an evolutionary analysis of the volunteer s dilemma abstract a public good is produced if and only if a volunteer provides it there are many pure strategy nash equilibria in each of which a single player volunteers noisy strategy revisions for instance quantal responses allow play to evolve equilibrium selection is achieved via the characterisation of long run play as revisions approximate best replies the volunteer need not be the lowest cost player relatively high cost but nonetheless reliable players may instead produce the public good more efficient players provide when higher values are associated with lower costs voluntary open source software provision offers a contemporary application

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

monetary shocks the exchange rate and the trade balance abstract this paper investigates the response of the exchange rate and the trade balance to monetary policy innovations for the us economy during the period 1973 01 1993 12 the empirical findings indicate that contractionary monetary policy shocks lead to transitory appreciations of the real and the nominal exchange rate exchange rate appreciations that are caused by a temporary contractionary shock to monetary policy are correlated with a short lived improvement in the trade balance which is then followed by a deterioration giving support to the j curve hypothesis

raise rates to raise inflation neo fisherianism in the new keynesian model increasing the inflation target in a new keynesian nk model may require increasing rather than decreasing the nominal interest rate in the short run we refer to this positive short run comovement between the nominal rates and inflation conditional on a nominal shock as neo fisherianism we show that the nk model is more likely to be neo fisherian the more persistent is the change in the inflation target and the more flexible are prices neo fisherianism is driven by the forward looking nature of the model modifications that make the framework less forward looking make it less likely for the model to exhibit neo fisherianism

a spatial econometric approach to the economics of site specific nitrogen management in corn production the objective of this study is to determine the potential for using spatial econometric analysis of combine yield monitor data to estimate the site specific crop response functions the specific case study is for site specific nitrogen n application to corn production in argentina spatial structure of the yield data is modeled with landscape variables spatially autoregressive error and groupwise heteroskedasticity results suggest that n response differs by landscape position and that site specific application may be modestly profitable profitability depends on the model specification used with all spatial models consistently indicating profitability whereas the nonspatial models do not

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

factor models and time varying parameter framework for forecasting exchange rates and inflation a survey a survey of models used for forecasting exchange rates and inflation reveals that the factor based and time varying parameter or state space models generate superior forecasts relative to all other models this survey also finds that models based on taylor rule and portfolio balance theory have moderate predictive power for forecasting exchange rates the evidence on the use of bayesian model averaging approach in forecasting exchange rates reveals limited predictive power but strong support for forecasting inflation overall the evidence overwhelmingly points to the context of the forecasts relevance of the historical data data transformation choice of the benchmark selected time horizons sample period and forecast evaluation methods as the crucial elements in selecting forecasting models for exchange rate and inflation

interpreting the macroeconomic time series facts the effects of monetary policy existing theory and evidence on the effects of monetary policy are reviewed substantial room for disagreement among economists remains new evidence based on multivariate time series studies of several countries is presented while certain patterns in the data consistent with effective monetary policy are strikingly similar across countries others particularly the tendency of interest rate increases to predict high inflation are harder to reconcile with effective monetary policy

imperfect information multiple shocks and policy s signaling role abstract in multiple shock models when agents have imperfect information they attempt to infer a shock s type in addition to its size in this environment monetary policy plays an important signaling role this paper highlights this signaling role by showing that conclusions from imperfect information monetary models are sensitive to the number of shocks included with multiple shocks contractionary monetary policy can initially increase inflation and delay the eventual disinflation moreover multiple shocks can result in destabilizing price flexibility while optimal policy s response to one shock will depend on the existence of other shocks contrary to a typical linear quadratic framework

introducing the bank of canada staff economic projections database we present a new publicly available database of real time data and forecasts from the bank of canada s staff economic projections which will be updated on an annual basis we describe the data construct its variables coverage and frequency we then provide a forecast evaluation for gross domestic product gdp growth consumer price index cpi inflation and the policy rate since 1982 we compare the staff s forecasts with those from commonly used time series models estimated with the real time data and with forecasts from other professional forecasters and provide standard bias tests finally we study changes in predictability of the canadian economy following the announcement of the inflation targeting regime in 1991 our data set is unprecedented outside the usa and our evidence is particularly interesting as it covers over 30 years of staff forecasts two severe recessions and different monetary policy regimes

