclical behavior of prices and margins evidence on the levels of price cost margins indicates that oligopolies achieve equilibria that more closely resemble a one shot cournot nash outcome than monopoly the authors find however that industries with high price cost margins exhibit cyclical price behavior which is quite different from that of unconcentrated industries little evidence of price wars during either recessions or booms is found copyright 1987 by blackwell publishing ltd

profit margins and the business cycle evidence from uk manufacturing firms this paper presents some empirical models of profitability using panel data covering 709 large u k companies ove r the 1970s and 1980s focusing specifically on the role of aggregate demand shocks in shaping firm level profitability in basic regressi ons and in quite complex econometric models the results suggest that firm level profit margins fell heavily during the deep manufacturing recession of the early 1980s and as such are consistent with model s predicting the procyclical nature of profit margins this result hol ds across different product groups producer goods consumer durables a nd nondurables though the timing of the impact of aggregate shocks appears to differ copyright 1993 by blackwell publishing ltd

real wages employment and the phillips curve a recent study by bils found real wages to be procyclical contradicting previous findings by geary and kennan who found no consistent relationship and neftci who found countercyclical movements in real wages these studies differed in both methodology and sample period in this study we found that real wages were either procyclical or countercyclical depending on the sample period chosen employment changes generated by aggregate supply shocks were associated with procyclical real wage movements while during years dominated by shifts in aggregate demand real wages were highly countercyclical

price and investment dynamics theory and plant level data we construct a model of a firm competing for market share in a customer market and making investments in physical capital the firm is financially constrained and there are implementation lags in investment our model predicts that product prices should depend on costs and competitors prices but respond weakly to demand shocks also prices should be strongly related to investment we estimate price and investment equations on panel data for swedish manufacturing plants and find results that are qualitatively in line with these predictions though the relation between investment and prices is stronger than predicted by our model

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

antitrust and merger policy a review and critique a ny antitrust policy that tries to put some restrictions on mergers must have a conceptual basis one such framework might be a populist approach in which only absolute or relative size of the merger partners and or the resulting entity would be the criterion political rhetoric often embodies this approach an alternative approach the one that underlies the 1982 department of justice merger guidelines concerns itself with the possible exercise of market power 1 i believe this second approach is more consistent with the language of section 7 of the clayton act itself which instructs the department of justice and the federal trade commission to prevent those mergers the effects of which may be substantially to lessen competition or to tend to create a monopoly this market power approach also places merger policy in a realm that is susceptible to economic analysis for this reason as well this approach appeals to me the merger guidelines are firmly rooted in the standard oligopoly theory developed by chamberlin 1933 fellner 1949 and stigler 1964 and strengthened

the dynamic effects of aggregate demand and supply disturbances we interpret fluctuations in gnp and unemployment as due to two types of disturbances disturbances that have a permanent effect on output and disturbances that do not we interpret the first as supply disturbances the second as demand disturbances demand disturbances have a hump shaped mirror image effect on output and unemployment the effect of supply disturbances on output increases steadily over time peaking after two years and reaching a plateau after five years

imperfect competition and the effects of energy price increases on economic activity the authors show that modifying the standard neoclassical growth model by assuming that competition is imperfect makes it easier to explain the size of the declines in output and real wages that follow increases in the price of oil plausibly parameterized models of this type are able to mimic the response of output and real wages in the united states the responses are particularly consistent with a model of implicit collusion where markups depend positively on the ratio of the expected present value of future profits to the current level of output copyright 1996 by ohio state university press

why are prices sticky preliminary results from an interview study this paper reports preliminary results from a large research project on business pricing which is currently underway the idea is to use interviews with actual price setters to assess the validity of a dozen theories of price stickiness the rather unorthodox for economists methodology is defended the research design is described briefly and a few results based on the first 72 interviews out of a projected 200 are presented this sample suggests that the median firm changes its price annually and that price adjustments typically lag 3 4 months behind shocks to demand or cost this abstract was borrowed from another version of this item

