efficient mechanisms for bilateral trading we consider bargaining problems between one buyer and one seller for a single object the seller s valuation and the buyer s valuation for the object are assumed to be independent random variables and each individual s valuation is unknown to the other we characterize the set of allocation mechanisms that are bayesian incentive compatible and individually rational and show the general impossibility of ex post efficient mechanisms without outside subsidies for a wide class of problems we show how to compute mechanisms that maximize expected total gains from trade and mechanisms that can maximize a broker s expected profit journal of economic literature classification number 026

the out of sample success of term structure models as exchange rate predictors a step beyond abstract a large literature suggests that standard exchange rate models cannot outperform a random walk forecast and that the forward rate is not an optimal predictor of the spot rate however there is evidence that the term structure of forward premia contains valuable information for forecasting future spot exchange rates and that exchange rate dynamics display nonlinearities this paper proposes a term structure forecasting model of exchange rates based on a regime switching vector equilibrium correction model which is novel in this context our model significantly outperforms both a random walk and to a lesser extent a linear term structure vector equilibrium correction model for four major dollar rates across a range of horizons

testing for nonlinear dependence in daily foreign exchange rates the purpose of this article is to investigate whether daily changes in five major foreign exchange rates contain any nonlinearities although the data contain no linear correlation evidence indicates the presence of substantial nonlinearity in a multiplicative rather than additive form further examination reveals that a generalized autoregressive conditional heteroskedasticity model can explain a large part of the nonlinearities for all five exchange rates copyright 1989 by the university of chicago

forecasting real exchange rates abstract considerable evidence supports the view that real exchange rates do not have unit roots but rather show mean reversion this is the first paper to present systematic results on if and how this mean reversion is useful for forecasting real rates longer time horizons improve the performance of the estimated forecast models relative to the benchmark driftless random walks longer estimation periods particularly improve performance relative to the benchmark the forecasting ability in simple statistical models seems genuine but the models resolve only a small part of the uncertainty regarding the revolution of real exchange rates

interest rates and currency prices in a two country world abstract this paper is a theoretical study of the determination of prices interest rates and currency exchange rates set in an infinitely lived two country world which is subject both to stochastic endowment shocks and to monetary instability formulas are obtained for pricing all equity claims nominally denominated bonds and currencies and these formulas are related to earlier closely related results in the theories of money finance international trade

recycling in multifamily dwellings does convenience matter factors that decrease the the cost of recycling have significant positive correlations with recycling rates in multifamily dwellings mfds waste management experts have previously used anecdotes to infer a link between convenience and waste diversion rates in mfd recycling programs this article confirms and quantifies that link by applying probit and double censored to bit analysis to survey data from 214 households in urbana illinois we find a strong connection between recycling rates and the perceived presence of adequate interior space for processing recyclables and distance to recycling bins affects container recycling intensity the results have implications for cost effective design of mfd recycling programs jel di q2 i introduction statistics from the u s environmental protection agency epa show that from 1960 to 1997 u s recycling rates rose from 6 4 to 28 and 9 000 curbside recycling programs were established epa 1998 such programs have traditionally been geared toward single family dwellings sfds conventional doctrine has been that recycling activity is likely to be limited in multifamily dwellings mfds however as residential recycling rates for sfds plateau in the united states solid waste managers and policy makers are becoming increasingly interested in mfd recycling programs by now at least half of all mfds may have access to a curbside recycling program epa 2001 stevens 1999 and the epa 1999 2001 show that waste diversion rates the fraction of a household s waste that is recycled instead of discarded as refuse tend to be slightly lower in mfds than in sfds but some mfd recycling programs have yielded diversion rates as high as 60 what factors influence the recycling rates chosen by residents of mfds in a detailed nationwide study the epa 2001 found that successful 20 or higher diversion rate mfd recycling programs tended to have large and numerous containers provided by the recycling service waste management experts emphasize the importance of convenience in yielding high waste diversion rates in mfd recycling programs with some record setting programs using strategies like doorstep pickup of recyclables in high rise apartment buildings epa 1999 such anecdotes are intriguing however although much work has studied sfd recycling behavior little has been done to explore mfd recycling in a rigorous statistical fashion a number of economists have studied the sensitivity of recycling behavior to pricing policies that alter the costs and benefits of recycling relative to disposal 1 another body of work has investigated the influence of nonpecuniary policies and variables on recycling in sfds work by vining and ebreo 1990 and ebreo and vining 2000 supports the notion that convenience may increase the number of people that identify themselves as recyclers however their data are strictly qualitative the earlier study dates from a time when only community drop off recycling was available and the later study is focused on public attitudes toward and expectations regarding changes in recycling policy jakus et al 1996 1997 use economic models and rigorous empirical analysis to study the influence on actual recycling behavior of recycling promotional campaigns and policies to alter the time cost of recycling they find evidence that recycling participation is not a function of home ownership or renting status per se however these articles do not delve into the details of mfd recycling because the data were collected in the context of rural drop off recycling a few studies have turned their attention to mfd recycling stevens 1999 finds that programs with high aggregate diversion rates are likely to have a relatively large ratio of collection bins to households mcquaid and murdoch 1996 conduct a qualitative analysis of mfd recycling in edinburgh that suggests that housing characteristics such as floor level presence of an elevator and household size may influence recycling rates