nonparametric nonlinear cotrending analysis with an application to interest and inflation in the united states given the assumption that the components of a vector time series are stationary around nonlinear deterministic time trends nonlinear cotrending is the phenomenon that one or more linear combinations of the time series are stationary around a linear trend or a constant hence the series have common nonlinear deterministic time trends in this article i develop nonparametric tests for nonlinear cotrending and i derive nonparametric estimators of the cotrending vectors i apply this approach to the federal funds rate and the consumer price index inflation rate in the united states using monthly data to analyze the price puzzle

changes in monetary regimes and the identification of monetary policy shocks narrative evidence from canada abstract using narrative evidence with a novel database of real time data and forecasts from the bank of canada s staff projections 1974 2015 we construct a new measure of monetary policy shocks and estimate the effects of monetary policy in canada we show it is crucial to account for the break in the conduct of monetary policy caused by the announcement of inflation targeting in 1991 a 100 basis point increase in our new shock series leads to a 1 0 percent peak decrease in real gdp and a 0 5 percent fall in the price level while not accounting for the break leads to a persistent decrease in gdp and a price puzzle albeit the change in monetary regime the effects of monetary policy have not changed much before and after it

hugging trees claiming de facto property rights by blockading resource use this paper explores conflicts between two groups the industry and theenvironmentalists over whether an indivisible resource e g an ancient tree should be harvested or preserved in a complete information war ofattrition the environmentalists willingness to blockade harvest attemptsmay control resource use as effectively as if they held property rights optimal government intervention will override this ability for somebenefit cost combinations but may augment it for other combinations introducing uncertainty about the environmentalists benefits results inextended disputes and consequent lack of efficiency governmentintervention for welfare reasons generally reduces these efficiencylosses

the effects of monetary policy using structural factor analysis the traditional vector autoregression var method is widely used to trace out the effects of monetary policy innovations on the economy however this method suffers from the curse of dimensionality so that in practice vars are estimated on a limited number of variables leading to a potential missing information problem in this article we use the method of structural factor analysis to evaluate the effects of monetary policy on key macroeconomic variables in a data rich environment this methodology allows us to extract information on monetary policy and its impact on the economy from a much larger data set than is possible with the traditional var method we propose two structural factor models one is the structural factor augmented vector autoregressive sfavar model and the other is the structural factor vector autoregressive sfvar model compared to the traditional var both models incorporate information from hundreds of data series series that can be and are monitored by the central bank in

discretionary tax changes and the macroeconomy new narrative evidence from the united kingdom abstract this paper provides new estimates of the macroeconomic effects of tax changes using a new narrative dataset for the united kingdom identification is achieved by isolating exogenous tax policy changes using the romer and romer narrative strategy i find that a 1 percent cut in taxes increases gdp by 0 6 percent on impact and 2 5 percent over three years the findings are remarkably similar to romer and romer narrative estimates for the united states reinforcing the view that tax changes have powerful and persistent effects exogenous tax changes are also shown to have contributed to important episodes in the uk business cycle jel e23 e32 e62 h20 h61

bargaining with imperfect commitment abstract we study the effect of imperfect commitment in noncooperative two person bargaining games by establishing the reputation for being stubborn a player sometimes commits to her initial demand becoming unable to change her demands or to accept an inferior offer from her opponent when the probability of being stubborn is small the set of equilibria is shown to be small and agreement may be reached immediately despite the possibility of stubbornness a player has greater bargaining power when she is more patient and or is more likely to be stubborn journal of economic literature classification number c78

monetary policy rules based on real time data this paper examines the magnitude of informational problems associated with the implementation and interpretation of simple monetary policy rules using taylor s rule as an example i demonstrate that real time policy recommendations differ considerably from those obtained with ex post revised data further estimated policy reaction functions based on ex post revised data provide misleading descriptions of historical policy and obscure the behavior suggested by information available to the federal reserve in real time these results indicate that reliance on the information actually available to policy makers in real time is essential for the analysis of monetary policy rules