do supply curves slope up this paper examines the short run responses of price and quantity to exogenous demand shocks for disaggregated u s manufacturing industries using prior information on input output linkages to identify industries whose fluctuations are likely to function as approximately exogenous demand shocks for other industries i find that demand shocks induce positive covariation between price and quantity for 16 out of 26 sample industries controlling for observable cost shift variables when sample industries are pooled i estimate that a demand shock which initially raises industry output by 1 percent generates a price increase of 0 182 percent within one year i find that input output instruments detect upward sloping supply curves more readily than least squares or other commonly used demand shift instruments

the differential impact of uncertainty on investment in small and large businesses we study the impact of profit uncertainty on investment and whether or not this response is different in industries that are dominated by small firms versus those that are dominated by relatively larger firms our key findings are that the sign of the investment uncertainty relationship is negative and that the quantitative negative impact is substantially greater in industries dominated by small firms these results are robust to accounting for potential endogeneity of the uncertainty measure alternate procedures for measuring uncertainty and alternate ways of segmenting industries into small and large firm groups

business cycles and the relationship between concentration and price cost margins using a newly constructed panel data base we examine changes in price cost margins in 284 manufacturing industries between 1958 and 1981 a key finding is a dramatic narrowing of the spread between the margins of concentrated and unconcentrated industries over this period we provide evidence that this narrowing is a result of the greater sensitivity of price cost margins in more concentrated industries to demand fluctuations this finding is robust to the inclusion of other industry variables and to measures of import competition the results indicate that cross sectional estimates of the concentration margins relationship are likely to be both biased and misleading

product diversity economies of scale and international trade the paper develops new testable implications for monopolistic competition in the open economy within a two sector model we explore how international trade affects plant size the degree of product diversity and excess capacity the analysis then focuses on how trade affects the degree of domestic and international concentration intersectoral capital mobility and output in the competitive sector finally we compare the model to the traditional hecksher ohlin model and find that many of the central propositions still hold

the long and short of it why are stocks with shorter runs preferred this article examines how consumers process graphical financial information to estimate risk we propose that consumers sample the local maxima and minima of a graph to infer the variation around a trend line which is used to estimate risk the local maxima and minima are more extreme the higher the run length of the stocks the consecutive number of upward or downward movements of a price series with identical mean variance skewness and kurtosis three experiments show that this leads to stocks with higher run lengths being perceived as riskier the run length effect importantly the run length effect is greater for investors who are more educated are employed full time trade more frequently have had longer experience trading and trade a wider range of financial instruments implications for the communication of financial products public policy and consumer welfare are discussed as are theoretical implications for the processing of visual and financial information and behavioral finance

in search of the liquidity effect abstract a short run negative relationship between monetary aggregates and interest rates the liquidity effect is central to discussions of monetary policy this paper searches for this empirical relationship we investigate whether the characterization of the liquidity effect is sensitive to i changes in sample period ii conditioning the correlations on past information iii assuming money growth is exogenous and iv treating monetary changes as anticipated or unanticipated the correlations change substantially in each case we conclude that the traditional analysis and modern models which rely completely on demand side behavior cannot explain the observed correlations a successful characterization of the liquidity effect requires identification of both private and policy behavior

international trade and industrial organization this survey reviews recent contributions to the interface between international trade and industrial organization import competition places a substantial limit on domestic market power in the short run competitive conditions can influence the speed and efficiency of a domestic market s adjustment to international disturbances exports effects on competition among national sellers are unclear and depend on the scope for price discrimination models of trade with monopolistic competition explain intra industry trade and also the widely observed sensitivity of firm size to market size exposure to trade also increases the technical efficiency of production diverse policy issues turn on the distinction between national and global welfare and the scope for commitment

behavioral portfolio theory we develop a positive behavioral portfolio theory bpt and explore its implications for portfolio construction and security design the optimal portfolios of bpt investors resemble combinations of bonds and lottery tickets consistent with friedman and savage s 1948 observation we compare the bpt efficient frontier with the mean variance efficient frontier and show that in general the two frontiers do not coincide optimal bpt portfolios are also different from optimal capm portfolios in particular the capm twofund separation does not hold in bpt we present bpt in a single mental account version bpt sa and a multiple mental account version bpt ma bpt sa investors integrate their portfolios into a single mental account while bpt ma investors segregate their port folios into several mental accounts bpt ma portfolios resemble layered pyramids where layers are associated with aspirations we explore a two layer portfolio where the low aspiration layer is designed to avoid poverty while the high aspiration layer is designed for a shot at riches

