the institutions of monetary policy it is a great honor to be invited by this year s president elect marty feldstein to deliver the ely lecture marty has been my teacher mentor colleague and friend for over 30 years and i never cease to be amazed by the energy and imagination which he devotes to the study of economic problems i got to know marty during my time as a kennedy scholar at harvard in 1971 the kennedy scholarships form one part of britain s national memorial to president john f

money and capital abstract the effects of money anticipated inflation on capital formation is a classic issue in macroeconomics previous papers adopt reduced form approaches putting money in the utility function or imposing cash in advance but using otherwise frictionless models we follow instead a literature that tries to be explicit about the frictions making money essential this introduces new elements including a two sector structure with centralized and decentralized markets stochastic trading opportunities and bargaining these elements matter quantitatively and numerical results differ from findings in the reduced form literature the analysis also reduces a gap between microfounded monetary economics and mainstream macro

currency and credit in a private information economy in an environment with private information spatial separation and limited communication a currency like object and more standard named credits can be distinguished the credit objects can be used among agents in an enduring relationship that is among agents with known trading histories whereas the currency like object must be used among relative strangers in this environment collectively determined pareto optimal rules make the level of the currency like object and the mix of currency to named credits responsive to individual needs and to economywide states total indebtedness is determined by the number of lenders that is by preference or demand shocks and the mix of currency to credits is determined by transaction patterns among the agents

explaining the deteriorating entry earnings of canada s immigrant cohorts 1966 2000 abstract using the 1981 1986 1991 1996 and 2001 canadian censuses we explore causes of the deterioration in entry earnings of successive cohorts of immigrant men and women roughly one third of the deterioration is explained by compositional shifts in language ability and region of birth we find no evidence of a decline in the returns to foreign education for either immigrant men or immigrant women but a definite deterioration in the returns to foreign labour market experience most strongly among men from non traditional source countries we can explain roughly two thirds of the male and one half of the female deterioration without any reference to entry labour market conditions when we also account for entry conditions our results suggest canada s immigrants of the late 1990s would otherwise have enjoyed entry earnings equal to or higher than their counterparts of the 1960s

a model of debit card as a means of payment abstract this paper provides an explanation for both the rapid growth in the use of a debit card over time and the cross sectional difference in the use of a debit card using a search theoretic model the trade off between cash and a debit card as means of payment is incorporated such that a buyer incurs disutility cost proportional to the amount of cash holdings while a seller accepting a debit card bears a fixed record keeping cost regardless of transaction amount as record keeping cost decreases with the development of information technology over time disutility cost of cash holdings required for pairwise trade eventually exceeds record keeping cost so that all the agents with different wealth levels choose to use a debit card as a means of payment also disutility cost of cash holdings required for pairwise trade would be higher for the rich than for the poor implying the cross sectional feature of payment pattern that the rich use a debit card more frequently than the poor there are two distinct mechanisms that improve welfare as record keeping cost decreases one is to reduce deadweight loss from holding cash and the other is to reduce its distortionary effect on output produced in pairwise trade

the effect of immigration along the distribution of wages this paper analyses the effect immigration has on wages of native workers unlike most previous work we estimate wage effects along the distribution of wages we derive a flexible empirical strategy that does not rely on pre allocating immigrants to particular skill groups in our empirical analysis we demonstrate that immigrants downgrade considerably upon arrival as for the effects on native wages we find that immigration depresses wages below the 20th percentile of the wage distribution but leads to slight wage increases in the upper part of the wage distribution the overall wage effect of immigration is slightly positive the positive wage effects we find are although modest too large to be explained by an immigration surplus we suggest alternative explanations based on the idea that immigrants are paid less than the value of what they contribute to production generating therefore a surplus and we assess the magnitude of these effects