narrative and var approaches to monetary policy common identification problems abstract romer and romer romer c d romer d h 1989 does monetary policy matter a new test in the spirit of friedman and schwartz in blanchard o j fischer s eds nber macroeconomics annual 1989 mit press cambridge ma pp 121 170 romer c d romer d h 1994 monetary policy matters journal of monetary economics 34 75 88 adopted a narrative approach to address the identification problems in time series models of monetary policy based on federal reserve documents the romers created a dummy variable equal to one in periods when the federal reserve contracted in response to perceived inflationary pressures this paper shows 1 the dummy variable is predictable from past macroeconomic variables reflecting the endogenous response of policy to the economy 2 unpredictable changes in the dummy do not generate dynamic responses that look like the effects of monetary policy the identification problems that plague time series models also afflict the narrative approach

effect of urban proximity on agricultural land values this article seeks to more accurately estimate the size and distance of the effect of urban proximity on agricultural land values the econometric model lets the size and distance of the effect of urban proximity on agricultural land values vary by population real income and time the changes in the effect of urban proximity over time can be largely explained by population and income thus there does not appear to be a shift in preferences toward living further from the city center

financial stability and interest rate policy a quantitative assessment of costs and benefit should monetary policy use its short term policy rate to stabilize the growth in household credit and housing prices with the aim of promoting financial stability we ask this question for the case of canada we find that to a first approximation the answer is no resume stabilite financiere et politique de taux d interet evaluation quantitative des couts et des avantages afin de favoriser la stabilite financiere la politique monetaire devrait elle utiliser son taux directeur a court terme pour equilibrer la croissance de l endettement des menages et du prix des logements nous posons cette question pour le canada dans une premiere approximation notre reponse est negative

federal reserve information and the behavior of interest rates this paper tests for the existence of asymmetric information between the federal reserve and the public by examining federal reserve and commercial inflation forecasts it demonstrates that the federal reserve has considerable information about inflation beyond what is known to commercial forecasters it also shows that monetary policy actions provide signals of the federal reserve s information and that commercial forecasters modify their forecasts in response to those signals these findings may explain why long term interest rates typically rise in response to shifts to tighter monetary policy jel e52 e43 d82 asymmetric information between the federal reserve and the public is a phenomenon that is often posited but rarely tested numerous models of central bank behavior for example show that the existence of asymmetric information has important implications for the effectiveness of policy and the consequences of dynamic inconsistency yet there

reputation and patience in the war of attrition this article presents an approach to selecting among the many subgame perfect equilibria that exist in a standard concession game with complete information the authors extend the description of a game to include a specific irrational mixed strategy for each player depending on the irrational strategies chosen the authors demonstrate that this approach may select a unique equilibrium in which the weaker player concedes immediately a player is weaker if he is more impatient or if his irrational strategy is to wait in any period with the higher probability copyright 1989 by the london school of economics and political science

centralizing information in networks in the dynamic game we analyze players are the members of a fixed network everyone is initially endowed with an information item that he is the only player to hold players are offered a finite number of periods to centralize the initially dispersed items in the hands of any one member of the network in every period each agent strategically chooses whether or not to transmit the items he holds to his neighbors in the network the sooner all the items are gathered by any individual the better it is for the group of players as a whole besides the agent who first centralizes all the items is offered an additional reward that he keeps for himself in this framework where information transmission is strategic and physically restricted we provide a necessary and sufficient condition for a group to pool information items in every equilibrium this condition is independent of the network structure the architecture of links however affects the time needed before items are centralized in equilibrium

liquidity loanable funds and real activity abstract this paper develops a general equilibrium model of two traditional explanations of the monetary black box linking money and real activity the liquidity effect and the loanable funds effect these effects are modeled with a monetary production economy in which central bank injections of cash are funnelled into the economy through the credit market since only borrowers have direct access to the newly injected cash monetary injections cause nominal interest rates to fall if firms are borrowers then monetary injections also increase current and future real activity