implementation of reduced form auctions a geometric approach an auction is a mechanism for allocating a single indivisible object to one of several competing bidders the winner is the bidder who is awarded the object the rules of the auction specify two functions the first is the probability with which a bidder wins as a function of everyone s bids the second is the payment each bidder makes to the seller as a function of all the bids and whether or not he wins for instance a first price auction awards the object to the highest bidder with probability one providing there are no tie bids the winner pays his bid and the losers pay nothing the bidders in an auction differ significantly these differences are captured by the bidder s type a type may be the bidder s personal valuation of the object for sale his degree of risk aversion or perhaps his information about the object maskin and riley 1984 discuss a number of different economically meaningful examples of bidder types from the viewpoint of the seller and the other bidders each bidder s type is a random variable in this analysis we confine attention to auctions in which the types are independently and identically distributed according to a known probability distribution the revelation principle asserts that every auction is strategically equivalent to an auction in which bidders bid by announcing their type and no bidder has any incentive to lie such an auction is called an incentive compatible direct auction we will confine our attention to the probability functions for direct auctions and let the incentive compatibility conditions restrict the payment functions each bidder can compute the probability that he wins conditional on his own type by averaging over the types of the other bidders the function relating a bidder s type to his probability of winning is the reduced form of the auction the literature on optimal auctions usually addresses the problem of maximizing expected revenue for the seller for this purpose all the relevant information about the probability function of an auction is contained in its reduced form it is the reduced form that determines each bidder s behavior and hence the seller s expected revenue in a symmetric auction each bidder s reduced form is identical so that expected revenue is a functional defined on reduced forms which are functions of one variable namely types this makes the seller s problem somewhat tractable to design an auction a seller must be able to recognize a reduced form and recover the underlying auction reduced forms satisfy an intuitive feasibility condition given a set of types the

can the markov switching model forecast exchange rates abstract a markov swirching model is fit for 18 exchange rates at quarterly frequencies the model fits well in sample for many exchange rates by the mean squared error criterion the markov model does not generate superior forecasts to a random walk or the forward rate there appears to ne some evidence that the forecasts of the markov model are superior at predicting the direction of change of the exchange rate

level k mechanism design non equilibrium models of choice e g level k reasoning have significantly different sometimes more accurate predictions in games than does nash equilibrium when it comes to the maximal set of functions that are implementable in mechanism design however they turn out to have similar implications focusing on single valued rules we discuss the role and implications of different behavioural anchors arbitrary level 0 play and prove a level k revelation principle if a function is level k implementable given any level 0 play it must obey a slight weakening of standard strict incentive constraints further the same condition is also sufficient for level k implementability although the role of specific level 0 anchors is more controversial for the sufficiency argument nonetheless our results provide tight characterizations of level k implementable functions under a variety of level 0 play including truthful uniform and atomless anchors