sticky prices new evidence from retail catalogs this paper presents new results on the size frequency and synchronization of price changes for twelve selected retail goods over the past 35 years three basic facts about the data are uncovered first nominal prices are typically fixed for more than one year although the time between changes is very irregular second prices change more often during periods of high overall inflation third when prices do change the sizes of the changes are widely dispersed both large and small changes occur for the same item and the sizes of these changes do not closely depend on overall inflation

market structure capacity expansion and pricing a model applied to the japanese iron and steel industry abstract the main objective of this paper is to study empirically the simultaneous and recursive relations between short run pricing capacity decision and fluctuations in the elements of market structure for this purpose a time series industry model was constructed and applied to the japanese iron and steel industry for 1957 1975 the statistical results imply that over time industry market structure especially seller concentration might change endogenously in the system the model also indicated that seller concentration as an element of market structure was a significant determinant of short run domestic and export prices and also had a significant effect on the capacity decisions these findings support the proposition that market structure affects market conduct at any moment in time while it is some degree shaped by past market conduct or behavior and structure

trade policy to promote entry with scale economies product variety and export potential with scale economies product variety and export potential production of socially desirable varieties of a product may be privately unprofitable if competition from imported varieties of the same general product is in part responsible for this market failure either tariffs or subsidies may be used to promote domestic entry this paper demonstrates that in domestic welfare terms tariffs may be superior to subsidies for this purpose furthermore because domestic firns will export as well as produce for the domestic market tariff protection which induces entry may give rise to intra industry trade that benefits foreigners and domestic residents la politique commerciale pour promouvoir 1 entree de producteurs domestiques dans les cas ou coexistent des e conomies d e chelle une varie te de produits et des possibilites d exporta tion quand coexistent les economies d echelle la variet6 de produits et les possibilit6s d exportation l auteur montre qu il peut etre non profitable au niveau prive de produire une variett de produits socialement d6sirables si c est la concurrence de vari6t6s import6es d un produit gdneral qui est responsable de cette defaillance du march6 on peut utiliser soit les droits de douane soit les subsides pour promouvoir l entr6e de producteurs domestiques ce memoire demontre que l utilisation des droits de douane est une solution pref6rable en termes de bien etre domestique de plus comme les entreprises domestiques vont exporter en plus de produire pour le march6 domestique la protection douaniere qui suscite l entr6e peut aussi donner lieu a du commerce intra industrie qui a des retombees ben6fiques pour les etrangers et pour les residents de l economie domestique

what happened to the oil price macroeconomy relationship abstract strong evidence is found that oil prices no longer granger cause many u s macroeconomic indicator variables in data after 1973 a number of potential explanations are explored that sample stability issues are responsible that oil prices are now endogenous and that linear and symmetric specifications misrepresent the form of the oil price interaction none of these hypotheses are supported by the data the opec price increases do appear to have had significant impacts while the effects of the price declines of the 1980s are smaller and harder to characterize these results have potentially important implications for the large body of research which utilizes oil prices as an instrumental or explanatory variable

potential foreign competition in us manufacturing abstract trade barriers are falling and firms are competing in increasingly open international markets the data reveal considerable heterogeneity across industries in the intertemporal path of import shares against this backdrop we focus on an issue that is increasingly important for competition policy analysis potential foreign competition inadequate attention to this aspect could result in a biased picture of total competition leading to misguided antitrust decisions drawing on the conceptual framework outlined by landes and posner harvard law review 94 1981 937 we measure potential foreign competition by the intertemporal response of industry import share to industry specific and aggregate economic factors and our estimates indicate wide variation across industries in this dimension a particularly striking finding is that highly concentrated industries which are more likely to be subject to antitrust scrutiny have a greater degree of potential foreign competition than industries with low concentration even though the extent of actual foreign competition is similar across these groups of industries