multi battle contests abstract we study equilibrium in a multistage race in which players compete in a sequence of simultaneous move component contests players may win a prize for winning each component contest as well as a prize for winning the overall race each component contest is an all pay auction with complete information we characterize the unique subgame perfect equilibrium analytically and demonstrate that it exhibits endogenous uncertainty even a large lead by one player does not fully discourage the other player and each feasible state is reached with positive probability in equilibrium pervasiveness expected effort in the component contests may be non monotonic in the closeness of the race and realized individual effort may exceed the value of the prize by a factor that is proportional to the maximum number of stage victories required

estimating maximum land use change potential from a regional biofuel industry abstract the maximum amount of land for growing switchgrass for ethanol is estimated for a region in the southeastern u s breakeven capacities are calculated for land in row crops hay pasture and marginal land characteristics of land categories inform potential land use change impacts as well as switchgrass profitability variable yields within and across land categories are translated into distributions of switchgrass net revenue breakeven curves are generated for a range of switchgrass prices these curves provide upper bounds for further analysis of actual switchgrass adoption in context of broader economic forces and possible policy mechanisms to minimize environmental impacts a farm gate price of 55 mg 1 is estimated for half of marginal and pasturelands to break even with switchgrass at this price only 20 of land in hay and a small fraction of row crop hectares break even half of hay and row crops hectares break even at approximately 90 mg 1 and 100 mg 1 respectively at 60 mg 1 sufficient land area can profitably produce switchgrass for ethanol to displace approximately 10 of gasoline consumed in georgia north carolina and south carolina however this price only indicates breakeven capacity implying that higher prices may be necessary to realize 10 displacement

adding value to spatially managed inputs by understanding site specific yield response abstract many mechanized crop producers and agribusinesses are fascinated with precision agriculture technology but adoption has lagged behind the expectations among the reasons for slow adoption of precision agriculture technology is that initial users focused excessively on in field benefits from variable rate fertilizer application using regional average fertilizer recommendations this article illustrates how greater use of site specific crop response information can improve variable rate input application recommendations precision agriculture is spatial information technology applied to agriculture the technologies include global position systems gps geographic information systems gis yield monitoring sensors and computer controlled within field variable rate application vra equipment experimentation with these technologies is occurring everywhere there is large scale mechanized agriculture commercial use has been greatest in the us where 43 of farm retailers offered vra services in 2001 except for certain high value crops like sugar beet farmer adoption of vra has been modest the farm level profitability of vra continues to be questionable for bulk commodity crops the theoretical model and illustration presented here suggest that vra fertilization has not yet reached its profitability potential most vra field trials to date have relied upon existing state wide or regional input rate recommendations unobserved soil characteristics can potentially interact with an input to make its effect on yield vary site specifically within fields failure to use site specific response functions for vra applications may lead to a misallocation of inputs just as great as that which results from using uniform applications instead of vra agricultural economists have a long history of estimating output response to input applications several have started to develop tools to estimate site specific responses from yield monitor and other precision agriculture data likewise agricultural economists have developed an important body of research results on information value based on managing variability typically in temporal settings with these tools a major potential exists to develop further benefits from precision agriculture technologies that permit truly spatially tailored input applications

discount window borrowing monetary policy and the post october 6 1979 federal reserve operating procedure abstract a demand schedule for discount window borrowing based on profit maximizing bank behavior is derived a feature of non price rationing at the discount window making longer duration borrowing more costly is shown to make lagged borrowing and expected future spreads between the federal funds rate and the discount rate relevant to the current borrowing decision consequently both the size of the coefficients in the borrowing functions as well as the form of the function itself depend on expected fed policy toward the spread the demand function for discount window borrowing provides the critical link by which non borrowed reserve control affects short term interest rates and ultimately the money supply under post october 6 1979 reserve targeting the analysis suggests some reasons why the fed has experienced difficulty in specifying estimating and utilizing a discount window borrowing function in the non borrowed reserve operating procedure

estimating the effects of monetary policy shocks does lag structure matter this paper examines the implications of lag structure for estimating the effects of monetary policy shocks in a var a symmetric lag structure in which all variables have the same lag length and an asymmetric lag structure in which the lag length differs across variables but is the same for a particular variable in each equation of the model are examined this is important in light of the fact that the true lag structure is generally not known four commonly used identification schemes are employed to identify monetary policy shocks monte carlo simulations strongly indicate that the lag structure of a var model does matter when assessing the quantitative effects of monetary policy shocks given the inherent uncertainty about the true lag structure in practice it is thus important that one compare the impulse response functions from both symmetric lag and asymmetric lag vars in assessing the effects of monetary policy shocks