the displacement effect of convenience the case of recycling in light of increasingly ambitious recycling targets it is important to analyse the potential displacement effect of improving access to kerbside provision on other forms of recycling do households view the different modes of recycling as substitutes or complements of each other does this perceived relationship depend on the type of material recycled using data for all of the uk s local governments from 2004q2 to 2013q3 we analyse the nature of the relationship between the two main channels of recycling in the case of dry recycling the empirical findings are ambiguous on the trade off between kerbside and non kerbside recycling on the one hand the findings suggest that there is no trade off when considering the effect of expanding kerbside provision on the other hand the findings also suggest that there is a trade off when we focus on the effect of expanding non kerbside provision however putting together the empirical findings with theory in particular the symmetry property of the hicksian substitution effect suggests that there is a trade off irrespective of whether we consider expansion of kerbside or non kerbside provision in the case of green compost recycling the empirical findings on their own or together with theory unambiguously suggest that there is a trade off

mechanism design by an informed principal private values with transferable utility we provide a solution to the informed principal problem in the independent private values setting with monetary transfers the principal s private information creates signaling considerations that may distort the implemented allocation we show that there is no distortion all principal types implement an allocation that is optimal for the principal ex ante before he she learns his her type as an application we consider settings with linear utility for bilateral exchange in which the principal is one of the traders the solution is a combination of a participation fee a buy out option for the principal and a resale stage with posted prices

purchasing power parity over two centuries trends and nonlinearity in two recent contributions lothian and taylor and cuddington and liang produced empirical evidence that annual data for the dollar sterling real exchange rate spanning two centuries exhibited a non linear deterministic trend this trend could be proxying harrod balassa samuelson effects lothian and taylor showed that a linear stationary autoregressive mode which embodied a cubic trend implied much faster mean reversion of the real exchange rate to shocks than a model that excluded the trend this article shows that both non linearity and a deterministic trend can be allowed for in a theoretically appealing manner and that the fitted models provide a parsimonious explanation of both the dollar sterling and franc sterling real exchange rates over the two centuries of data generalized impulse response function analysis of the models demonstrates that the speed of adjustment to shocks can be even faster when trends are considered

long memory in foreign exchange rates using the geweke porter hudak test we find evidence of long memory in exchange rate data this implies that the empirical evidence of unit roots in exchange rates may not be robust to long memory alternatives fractionally integrated autoregressive moving average arfima models are estimated by both the time domain exact maximum likelihood ml method and the frequency domain approximate ml method impulse response functions and forecasts based on these estimated arfima models are evaluated to gain insight into the long memory characteristics of exchange rates some tentative explanations of the long memory found in the exchange rates are discussed

currency fluctuations in the post bretton woods era the international monetary landscape that has emerged since the felling of bretton woods is characterized by a hybrid exchange rate system that lies somewhere between the textbook polar cases of a gold standard and a pure float this system has relatively flexible exchange rates between major countries active central bank intervention in the market for the major currencies and predominantly fixed exchange rates relative to the dollar or to some basket of currencies for less developed countries and newly industrializing nations the majority of research on currency markets since the early 1970s has focused on the characteristics of flexible exchange rates under this hybrid regime my thesis is that this research has been unsuccessful the proportion of monthly or quarterly exchange rate changes that current models can explain is essentially zero even after the fact forecasts that use actual values instead of forecasted values of the explanatory variables cannot explain major currency movements over the post bretton woods era this result is quite surprising since exchange rate changes would be entirely unpredictable only in very special cases of the theoretical models discussed as the discussion below will argue it is not a general implication of market efficiency that exchange rates follow a random walk process 1

purchasing power parity over two centuries abstract this paper re examines the purchasing power parity hypothesis for the dollar sterling exchange rate using the two centuries of data from lothian and taylor lt 1996 real exchange rate behavior the recent float from the perspective of the past two centuries journal of political economy 104 3 488 509 unlike lt we conclude that the dollar sterling rer is nonstationary implying a rejection of the long run ppp hypothesis the differences in our conclusions are explained by 1 sensitivity of adf unit root tests to the choice of lag length and or 2 the presence of significant time trends in the adf or phillips perron unit root test equations

