the structure of unemployment we test for a unit root in postwar unemployment rates for sixteen oecd countries when a one time structural break is incorporated the unit root hypothesis can be rejected for most of the countries and the measured persistence of unemployment falls dramatically we then test for multiple structural changes and find evidence of one or two breaks for those countries for which the unit root hypothesis could be rejected almost all of the breaks are positive reflecting the sustained rise in european unemployment the major exception is the united states where long term unemployment rose in the 1970s and fell in the 1980s

endogenous formation of coalitions in noncooperative games abstract in this paper we extend the definitions of coalition proof nash equilibrium and communication proof equilibrium to situations of partial communication then we use the model of endogenous formation of coalitions of aumann and myerson to find that one of these situations in which the corresponding equilibrium exists will be endogenously determined by the players in the game journal of economic literatureclassification numbers c70 c72

are the discounts on closed end funds a sentiment index in investor sentiment and the closed end fund puzzle charles lee andrei shleifer and richard thaler 1991 claim to solve not one but two longstanding puzzles discounts on closed end funds and the small firm effect both according to lee et al are driven by the same waves of small investor sentiment killing two such elusive birds with one stone would be a neat trick indeed if lee et al could bring it off but they can t measured properly the comovement between fund discounts and small firm returns is neither strong enough nor robust enough to support their common sentiment story the case of lee et al rests mainly on their key table iv in which monthly returns for 10 separate size grouped portfolios are regressed on monthly changes in the discount of a value weighted portfolio of closed end funds avwd and the monthly return on a value weighted portfolio of nyse firms vwny for their twenty year sample period running from july 1965 to december 1985 lee et al find changes in the value weighted discount holding market returns constant to be positively related to the returns of the largest firms decile 10 but negatively related to those of all other size deciles the negative coefficient is largest for the very small firms in decile 1 leading lee et al to conclude that when individual investors become optimistic about closed end funds and smaller stocks these stocks do well and discounts narrow and when individual investors become pessimistic about closed end funds and smaller stocks smaller stocks do badly and discounts widen pp 94 95 could the observed relation between fund discounts and small firm returns be just a chance sampling fluctuation lee et al checked for robustness by dividing their sample in half and rerunning their regressions on each half separately their table vii they found the coefficient of avwd in the decile 1 regression dropped in the second subperiod by 80 percent and in absolute size fell to barely one standard error from zero similar attenuation in size and significance was noted for all other size groups the virtual disappearance of the relation between the discounts and small firm returns after 1975 might have led other researchers to abandon a common sentiment hypothesis but not lee shleifer and thaler they see

cooperative outcomes through noncooperative games abstract this paper shows the equivalence between the stable solution set of any cooperative game in characteristic form g1 and the subgame perfect nash equilibria in pure strategies of a certain noncooperative game g2 players of g1 are named agents g2 is played by different players principals who compete in wages to attract agents the equivalence result holds when there are enough principals if the game is superadditive two principals suffice finally another related cooperative game g3 is constructed with both principals and agents as players for g2 and g3 the same result is then proven for any number of principals journal of economic literature classification numbers c71 and c72

wage aspirations and unemployment persistence abstract we use panel data to examine the empirical determinants of the reservation wage in particular the influence of previous wages and consider what this implies for the evolution of the natural rate of unemployment we find that previous wages have a significant but relatively small effect on reservation wages an elasticity between 0 15 and 0 47 we also find considerable differences across genders with previous wages being more important for men and market wages being more important for women overall our results suggest that the reservation wage will adjust quite quickly to shocks

how are stock prices affected by the location of trade abstract we examine pairs of large siamese twin companies whose stocks are traded around the world but have different trading and ownership habitats twins pool their cash flows so with integrated markets twin stocks should move together however the difference between the prices of twin stocks appears to be correlated with the markets on which they are traded most i e a twin s relative price rises when the market on which it is traded relatively intensively rises we examine several explanations of this phenomenon including the discretionary use of dividend income by parent companies differences in parent expenditures voting rights currency fluctuations ex dividend date timing issues and tax induced investor heterogeneity only the last hypothesis can explain some but not all of the empirical facts we conjecture that a country specific sentiment shocks might affect share intensity b investors are rational but markets are segmented by frictions other than international transactions costs such as agency problems