monetary policy and exchange rate interactions in a small open economy the transmission mechanisms of monetary policy in a small open economy like norway are analysed through structural vars with special emphasis on the interdependence between monetary policy and exchange rate movements by imposing a long run neutrality restriction on the real exchange rate thereby allowing the interest rate and the exchange rate to react simultaneously to news i find considerable interdependence between monetary policy and the exchange rate in particular following a contractionary monetary policy shock the real exchange rate immediately appreciates after which it gradually depreciates back to the baseline the results are found to be consistent with findings from an event study

a model of monetary policy shocks for financial crises and normal conditions in their classic 1999 paper monetary policy shocks what have we learned and to what end christiano eichenbaum and evans cee investigate one of the most widely used methods for identifying monetary policy shocks of its time unfortunately their approach is no longer viable at least not in its original form a major problem stems from the recent behavior of two key variables in their model the fed funds rate and non borrowed reserves we develop a new identification scheme that remedies these diculties but maintains the basic cee framework our empirical specification is motivated by a standard new keynesian dsge model augmented by a simple financial structure the model provides theoretical support for variables we use in place of certain variables that were used in the classic var approach outlined in cee one significant innovation is our use of divisia m4 the broadest monetary aggregate currently available for the united states as the policy indicator variable we obtain four major empirical results that support the use of a properly measured broad monetary aggregate as the policy variable first policy shocks have significant eects on output and on the price level even when an interest rate is included in our model contradicting the new keynesian argument that monetary aggregates are redundant second we develop a model that is not subject to the output price or liquidity puzzles common to this literature contradicting the view that using the interest rate as the policy indicator generally yields more reasonable responses than a monetary aggregate third during normal conditions policy shocks from our divisia based model have similar eects on variables to those found in the fed funds model of monetary policy and where there are dierences our model with divisia m4 obtains results that are more consistent with standard economic theory fourth our preferred specification produces plausible responses to a monetary policy shock in samples that include or exclude the recent financial crisis

is site specific yield response consistent over time does it pay this study examines the profitability and stability of site specific ss nitrogen fertilizer recommendations using an empirical model of ss yield response to controlled inputs stable site characteristics and time varying weather factors using a three year panel of on farm corn yield experiments and new continuous variables to describe site characteristics both spatial and ordinary least squares regression models show clear evidence of ss corn yield response to nitrogen fertilizer yield response is predictable only on irrigated fields even there bootstrapped confidence intervals for profitability gains on selected fields indicate that ss nitrogen application would rarely cover its costs

the dynamic responses of crop and livestock prices to money supply shocks a bayesian analysis using long run identifying restrictions the impact of monetary policy on agriculture has been much debated this study examines the dynamic responses of u s agricultural prices to money supply shocks using three innovations first the variables responses are identified by long run money neutrality restrictions instead of the more common contemporaneous ordering second a bayesian approach to model uncertainty is used to add robustness to the estimation process third agricultural prices are disaggregated into crop and livestock components the empirical results find that both agricultural sectors benefit in the short run from positive money supply shocks with agricultural prices increasing relative to the general price level

how to solve the price puzzle a meta analysis the short run increase in prices following an unexpected tightening of monetary policy constitutes a frequently reported puzzle yet the puzzle is surprisingly easy to explain away when all published models are quantitatively reviewed we collect about 1 000 point estimates of impulse responses from 70 articles using vector autoregressive models and present a simple method of research synthesis for graphical results our ndings indicate publication selection in favor of the intuitive response of prices to a tightening the estimates depend systematically on study design when misspecications are

the effects of monetary policy in japan this article interprets time series facts regarding the sources of business fluctuations in japan and attempts to uncover possible characteristics of the effects of monetary policy over the last two decades it argues that given the institutional features of the bank of japan s operating procedures a simple recursive vector autoregressive var model that consists of interest rates money stock prices and output all in first differences may serve as a useful benchmark for japan the main finding is that monetary policy shocks in fact have a persistent effect on real output especially in the rise and fall of japan s bubble economy in the late 1980s