testing long horizon predictive ability with high persistence and the meese rogoff puzzle a well known puzzle in the international finance literature is that a random walk predicts exchange rates better than economic models meese and rogoff 1983a b and 1988 this paper offers a potential explanation for this finding when exchange rates and fundamentals are highly persistent long horizon forecasts of economic models are asymptotically biased by the estimation error in the parameter that measures the persistence when this bias outweighs the benefits from exploiting economic information the random walk model will forecast better this happens even if the economic model is the true data generating process the reason is that a random walk model imposes a unit root rather than estimates it the paper thus proposes a test for equal predictive ability in the presence of highly persistent variables when applied to the meese rogoff exercise this test shows that the poor forecasting ability of economic models does not imply that the models are not a good description of the data

assessing the causal effect of curbside collection on recycling behavior in a non randomized experiment with self reported outcome this paper aims at identifying the causal effect of reducing behavioral costs of participation in household waste recycling through curbside collection using propensity score matching and differences in differences estimation with individual level panel data we estimate the effect of curbside collection its variation between types of recyclables and sociodemographic background variables and its elasticity with regard to the distance to collection containers in the bring scheme condition we argue that in a quasi experimental setting dd may be systematically upward biased due to the outcome variable being self reported while ddd may be systematically downward biased in the presence of spillover effects accordingly both estimators can be combined to derive upper and lower bounds of the true effect we find that a curbside scheme has no effect on paper recycling but increases recycling participation by between 10 and 25 points for plastic and packaging moreover we find systematic treatment effect heterogeneity with regard to pre treatment distance to collection sites and individual environmental attitudes but not by socio demography the results of our analysis therefore have important implications for effective and cost efficient implementation of environmental protection policies in urban areas

full implementation and belief restrictions we introduce a framework to study the problem of full implementation under general restrictions on agents beliefs which we call implementation first we provide a characterization of the properties of the mechanisms that achieve implementation these conditions relate the possibility of achieving full implementation to the strength of the strategic externalities induced by the mechanism we then study how to achieve full implementation via the design of simple transfer schemes in these context the general conditions for implementation suggest a simple design principle in which belief restrictions are used to weaken the strategic externalities induced by the baseline transfers of the belief free benchmark importantly our results require minimal information on agents beliefs which regard simple moments of the distribution of types these moment conditions arise naturally in applications and in practical problems of mechanism design

on the equivalence of bayesian and dominant strategy implementation we consider a standard social choice environment with linear utilities and independent one dimensional private types we prove that for any bayesian incentive compatible mechanism there exists an equivalent dominant strategy incentive compatible mechanism that delivers the same interim expected utilities for all agents and the same ex ante expected social surplus the short proof is based on an extension of an elegant result due to gutmann kemperman reeds and shepp 1991 we also show that the equivalence between bayesian and dominant strategy implementation generally breaks down when the main assumptions underlying the social choice model are relaxed or when the equivalence concept is strengthened to apply to interim expected allocations

time varying parameters and the out of sample forecasting performance of structural exchange rate models varying parameter estimation techniques based on recursive application of the kalman filter are used to improve the predictive performance of a class of monetary exchange rate models i find that allowing estimated parameters to vary over time enhances the models forecasting performance for the dollar pound dollar mark and dollar yen exchange rates contrary to earlier results in the literature ex post forecasts for the dollar mark rate compare favorably with those obtained from the naive random walk forecasting rule

foreign exchange market interventions and the exchange rate in the long run this article examines whether foreign exchange market interventions conducted by the bank of japan are important for the dollar yen exchange rate in the long run we rely on a re examination of the empirical performance of a monetary exchange rate model this is basically not a new topic however we focus on two new questions first does the consideration of periods of massive interventions in the foreign exchange market uncover a potential long run relationship between the exchange rate and its fundamentals second do forex interventions support the adjustment towards a long run equilibrium value our results suggest that taking periods of interventions into account within a monetary model does improve the goodness of fit of an identified long run relationship to a significant degree furthermore forex interventions increase the speed of adjustment towards long run equilibrium in some periods particularly in periods of coordinated forex interventions our results indicate that only coordinated inter