the eurosystem the u s federal reserve and the bank of japan similarities and differences the paper provides a systematic comparison of the eurosystem the u s federal reserve and the bank of japan these monetary authorities exhibit somewhat different status and tasks which reflect different historical conditions and national characteristics however widespread changes in central banking practices in the direction of greater independence and increased transparency as well as changes in the economic and financial environment over the past 15 20 years have contributed to reduce the differences among these three world s principal monetary authorities a comparison based on simple over the counter policy reaction functions shows no striking differences in terms of monetary policy implementation

coalition proof trade and the friedman rule in the lagos wright model the lagos wright model a monetary model in which pairwise meetings alternate in time with a centralized meeting has been extensively analyzed but always using particular trading protocols here trading protocols are replaced by two alternative notions of implementability one that allows only individual defections and one that also allows cooperative defections in meetings it is shown that the first best allocation is implementable under the stricter notion without taxation if people are sufficiently patient and if people are free to skip the centralized meeting then lump sum taxation used to pay interest on money does not enlarge the set of implementable allocations

general equilibrium with nonconvexities and money in a general equilibrium economy with nonconvexities there are sunspot equilibria with good welfare properties sunspots can ameliorate the effects of the nonconvexities for these economies we show that agents act as if they have quasi linear utility functions we use this result to construct a new model of monetary exchange along the lines of lagos and wright where trade occurs in both centralized and decentralized markets but instead of quasi linear preferences we assume general preferences but with indivisible labor this suggests that modern monetary theory is more robust than one might have thought it also constitutes progress on the classic problem of integrating monetary economics and general equilibrium theory

on the future of macroeconomics a new monetarist perspective this article argues that a pressing goal for macroeconomics is to incorporate financial considerations but we need models with solid microfoundations in particular the use of assets in facilitating exchange as well as different credit or other financial arrangements should be outcomes of not inputs to theories as a preview i suggest that mainstream macro does a good job explaining many phenomena and a financial crisis does not disprove such theory but understanding crises requires better incorporating factors related to money credit banking and liquidity the approach called new monetarist economics can help a lot in this regard

the colour of money earnings differentials among ethnic groups in canada the literature on ethnically based earnings differentials in canada has focused on differences either between whites and visible minorities or between particular ethnic groups in this paper the authors examine both earnings differentials between whites and visible minorities and earnings differentials within the white and visible minority groupings among both men and women they find substantial earnings differentials both between and within the white and visible minority groupings differentials between whites and visible minorities suggest that the visible minority category is a useful indicator of economic discrimination differentials within these groupings however suggest that it is only a rough indicator

credit and identity theft abstract the quintessential crime of the information age is identity theft the malicious use of personal identifying data in this paper we model identity and its use in credit transactions various types of identity theft occur in equilibrium including new account fraud existing account fraud and friendly fraud the equilibrium incidence of identity theft represents a tradeoff between a desire to avoid costly or invasive monitoring of individuals on the one hand and the need to control transactions fraud on the other our results suggest that technological advances will not eliminate this tradeoff

the distribution of money balances and the nonneutrality of money recent monetary models with explicit microfoundations are made tractable by assuming that agents have access to centralized markets after one round of decentralized trade given quasi linear preferences this makes the distribution of money degenerate which keeps the models simple but precludes the discussion of distributional effects of monetary policy we generalize these models by assuming two rounds of trade before agents can readjust their money holdings to study a range of new distributional effects analytically we show that unexpected symmetric lump sum money injections may increase short run output and welfare whereas asymmetric injections may increase long run output and welfare

inflation output and welfare this paper studies the effects of anticipated inflation on aggregate output and welfare within a search theoretic framework we allow money holders to choose the intensities with which they search for trading partners so inflation affects the frequency of trade as well as the quantity of output produced in each trade we consider the standard pricing mechanism for search models i e ex post bargaining as well as a notion of competitive pricing if prices are bargained over the equilibrium is generically inefficient and an increase in inflation reduces buyers search intensities output and welfare if prices are posted and buyers can direct their search search intensities are increasing with inflation for low inflation rates and decreasing for high inflation rates the friedman rule achieves the first best allocation and inflation always reduces welfare even though it can have a positive effect on output for low inflation rates