structural models of the liquidity effect in this paper we examine a number of recent studies that claim to have obtained a well defined liquidity effect using structural var models based on broad measures of money these studies can be distinguished in terms of the identifying restrictions sample periods and frequency of data used we show that estimation of the structural coefficients of all these models can be achieved by instrumental variable methods where the instruments are predetermined variables and the estimated structural errors from other equations in the system overall our judgment is that the evidence for a liquidity effect from these studies is much less certain than suggested in the original papers primarily because of the poor quality of the instruments used in estimation and the sensitivity of the estimates to the sample period used

the value of variable rate technology an information theoretic approach we present a theoretical treatment of the economics of variable rate technology and its interplay with information the framework facilitates description of on farm empirical profitability studies of variable rate nitrogen application on illinois cornfields we estimate site specific ex ante economically optimal nitrogen application rates and the value of site specific information in the management of variable rate technology we find that with site specific information provided free variable rate nitrogen application would have been profitable in six of eight fields because private markets are unlikely to provide such information sufficiently more public funding of long term multiregion multiyear experimentation is appropriate copyright 2009 oxford university press

monetary policy and exchange rate overshooting dornbusch was right after all abstract dornbusch s exchange rate overshooting hypothesis is a central building block in international macroeconomics yet empirical studies of monetary policy have typically found exchange rate effects that are inconsistent with overshooting this puzzling result has been viewed by some researchers as a stylized fact to be reckoned with in policy modelling however many of these studies in particular those using vector autoregressive vars approaches have disregarded the strong contemporaneous interaction between monetary policy and exchange rate movements by placing zero restrictions on them in contrast we achieve identification by imposing a long run neutrality restriction on the real exchange rate thereby allowing for contemporaneous interaction between the interest rate and the exchange rate in a study of four open economies we find that the puzzles disappear in particular a contractionary monetary policy shock has a strong effect on the exchange rate which appreciates on impact the maximum effect occurs within 1 2 quarters and the exchange rate thereafter gradually depreciates to baseline consistent with the dornbusch overshooting hypothesis and with few exceptions consistent with uncovered interest parity uip

what do the vars mean measuring the output effects of monetary policy abstract vars describe the history of output and other variables following monetary shocks to measure the effects of monetary shocks one must add economic identifying assumptions i specify the relative effects of anticipated and unanticipated money and i calculate how var based measures of the effect of money on output change as one varies this assumption the anticipated unanticipated assumption influences measured output effects as much or more than the variable selection and shock orthogonalization assumptions on which the var literature focuses assuming that anticipated monetary policy can have some effect on output results in much shorter smaller and perhaps more believable estimates of the output response to monetary shocks

has monetary policy become more effective we investigate the implications of changes in the structure of the u s economy for monetary policy effectiveness estimating a vector autoregression over the pre and post 1980 periods we provide evidence of a reduced effect of monetary policy shocks in the latter period we estimate a structural model that replicates well the economy s response in both periods and perform counterfactual experiments to determine the source of the change in the monetary transmission mechanism and in the economy s volatility we find that by responding more strongly to inflation expectations monetary policy has stabilized the economy more effectively in the post 1980 period

are government spending multipliers greater during periods of slack evidence from 20th century historical data a key question that has arisen during recent debates is whether government spending multipliers are larger during periods of slack some researchers and policymakers have argued that while government spending multipliers are estimated to be modest on average they might become greater during times when resources are underutilized auerbach and gorodnichenko 2012 forthcoming henceforth ag test this hypothesis and find larger multipliers dur