the returns to mobility and job search by gender using data from the national longitudinal survey of youth the authors estimate the returns to job search mobility and the interaction of search and mobility for young men and women they find st

measuring the gender disparities in unemployment dynamics during the recession evidence from portugal abstractthis article researches gender differences in the incidence and persistence of unemployment during the debt crisis and recession in portugal through estimating a dynamic random effects prob

unemployment rate dynamics and persistent unemployment under rational expectations this paper develops a model of unemployment rate dynamics that provides an explanation of persistent cyclical unemployment that does not involve persistent expectational errors or other nonoptimizing behavior our results are based on the interaction of search dynamics and inventory adjustments an important element in these dynamics appears to be heterogeneity in the labor force which can be characterized as consisting of a relatively small group of high turnover individuals who comprise the bulk of normal unemployment and a larger group of low turnover individuals who dominate movements in cyclical unemployment our empirical results provide support for this theory as we demonstrate that the appropriately measured probability of becoming employed during a recovery falls relative to normal because of the unusually high proportion of low turnover individuals who have lost permanent jobs as aresult recovery is much slower than is indicated by normal relationships although each individual is searching optimally this abstract was borrowed from another version of this item

the seemingly anomalous price behavior of royal dutch shell and unilever n v plc abstract we examine two anglo dutch groups the shares of whose parents trade on several international exchanges within each group the parents corporate charters mandate the division of cash flows available for distribution this implies a specific ratio for the market prices of their securities we document persistent deviations from these ratios on both the new york and london exchanges the direction and magnitude of the mispricing are common to both pairs of stocks and both markets nevertheless we find no evidence of profitable intra or intermarket trading rules

multilateral trade negotiations bilateral opportunism and the rules of gatt wto abstract trade negotiations occur through time and between the governments of many countries an important issue is thus whether the value of concessions that a government wins in a current negotiation may be eroded in a future bilateral negotiation to which it is not party we identify rules of negotiation that serve to protect the welfare of governments that are not participating in the bilateral negotiation our main finding is that the two central principles of gatt wto nondiscrimination mfn and reciprocity preserve the welfare of nonparticipating governments and therefore offer a first line of defense against bilateral opportunism

the persistence of unemployment in the usa and europe in terms of fractionally arima models this article examines the persistence of unemployment in the usa and four european countries by means of fractionally integrated arma arfima models in doing so a type of flexibility in modelling low frequency dynamics not achieved by non fractionally arima models can be provided the results indicate that the unemployment series are much more persistent in some countries such as the uk and france than in others including germany or the usa

evidence on the dynamics of unemployment by gender we present empirical evidence regarding unemployment dynamics for women and men in eight oecd countries unit root tests are used to examine the unemployment dynamics of women and men failure to reject the unit root hypothesis is consistent with unemployment hysteresis rejection of the unit root hypothesis indicates that unemployment dynamics are best explained by the natural rate of unemployment or the structuralist view we find evidence of gender differences in unemployment dynamics in canada germany and the us but not in other countries while there are some differences in the extent of persistence across gender and across countries the degree of persistence for both female and male unemployment rates is fairly low in all countries our results therefore contrast with substantial empirical evidence of high levels of unemployment persistence in european countries

a communication proof equilibrium concept department of economics universidad carlos iii de madrid 28903 getafe spainreceived february 4 1992 revised october 24 1994this paper proposes an equilibrium concept for the classes of environments inwhich players can communicate with each other but cannot make bindingagreements the communication proof equilibrium is intended to be regarded as anextension of both coalition and renegotiation proof equilibria conceptual founda tions for this particular definition are discussed as it is confronted with otherdefinitions in these environments journal of economic literature classificationnumber c72