explaining the variation in household recycling rates across the uk household waste recycling rates vary significantly both across and within regions of the uk this paper attempts to explain the variation by using a new data set of waste recycling rates and policy determinants for all of the uk s 434 local authorities over the period 2006q2 to 2008q4 our results suggest that the method of recycling collection chosen by policy makers is an important factor influencing the recycling rate we also find an inverse relationship between the frequency of the residual waste collection and the recycling rate

the monetary exchange rate model as a long run phenomenon abstract pure time series based tests fail to find empirical support for monetary exchange rate models in this paper we apply pooled time series estimation on a forward looking monetary model resulting in parameter estimates which are in compliance with the underlying theory based on a panel version of the engle and granger engle r f granger c w j 1987 co integration and error correction representation estimation and testing econometrica 55 251 276 two step procedure we find that the residuals of the panel based estimated monetary model are stationary this indicates that on a pooled time series level there is cointegration between the exchange rate and the macroeconomic fundamentals of this monetary model

curbside recycling in the presence of alternatives we measure the extent to which curbside access affects quantity recycled we use novel data to distinguish between new recycling and material diverted from other recycling modes we find that the marginal impact of expanding curbside programs on total recycled quantities is small in part because curbside programs significantly cannibalize returns from drop off recycling centers failure to account for cannibalization from other modes may substantially over estimate the benefits of curbside programs we conclude with simple cost effectiveness comparisons results suggest that incremental expansion of curbside access may not be cost effective

a fractional cointegration analysis of purchasing power parity a generalized notion of cointegration called fractional cointegration is introduced to examine the long run purchasing power parity ppp hypothesis by allowing deviations from equilibrium to follow a fractionally integrated process the fractional cointegration analysis can capture a wider range of mean reversion behavior than standard cointegration analyses this gain is flexibility in modeling subtle mean reverting dynamics is found to be important for a proper evaluation of long run ppp empirical results based on historical data for the 1914 1989 period show that ppp reversion exists and can be characterized by a fractionally integrated process in three out of five countries studied the results support ppp as a long run phenomenon though significant short run deviations from ppp can exist

household responses to pricing garbage by the bag this paper estimates household reaction to the implementation of unit pricing for the collection of residential garbage we gather original data on weight and volume of weekly garbage and recycling of 75 households in charlottesville virginia both before and after the start of a program that requires an eighty cent sticker on each bag of garbage this data set is the first of its kind we estimate household demands for the collection of garbage and recyclable material the effect on density of household garbage and the amount of illegal dumping by households we also estimate the probability that a household chooses each method available to reduce its garbage in response to the implementation of this unit pricing program we find that households 1 reduced the weight of their garbage by 14 2 reduced the volume of garbage by 37 and 3 increased the weight of their recyclable materials by 16 we estimate that additional illegal or at least suspicious disposal accounts for 0 42 pounds per person per week or 28 of the reduction in garbage observed at the curb this abstract was borrowed from another version of this item

revisiting the persistence of real exchange rates abstract in this paper we provide new and robust evidence that panel regressions significantly reduce the estimated half lives of real exchange rates in a sample of 21 countries these results are obtained under dynamic panel models that control for non purchasing power parity ppp equilibria small sample bias does not have a significant impact on half lives since the increase in the half life arising from the bias is more than compensated by the decrease of the half life due to the control of non ppp equilibria among the two sources of non ppp equilibria i e first the balassa samuelson effect and second smooth shifts in mean we find that under a heterogeneous panel model the first source results in a larger reduction of half lives

household responses to price incentives for recycling some further evidence this paper investigates the role of waste disposal service fees and household characteristics in determining recycling rates and waste generation using individual household data from portland oregon we model a multistage household decision process regarding waste generation and recycling effort under a block pricing system including the choice of container size and reduced form demand equations for recyclables non recyclables and recycling rate the choice of container size is not affected by the price of waste disposal services but within a given container size households respond to a price increase by increasing recycling to avoid charges for waste generation above contracted volumes