bargaining reputation and equilibrium selection in repeated games with contracts consider a two person intertemporal bargaining problem in which players choose actions and offers each period and collect payoffs as a function of that period s actions while bargaining proceeds this can alternatively be viewed as an infinitely repeated game wherein players can offer one another enforceable contracts that govern play for the rest of the game theory is silent with regard to how the surplus is likely to be split because a folk theorem applies perturbing such a game with a rich set of behavioral types for each player yields a specific asymptotic prediction for how the surplus will be divided as the perturbation probabilities approach zero behavioral types may follow nonstationary strategies and respond to the opponent s play in equilibrium rational players initially choose a behavioral type to imitate and a war of attrition ensues how much should a player try to get and how should she behave while waiting for the resolution of bargaining in both respects she should build her strategy around the advice given by the nash bargaining with threats nbwt theory developed for two stage games in any perfect bayesian equilibrium she can guarantee herself virtually her nbwt payoff by imitating a behavioral type with the following simple strategy in every period ask for and accept nothing less than that player s nbwt share and while waiting for the other side to concede take the action nash recommends as a threat in his two stage game the results suggest that there are forces at work in some dynamic games that favor certain payoffs over all others this is in stark contrast to the classic folk theorems to the further folk theorems established for repeated games with two sided reputational perturbations and to the permissive results obtained in the literature on bargaining with payoffs as you go

the missing link monetary policy and the labor share the textbook new keynesian nk model implies that the labor share is pro cyclical conditional on a monetary policy shock we present evidence that a monetary policy tightening robustly increased the labor share and decreased real wages and labor productivity during the great moderation period in the us the euro area the uk australia and canada we show that this is inconsistent not only with the basic nk model but with a wide variety of nk models commonly used for monetary policy analysis and where the direct link between the labor share and the markup can be broken down

monetary policy and the exchange rate evaluation of var models abstract this paper examines the ability of vector autoregressive var models to properly identify the transmission of monetary policy in a controlled experiment simulating data from a small open economy dsge model estimated for australia we find that sign restricted var models do reasonably well at estimating the responses of macroeconomic variables to monetary policy shocks this is in contrast to models that use recursive zero type restrictions for which inflation can rise following an unexpected interest rate increase while the exchange rate can appreciate or depreciate depending on the ordering of the variables sign restricted var models seem to be able to overcome puzzles related to the real exchange rate provided that a sufficient number of different types of shocks are identified despite delivering the correct sign of the impulse responses central tendency measures of sign restricted var models can however be misleading and hardly ever coincide with the true impulses this finding casts doubt on the common notion that the median impulses are the most probable description of the true data generating process

the generalized war of attrition abstract we model a war of attrition with n k firms competing for n prizes in a natural oligopoly context the k 1 lowest value firms drop out instantaneously even though each firm s value is private information to itself in a standard setting context in which every competitor suffers losses until a standard is chosen even after giving up on its own preferred alternative each firm s exit time is independent both of k and of other players actions our results explain how long it takes to form a winning coalition in politics solving the model is facilitated by the revenue equivalence theorem jel d43 d44 l13 o30

dynamic model for market competition and price rigidity abstractthis article presents a price floor model in which durability unit costs and production period are factors in explaining price rigidity this article elaborates that cost structure plays an essential role in resolving the inconclusive relationship between market concentration and price rigidity when the industry is characterized by decreasing returns of scale the degree of price flexibility decreases as market competition intensifies the reverse is true when the industry exhibits increasing returns of scale the factors that cause price rigidity also foster price adjustment asymmetry and price adjustment lag during times of recession the model exhibits upward price flexibility as costs increase but downward price rigidity as costs decrease even under forward looking expectations the way in which firms adjust prices could look as though they have adaptive expectations if price stickiness is a characteristic of market competition then public policies determined by price level could be too

the impact of money on short term interest rates this study reviews empirical evidence from four research methods related to the impact of money on short term nominal rates the studies consistently fail to find evidence supporting the much hypothesized short term negative relationship between money and nominal rates since at least april 1975 reasons for the absence of a negative relationship include the tendency of financial markets to anticipate corrective action by the fed whenever ml deviates from targeted growth ranges and a rapid adjustment of inflationary expectations to changes in money growth

does money matter for the identification of monetary policy shocks a dsge perspective this paper investigates how the identification assumptions of monetary policy shocks modify the inference in a standard dsge model considering svar models in which either the interest rate is predetermined for money or money and the interest rate are simultaneously determined two dsge models are estimated by minimum distance estimation the estimation results reveal that real balance effects are necessary to replicate the high persistence implied by the simultaneity assumption in addition the estimated monetary policy rule is sensitive to the identification scheme this suggests that the way money is introduced in the identification scheme is not neutral for the estimation of dsge models c 2010 elsevier b v all rights reserved