a strategic model of social and economic networks we study the stability and efficiency of social and economic networks when self interested individuals can form or sever links first for two stylized models we characterize the stable and efficient networks there does not always exist a stable network that is efficient next we show that this tension persists generally to assure that there exists a stable network that is efficient one is forced to allocate resources to nodes that are not responsible for any of the production we characterize one such allocation rule the equal split rule and another rule that arises naturally from bargaining of the players

a noncooperative view of coalition formation and the core a noncooperative implementation of the core is provided for games with transferable utility the implementation obtained here is meant to reflect the standard motivation for the core as closely as possible in the model proposed time is continuous this idealized treatment of time is most amenable for capturing an essential feature of the core there is always time to reject a noncore proposal before it is consumated

the more we know about the fundamental the less we agree on the price i allow trading horizon heterogeneity across groups in a standard differential information model of a financial market this approach can explain the well established phenomenon that after a public announcement trading volume increases more private information is incorporated into prices and volatility increases in such environments public information has the important secondary role of helping agents learn about the information of other agents therefore whenever the correlation between the private information of different groups is sufficiently low a public announcement increases disagreement among short horizon traders regarding the expected selling price even as it decreases disagreement about the fundamental value of the asset additional testable implications are also suggested

yes discounts on closed end funds are a sentiment index chen kan and miller 1993 best pronounced chek m provide a detailed critique of our earlier paper lee shleifer and tlialer 1991 ckm accuse lee et al of trying to kill two birds the closed end fund puzzle and the small firm effect with one stone and missing both their approach is to throw at lee et al every stone they can presumably hoping that one will hit this reply shows that none does ckm focus on four empirical issues 1 the role of utilities in the lee et al sample of small institutional ownership firms 2 the robustness of the relationship between fund discounts and the returns on high versus low ownership firms their table i 3 the appropriate way to specify the regression in table iv of lee et al their table ii and 4 the regressions using one closed end fund tricontinental their table iii we address these criticisms in turn ckm begin with the finding of lee et al that even during the second half of their sample when the relationship between closed end fund discounts and small firm returns weakens there is a significant relationship between return on stocks with low institutional ownership and changes in discounts ckm describe as a concession the finding of lee et al that most of these low ownership stocks are public utilities however this finding makes even more vivid the main claim of lee et al that stocks with similar ownership structures but very different fundamentals move together in the market after all what do public utilities have in common with closed end funds other than a similar ownership structure the one plausible common factor that might similarly affect closed end fund discounts and prices of public utility stocks is small investor sentiment ckm also say that they tested a portfolio of nyse public utility firms with more than 10 percent institutional ownership and that their results were essentially the same as for the sample with less than 10 percent ownership they do not report these results but have kindly provided us with their data to investigate their claim we divided all utilities into three groups of equal numbers of firms with high low and medium institutional ownership we then ran regressions like those in table viii of lee et al for each group the results in table i of this paper show that low institutional

a test of the modigliani miller invariance theorem and arbitrage in experimental asset markets modigliani and miller show that the total market value of a firm is unaffected by a repackaging of asset return streams to equity and debt if pricing is arbitrage free we investigate this invariance theorem in experimental asset markets finding value invariance for assets of identical risks when returns are perfectly correlated however exploiting price discrepancies has risk when returns have the same expected value but are uncorrelated in which case the law of one price is violated discrepancies shrink in consecutive markets but persist even with experienced traders in markets where overall trader acuity is high assets trade closer to parity

bond calls credible commitment and equity dilution a theoretical and clinical analysis of simultaneous tender and call stac offers this paper is an exploration of the ability of game theory to explain real world corporate maneuvering we explore this issue by investigating bond tender offers accompanied by a threat to call nontendered bonds so called simultaneous tender and call stac offers we argue that stacs engender a transparent game played by bondholders and shareholders we model this game and use this model to predict the outcome of stacs finally we investigate the issue of whether this theoretical model explains the outcomes of four actual stac issues made by james river may department stores and houston lighting power company our clinical analysis provides support for the explanatory power of our model calibrating the predictions of the model with data from these stacs we demonstrate a correspondence between theory and actual corporate behavior as predicted by our model subgame perfection or threat credibility and preplay coordination are central to explaining the outcomes of the stacs