approximately optimal auctions for correlated bidders abstract we consider the design of dominant strategy incentive compatible revenue maximizing auctions for an indivisible good when bidders values are drawn from a correlated distribution for independent distributions myerson showed that the optimal auction for risk neutral bidders remains incentive compatible regardless of bidders risk attitudes we show that for correlated distributions the same is true when only two bidders are involved whereas for more bidders randomization can generate strictly more revenue however for risk neutral bidders we show this gain is never more than a 5 3 factor this is a consequence of two results of independent interest 1 a polynomial time derandomization of auctions for two bidders 2 a polynomial time computable deterministic auction that 5 3 approximates the optimal revenue extractable from risk neutral bidders moreover we give a polynomial time algorithm to compute optimal auctions for a constant number of bidders and for any number of bidders we give polynomial time algorithms with approximation factors arbitrarily close to 3 2

the economics of household solid waste generation and disposal abstract we develop a household production model of waste management that explicitly incorporates many of the technical and behavioral elements germane to current regulatory and non regulatory solid waste policy initiatives examination of first order conditions shows the interaction among household preferences these production options and external prices and fees a simplified simulation of our model illustrates these relationships showing that household response elasticities can vary widely over common price ranges and that relatively large household welfare gains may be obtained by adopting curbside recycling and unit pricing programs

real exchange rates and switching regimes abstract we suggest that the real exchange rate between the major currencies in the post bretton woods period can be described by a stationary 2 state markov switching ar 1 model based on the forecast performance we find that this model outperforms two competing models where the real exchange rate is nonstationary we also find that the existence of different regimes as in the markov switching model is consistent with the common finding of unit roots in real exchange rates

purchasing power parity over two centuries strengthening the case for real exchange rate stability a reply to cuddington and liang cuddington and liang 2000 purchasing power parity over two centuries journal of international money and finance 19 751 755 examine the long span of sterling dollar real exchange rate data of lothian and taylor 1996 real exchange rate behavior the recent float from the perspective of the past two centuries journal of political economy 104 488 509 and claim to reject long run purchasing power parity by fitting time trends or by considering very high order autoregresssive representations this reply demonstrates however that the central claims of lothian and taylor are in fact strengthened by the implications of cuddington and liang s analysis in that while the economic importance of introducing trend terms is slight this leads to a faster estimated speed of mean reversion c 2000 elsevier science ltd all rights reserved jel classification f31 f41 c22

bayesian and dominant strategy implementation in the independent private values model we prove in the standard independent private values model that the outcome in terms of interim expected probabilities of trade and interim expected transfers of any bayesian mechanism can also be obtained with a dominant strategy mechanism

optimal private good allocation the case for a balanced budget abstract in an independent private value auction environment we are interested in strategy proof mechanisms that maximize the agents residual surplus that is the utility derived from the physical allocation minus transfers accruing to an external entity we find that under the assumption of an increasing hazard rate of type distributions an optimal deterministic mechanism never extracts any net payments from the agents that is it will be budget balanced specifically optimal mechanisms have a simple posted price or option form in the bilateral trade environment we obtain optimality of posted price mechanisms without any assumption on type distributions

banking on currency forecasts how predictable is change in money abstract the paper examines the predictive performance of four structural exchange rate models using both parametric and nonparametric techniques error correction versions of the models are fit so that plausible long run elasticities can be imposed on the fundamental variables of each model a variety of model evaluation statistics are reported our findings confirm that fundamental exchange rate models forecast no better than a random walk model for short term prediction horizons for longer horizons error correction terms can explain exchange rate movements significantly better than a no change forecast for a subset of the models and currencies we consider

garbage and recycling with endogenous local policy abstract this paper estimates the impact of garbage fees and curbside recycling programs on garbage and recycling amounts without correction for endogenous policy a price per bag of garbage has a negative effect on garbage and a positive cross price effect on recycling correction for endogenous local policy increases the effect of the user fee on garbage and the effect of curbside recycling collection on recycling introducing a fee of 1 per bag is estimated to reduce garbage by 412 pounds per person per year 44 but to increase recycling by only 30 pounds per person per year