the relation between price and marginal cost in u s industry an examination of data on output and labor input reveals that some u s industries have marginal cost well below price the conclusion rests on the finding that cyclical variations in labor input are small compared with variations in output in booms firms produce substantially more output and sell it for a price that exceeds the costs of the added inputs the paper documents the disparity between price and marginal cost where marginal cost is estimated from annual variations in cost it considers a variety of explanations of the findings that are consistent with competition but none is found to be completely plausible

the relation between narrative and money market indicators of monetary policy this paper studies the relation between narrative based indicators of monetary policy and widely used money market indicators of monetary policy three principal findings emerge first changes in monetary policy as measured by the narrative based policy indices are associated with persistent changes in the levels of m2 and the monetary base in contrast changes in the narrative policy indicators lead to transitory changes in short term interest rates nonborrowed reserves and the spread between the six month commercial paper rate and the three month treasury bill rate third these findings are generally robust across different narrative based policy indices

this is what happened to the oil price macroeconomy relationship abstract many of the quarterly oil price increases observed since 1985 are corrections to even bigger oil price decreases the previous quarter when one looks at the net increase in oil prices over the year recent data are consistent with the historical correlation between oil shocks and recessions

economic fluctuations market power and returns to scale evidence from firm level data recent research on aggregate fluctuations coupled with ongoing work in industrial organization has renewed interest in the existence magnitude and cyclical pattern of market power and the extent of increasing returns to scale by exploiting restrictions from dynamic theory and information from financial markets we present a framework for generating quantitative evidence on market power and returns to scale tailoring the econometric model to firm level panel data we calculate the percentage differential between price and marginal cost the lerner index in terms of the parameters from the econometric system results for firms in eleven industries indicate that there is a great deal of heterogeneity in the extent of market power industries with significantly positive lerner indices tend to have substantial increasing returns in the production technology we find that there is only a modest relation between our estimated lerner indices and traditional measures of market power and that when market power varies temporally it is usually procyclical thus variations in the markup of price over marginal cost may help dampen aggregate economic fluctuations

imperfect information specificity of schooling and rate of return migration abstract international migration is a dynamic process having moved into a country of destination a migrant may after a while decide to return to his country of origin the aggregate rate of return migration among a group of migrants is studied imperfect imformation leading to unrealized expectation of the migrants and changes in rates of return to schooling across countries over time are modelled as factors contributing towards return migration schooling is decomposed into schooling acquired before migration and after migration to take account of its specificity to the country in which it is acquired

the cyclical behavior of marginal cost and price the author examines the cyclical behavior of price marginal cost margins for u s manufac turing after 1956 short run marginal cost is markedly procyclical this is primarily due to procyclical overtime payments incurred beca use employment is not perfectly flexible in most industries output price fails to respond to the cyclical movement in marginal cost so price marginal cost margins are markedly countercyclical the res ults contradict business cycle theories that explain low production i n a recession by a high real cost of producing they support theories that explain low production in a recession by the inability of firms to sell their output copyright 1987 by american economic association

the only game in town investors confusion between market gains and trading gains helps explain why they continue trading even though it rarely improves their performance then too some investors reason that if trading based on random selection is as likely to prove profitable as not trading based on any information whatever will result in performance better than neutral the key to the fallacy in their reasoning is the market maker who must impose a spread in order to survive

the rigidity of prices this paper uses evidence on individual transaction prices to analyze price behavior the evidence shows that for many transactions pricesremain rigid for periods exceeding one year the rigidity of price ispositively correlated with industry concentration for several productsthe correlation of price changes across buyers is low the paper alsoinvestigates the relationship between price rigidity price change andthe length of time a buyer and seller have been doing business together the author interprets the evidence as emphasizing the importance of nonprice rationing and the inadequacy of models in whichprice movements alone clear markets copyright 1986 by american economic association