the effect of monetary policy shocks on macroeconomic variables evidence from the eurozone this paper investigates how european central bank ecb monetary policy shocks impact industrial production output and inflation prices i gather a novel dataset of macroeconomic forecasts and using a narrative approach i construct a new measure of monetary policy shocks industrial production responds to an unpredictable positive monetary policy shock of 100 basis points with a decline of over 0 5 on the contrary inflation responds weakly with a very modest decrease of 0 05

output spillovers from fiscal policy in this paper we estimate the cross country spillover effects of government purchases on output for a large number of oecd countries following the methodology in auerbach and gorodnichenko 2012a b we allow these multipliers to vary smoothly according to the state of the economy and use real time forecast data to purge policy innovations of their predictable components we also consider the responses of other key macroeconomic variables our findings suggest that cross country spillovers have an important impact and also confirm those of our earlier papers that fiscal shocks have a larger impact when the affected country is in recession

the real time properties of the bank of canada s staff output gap estimates we study the revision properties of the bank of canada s staff output gap estimates since the mid 1980s our results suggest that the average staff output gap revision has decreased significantly over the past 15 years in line with recent evidence for the u s

spatial effects in econometric practice in environmental and resource economics this paper reviews some methodological and practical issues that arise in the use of spatial econometric techniques in empirical research in environmental and resource economics the focus is on four issues that do not always receive sufficient attention in applied work the statistical implications of using spatially interpolated values in the rhs of models the issue of spatial scale and spatial aggregation the conceptualization of spatial variation in a continuous or discrete space and the modeling of dependence as simultaneous or conditional spatial effects in econometric practice in environmental and resource economics introduction recent years have seen a tremendous increase in the application of geographic information systems and spatial analysis in the social sciences in general goodchild et al 2000 and in applied research in environmental and resource economics in particular bockstael 1996 such research is often characterized by the need to combine data obtained from different sources using different sample designs aggregation conventions and reporting frequencies for example economic variables such as house and land values and the type and volume of agricultural production are collected by means of censuses and surveys designed to accurately portray the distribution of the variable in the population of interest this population pertains to economic agents or aggregates thereof which are typically conceptualized as discrete distinct objects but rarely envisaged in an explicit spatial context in contrast environmental characteristics are often obtained from physical measurements that result from an underlying spatial sampling design examples are satellite imagery used to estimate land use and land cover and readings from sensors at fixed air and water quality monitoring stations the sampling design used for these measures may be optimized to estimate the distribution of the physical phenomenon such as air quality as a spatial continuum or field but has little connection to the framework used to collect economic information in addition neither economic nor physical data collection necessarily matches the spatial scale of the phenomenon under study such as the geographic extent of a market this is a level of complexity that goes well beyond the traditional micro macro distinction in economic analysis the scale mismatch and the inherent need to integrate data from various

procyclical multifactor productivity tests of the current theories this paper conducts various tests of four hypotheses to account for procycical multifactor productivity the hypotheses include imperfect competition increasing returns to scale labor hoarding and thick market externalities the test results provide strong evidence for imperfect competition and increasing returns and weak evidence for labor hoarding and thick market externalities however the markup and returns to scale parameter estimates are much smaller than those noted in previous research this difference results from the use here of gross output and intermediate inputs as opposed to the use in previous research of value added and primary inputs

identifying monetary policy shocks with changes in open market operations abstract in this paper we reexamine the effects of monetary policy shocks by exploiting the information contained in open market operations a sticky price model is developed where money is the counterpart of securities deposited at the central bank the model s solution reveals that a rise in central bank holdings of open market securities can be interpreted as a monetary expansion estimates of vector autoregressions for us data are further provided showing that reactions to an unanticipated rise in open market securities are consistent with common priors about a monetary expansion i e a decline in the federal funds rate a rise in output and inertia in price responses compared to federal funds rate shocks prices do not exhibit a puzzling behavior and a larger fraction of the gdp forecast error variance can be attributed to open market shocks however the explanatory power of the latter has decreased since federal funds rate targets have been announced