measuring business cycle time the business cycle analysis of arthur f burns and wesley c mitchell and the national bureau of economic research presumed that aggregate economic variables evolve on a time scale defined by business cycle turning points rather than by months or quarters do macroeconomic variables appear to evolve on an economic rather than a calendar time scale evidence presented here suggests that they do however the estimated economic time scales are only weakly related to business cycle time scales providing evidence against the view underlying traditional business cycle analysis copyright 1987 by university of chicago press

is there a homogeneous causality pattern between oil prices and currencies of oil importers and exporters although the link between oil prices and dollar exchange rates has been frequently analyzed a clear distinction between prices and nominal exchange rate dynamics and a clarification of the issue of causality has not been provided in addition previous studies have mostly neglected nonlinearities which for example may stem from exogenous oil price shocks using monthly data for various oil exporting and oil importing countries this study contributes to the clarification of those issues we discriminate between long run and time varying short run dynamics using a markov switching vector error correction model in terms of causality the results differ between the economies under observation but suggest that the most important causality runs from exchange rates to oil prices with a depreciation of the dollar triggering an increase in oil prices on the other hand changes in nominal oil prices are responsible for ambiguous real exchange rate effects mostly through the price differential and partly also through a direct influence on the nominal exchange rate overall the fact that the adjustment pattern frequently differs between regimes underlines the fact that the relationships are subject to changes over time suggesting that nonlinearities are an important issue when analyzing oil prices and exchange rates

evidence on purchasing power parity from univariate models the case of smooth transition trend stationarity recent research has found that trend break unit root tests derived from univariate linear models do not support the hypothesis of long run purchasing power parity ppp for us dollar real exchange rates in this paper univariate smooth transition models are utilized to develop unit root tests that allow under the alternative hypothesis for stationarity around a gradually changing deterministic trend function these tests reveal statistically significant evidence against the null hypothesis of a unit root for the real exchange rates of a number of countries against the us dollar however restrictions consistent with long run ppp are rejected for some of the countries for which a rejection of the unit root hypothesis is obtained

generalized reduced form auctions a network flow approach we develop a network flow approach for characterizing interim allocation rules that can be implemented by ex post allocations our method can be used to characterize feasible interim allocations in general multi unit auctions where agents face capacity constraints both ceilings and floors applications include a variety of settings of practical interest ranging from individual and group specific capacity constraints set aside sale partnership dissolution and government license reallocation

dominant strategy implementation of bayesian incentive compatible allocation rules abstract a large literature on incentive mechanisms represents incentive constraints by the requirement that truthful reporting be a bayesian equilibrium this paper identifies mechanism design problems for which there is no loss in replacing bayesian incentive compatibility by the stronger requirement of dominant strategies we identify contexts where it is possible to change the transfer payments of an optimal bayesian mechanism so as to create dominant strategies and yet leave every participant s expected utility unchanged we also address the issue of multiple equilibria and unique implementation contexts where these results apply include auctions bilateral bargaining procurement contracting and intrafirm resource allocation

determinants of participation versus consumption in the nordic swan eco labeled market abstract this paper analyzes the determinants of demand for nordic swan eco labeled paper products and whether the factors determining the discrete decision to buy a swan labeled product are different from those that determine the quantity purchased using observed consumer purchase data from denmark we find that prices and socio demographic characteristics have a strong impact on the decision to purchase a swan labeled good the quantity consumed of swan labeled goods on the other hand is strongly affected by the availability of swan goods discounts and household size

the purchasing power parity debate originally propounded by the 16th century scholars of the university of salamanca the concept of purchasing power parity ppp was revived in the interwar period in the context of the debate concerning the appropriate level at which to re establish international exchange rate parities broadly accepted as a long run equilibrium condition in the post war period it first was advocated as a short run equilibrium by many international economists in the first few years following the breakdown of the bretton woods system in the early 1970s and then increasingly came under attack on both theoretical and empirical grounds from the late 1970s to the mid 1990s accordingly over the last three decades a large literature has built up that examines how much the data deviated from theory and the fruits of this research have provided a deeper understanding of how well ppp applies in both the short run and the long run since the mid 1990s larger datasets and nonlinear econometric methods in particular have improved estimation as deviations narrowed between real exchange rates and ppp so did the gap narrow between theory and data and some degree of confidence in long run ppp began to emerge again in this respect the idea of long run ppp now enjoys perhaps its strongest support in more than 30 years a distinct reversion in economic thought