gambling preferences options markets and volatility this study examines whether the gambling behavior of investors affects volume and volatility in financial markets focusing on the options market we find that the ratio of call option volume relative to total option volume is greatest for stocks with return distributions that resemble lotteries consistent with the theoretical predictions of stein 1987 we demonstrate that gambling motivated trading in the options market influences future spot price volatility these results not only identify a link between lottery preferences in the stock market and the options market but they also suggest that lottery preferences can lead to destabilized stock prices

microfoundations of macroeconomic price adjustment survey evidence from swedish firms this paper presents the results of a survey on price setting behavior conducted on a large random sample of swedish firms the median firm adjusts the price once a year state and time dependent price setting are about equally important the four highest ranked explanations for price rigidity in this study implicit contracts sluggish costs explicit contracts and the kinked demand curve have close correspondents among the top five places in two similar large scale surveys carried out in the uk and the u s the results point to the importance of the long term relations with customers for the rigidity of prices the estimated share of sales that go to regular customers is more than 80

rubble logic what did we learn from the great stock market bubble the financial analysts journal s 60th anniversary happens to coincide with the five year anniversary of the peak of the great stock market bubble of 1999 2000 the combination of proximity in time with just a bit of distance makes this year an appropriate time to consider what we may have learned from this momentous event this article suggests lessons that if we haven t learned them we should have

estimating the impact of immigrants on the host country social security system when return migration is an endogenous choice in this paper i examine the impact of immigrants on the social security system in germany when return migration is an endogenous choice for this purpose i develop a dynamic stochastic model of joint return migration and saving decisions that accounts for uncertainty in future employment and income and estimate this model using a longitudinal dataset on immigrants from five different source countries i find that immigrants make positive net contributions to both the pension and unemployment insurance systems in germany regardless of their country of origin and age at entry moreover the magnitudes of the net contributions are remarkable for certain groups return migration plays a critical role in generating these positive net contributions in a counterfactual i examine how much exogenous modeling of the return decision which has been the practice of the literature so far changes immigrants net contributions such a restriction causes a serious misestimation of net contributions i also examine the impact of a counterfactual policy experiment in which financial bonuses are provided conditional on return to certain unemployed immigrants such a policy turns out to be ineffective in a number of dimensions

global labour markets return and onward migration there is increasing evidence that international migration is characterized by frequent return and onward migration this has important consequences for the contribution of immigrants to the economy of the host country lack of longitudinal data has prevented much analysis of how frequently international migration involves a sequence of location decisions or how long the typical migrant stays in a host country a newly available longitudinal data set covering all immigrants to canada since 1980 provides the opportunity to address these issues the results show that a large fraction of male immigrants who are of working age especially among skilled workers and entrepreneurs are highly internationally mobile les flux migratoires internationaux sont caracterises par des retours frequents au pays d origine mais aussi par des departs vers une nouvelle destination voila qui a des consequences importantes pour la contribution des immigrants a l economie du pays d accueil le manque de donnees longitudinales a empeche jusqu ici le developpement d analyses de la frequence de ces migrations internationales qui impliquent une sequence de decisions de relocalisation et de la longueur du sejour de l immigrant typique dans un pays d accueil une nouvelle source de donnees longitudinales couvrant tous les immigrants vers le canada depuis 1980 permet d analyser ces questions les resultats montrent qu une forte fraction des hommes immigrants en ge de travailler et particulierement s il s agit de travailleurs specialises et d entrepreneurs sont tres mobiles internationalement

outmigration of foreign born members in canada this paper studies the partial effect of various socio economic characteristics on the rate of outmigration of the foreign born from the canadian population the data sets used are based on the microdata of the 1971 and 1981 censuses of population it is found that migrants with high school education have the highest propensity to outmigrate while those with less than high school education have the lowest the propensity to outmigrate is positively related to the age of the migrant males tend to have a higher propensity to outmigrate while having a command of official languages reduces the propensity to outmigrate summary in fre excerpt