new evidence on nominal exchange rate predictability abstract the meese rogoff puzzle one of the well known puzzles in international economics concerns the weak relationship between nominal exchange rates and market fundamentals the purpose of this paper is to show that market fundamentals do in fact matter in forecasting nominal exchange rates in particular we emphasize the importance of the harrod balassa samuelson effect in modeling deviations from purchasing power parity based on the post bretton woods period we provide solid out of sample evidence that rejects the random walk forecast model at medium term and long term forecast horizons we also find mild evidence for out of sample predictability of nominal exchange rates over the short term

transactions costs and nonlinear adjustment in real exchange rates an empirical investigation eolquilibrium models of real exchange rate determination in the presence of transactions costs imply a nonlinear adjustment process toward purchasing power parity ppp conventional cointegration tests which ignore the effect of transactions costs may be biased against the long run ppp hypothesis our results using both monthly data for the interwar period and annual data spanning two centuries clearly reject the linear framework in favor of an exponential smooth transition autoregressive process the systematic pattern in the estimates of the nonlinear models provides strong evidence of mean reverting behavior for ppp deviations and helps explain the mixed results of previous studies

household behavior under alternative pay as you throw systems for solid waste disposal in 1994 residents of marietta georgia participated in a pay as you throw solid waste demonstration project rather than pay a fixed monthly fee for collection half of the resi dents paid a fee per reusable trash can and half paid for each nonreusable trash bag collected data from both a sample of households and city wide totals indicate that the programs signifi cantly reduced waste set outs even after account ingfor increases in unpriced recycling the bag program caused larger reductions 36 than the subscription can program 14 rough esti mates of the program indicate both savings for residents and social welfare increases jel q20

full extraction of the surplus in bayesian and dominant strategy auctions we consider auctions for a single indivisible object in the case where the bidders have information about each other which is not available to the seller we show that the seller can use this information to his own benefit and we completely characterize the environ ments in which a well chosen auction gives him the same expected payoff as that obtainable were he able to sell the object with full information about each bidder s willingness to pay we provide this characterization for auctions in which the bidders have dominant strate gies and for those where the relevant equilibrium concept is bayesian nash in both set ups the existence of these auctions hinges on the possibility of constructing lotteries with the correct properties we consider the situation in which an agent the seller possesses one indivisible unit of a good to which he attaches no value but the good has value to a number of potential buyers and its transfer to one of them would increase social welfare in particular the transfer to the buyer with the highest valuation maximizes social welfare in this paper we completely characterize environments in which the seller can design an auction that will enable him to capture for himself the full increase in social welfare induced by the transfer of the good to the bidder with the highest willingness to pay if the seller had full information about the reservation prices of potential buyers his optimal selling strategy would be very simple he would announce a price equal or very close to the highest reservation value the optimal strategy for the bidder with the highest evaluation would be to accept the offer note that we are treating a situation in which the seller can commit himself to a price as a result of the exchange the utility of the seller increases by the full amount of the increase in social welfare and he has been able to fully extract the surplus in many circumstances however a seller has only imperfect knowledge of the buyers willingnesses to pay in this case he must find some mechanism or auction which will enable him to maximize his benefit from the sale of the object the auction literature starts with this observation and shows how the seller can by an astute choice of auction extract the largest possible fraction of the surplus in general the literature has shown that this proportion is strictly less than one in some circumstances the bidders will have information about each other which is not available to the seller for instance in auctions for petroleum drilling rights bidders know the results of geological tests which they have

balanced ranking mechanisms abstract in the private values single object auction model we construct a satisfactory mechanism a symmetric dominant strategy incentive compatible and budget balanced mechanism the mechanism converges to efficiency at an exponential rate it allocates the object to the highest valued agent with more than 99 probability provided there are at least 14 agents it is also ex post individually rational we show that our mechanism is optimal in a restricted class of satisfactory ranking mechanisms since achieving efficiency through a dominant strategy incentive compatible and budget balanced mechanism is impossible in this model our results illustrate the limits of this impossibility

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