the impact of cyclical demand movements on collusive behavior recent work by rotemberg and saloner 1986 investigates the effect of the business cycle on optimal collusive pricing by specifying that demand is subject to i i d shocks an implication of the i i d assumption is that firms expectations on future demand are unrelated to the current level of demand we put forth a model that allows for both the level of current demand and firms expectations on future demand to change over time thus it captures two important properties of the business cycle our analysis reveals that while the gain to deviating from a collusive agreement is greatest during booms firms find it most difficult to collude during recessions as the forgone profits from inducing a price war are relatively low an implication of this effect for pricing behavior is that at the same level of demand price is lower when demand is declining than when demand is rising consistent with previous theoretical work we find that firms price countercyclically for a range of values for the discount factor however numerical simulations reveal a greater tendency for firms to price countercyclically during recessions than during booms

trading as entertainment among 1 000 german brokerage clients for whom both survey responses and actual trading records are available investors who report enjoying investing or gambling turn over their portfolio at twice the rate of their peers including entertainment attributes as additional explanatory variables in cross sectional regressions of portfolio turnover on objective investor attributes more than doubles the fraction of the total variation of portfolio turnover that can be explained the results are robust to controlling for gender and proxies for overconfidence constructed from survey responses nonpecuniary benefits of trading thus appear to offer a straightforward explanation of the excessive trading puzzle

lottery markets design micro structure and macro behavior an ace approach abstract an agent based computational modeling of the lottery market is established in this paper to study the design issue in terms of the lottery tax rate as well as the emerging market behavior by using genetic algorithms and fuzzy logic lottery participants are modeled as autonomous agents who may endogenously adapt to exhibit behavioral properties consistent with well noticed behavior of lottery markets three major findings are presented first as anticipated a laffer curve is found in this model nonetheless the laffer curve has a flat top which indicates the non uniqueness of the optimal lottery tax rate second conscious selection behavior is also observed but it becomes weaker as time goes on third for the halo effect we observe exactly the opposite each of these three findings are then compared with available empirical results and the mechanism of genetic algorithms is further examined in light of the anti halo effect

economies of scale imperfect competition and the pattern of trade it has been long recognised that economies of scale and market structures have significant impacts on a country s comparative advantage and pattern of trade but the assumption of perfect competition used since the classicists has deterred the analysis of these elements in international trade theory this is evidenced by most of the current textbooks on international trade which usually offer a small section or at best a small chapter on imperfect competition and economies of scale in relation to international trade very recently however a handful of works have appeared that have dealt with economies of scale and imperfect competition in a general equilibrium framework in keeping with the modern theory of international trade negishi i972 krugman i979 i980 dixit and norman i980 helpman i981 and ethier forthcoming a brief summary of these contributions can be given as follows negishi is mainly concerned with proving the existence of equilibrium and gains from trade in a world of imperfect competion krugman i979 using the negishian model basically allows for product differentiation a la dixit and stiglitz i977 the very existence of product differentiation in turn allows for intra industry trade and it also implies that there are gains from trade from consuming more varieties of products even between economies which are identical in factor endowments technology and tastes using this model krugman i980 shows a larger domestic market hypothesis of pattern of trade which says that a country tends to be a net exporter of the products which have relatively larger domestic markets the existence of economies of scale is what explains this dixit and norman present three models of imperfect competition in the first one they consider a cournot model with entry in which it is shown that trade leads to a greater equilibrium number of firms and hence more competition and to an increase in welfare in the second model they examine the effect of trade on product selection in a monopoly model their third model appears to be richest among the three it incorporates product differentiation and intra industry trade as in krugman s papers an economy is divided into two sectors a competitive sector and a monopolistically competitive sector and then equilibrium in a trading world economy is characterised two conclusions stand out first as for the inter industry trade the factor abundance hypothesis the heckscher ohlin theorem explains the pattern of trade second as for the intra industry trade a smaller country has comparative advantage in the production of differentiated goods which are produced in the monopolistically

on the best use of trade controls in the presence of foreign market power this paper derives optimum tariffs for a country whose trading partner always exploits its own market power but assumes naively that the home country will leave its restriction unchanged it then shows that a country which is a monopolist or monopsonist will always prefer its best price limit price floor or ceiling to its best tariff and prefer free trade to any quota however a duopsonist or duopolist will prefer its best quota to its best tariff and free trade to any price limit finally the best import or export tariff of a country which fears retaliation may be negative