sticky prices a new monetarist approach why do some sellers set nominal prices that apparently do not respond to changes in the aggregate price level in many models prices are sticky by assumption here it is a result we use search theory with two consequences prices are set in dollars since money is the medium of exchange and equilibrium implies a nondegenerate price distribution when the money supply increases some sellers may keep prices constant earning less per unit but making it up on volume so profit stays constant the calibrated model matches price change data well but in contrast to typical sticky price models money is neutral jel e52 e31 e42

barter and monetary exchange under private information the authors develop a model of production and exchange with uncertainty concerning the quality of commodities and study the role of fiat money in ameliorating frictions caused by private information the model is specified so that without private information only high quality commodities are produced and there is no welfare gain from using money with private information there can be equilibria and sometimes multiple equilibria where low quality commodities are produced and money can increase welfare money works by promoting useful production and exchange in efficient monetary equilibria agents adopt strategies that increase the probability of acquiring high quality output copyright 1994 by american economic association

the effect of literacy on immigrant earnings we examine the impact of literacy on immigrant earnings and the sources of lower returns to education and experience among immigrants we find that the native born literacy distribution dominates that for immigrants however the two groups obtain similar returns to literacy skills contrary to discrimination based explanations for immigrant native born earnings differentials among the university educated literacy differences account for about two thirds of the earnings gap however low returns to foreign experience have a larger impact on this differential among the less educated literacy differences and differences in the returns to experience have similar effects on the earnings differential

cross country variation in the impact of international migration canada mexico and the united states using data drawn from the canadian mexican and u s censuses we find a numerically comparable and statistically significant inverse relation between immigrant induced shifts in labor supply and wages in each of the three countries a 10 labor supply shift is associated with a 3 4 opposite signed change in wages despite the similarity in the wage response theimpactofmigrationonthewagestructuredifferssignificantlyacrosscountries international migration narrowed wage inequality in canada increased it in the united states and reduced the relative wage of workers at the bottom of the skill distribution in mexico jel j31 j61

on the coexistence of money and higher return assets and its social role this paper adopts mechanism design to investigate the coexistence of at money and higherreturn assets we consider an economy with pairwise meetings where at money and riskfree capital compete as means of payment as in lagos and rocheteau 2008 the trading mechanism in pairwise meetings is chosen among all individually rational renegotiation proof mechanisms to maximize society s welfare we show that in any stationary monetary equilibrium capital commands a higher rate of return than at money

optimal pricing of payment services abstract payments are increasingly being made with payment cards despite the fact that the cost of clearing a card payment usually exceeds the cost of transferring cash we examine this puzzle through the lens of monetary theory we consider the design of an optimal card based payment system when cash is available as an alternative means of payment we find that a feature akin to the controversial no surcharge rule may be necessary to ensure the viability of the card payment system this rule states that merchants cannot charge a customer who pays by card more than a customer who pays by cash

search bargaining money and prices the goal of this paper is to extend existing search theoretic models of fiat money which until now have assumed that the price level is exogenous by explicitly incorporating bilateral bargaining this allows us to determine the price level endogenously and leads to additional insights concerning the role of money for example we find that monetary equilibria are generally inefficient in the sense that output and prices differ from the solution to a social planner s problem although the difference can become small as the discount rate or search friction vanishes we also find that there exist nonstationary inflationary equilibria

monetary policy and asset prices a mechanism design approach we investigate the eects of monetary policy on asset prices in economies where assets are traded periodically in over the counter otc markets with bilateral meetings between buyers and sellers the trading mechanism in pairwise meetings is designed to maximize social welfare taking as given the frictions in the environment e g lack of commitment and limited enforcement and monetary policy we show that asset price bubbles emerge in a constrained e cient monetary equilibrium only if liquidity is abundant and the rst best allocation is implementable in contrast if liquidity is scarce assets are priced at their fundamental value in any constrained e cient monetary equilibrium in which case an increase in in ation has no eect on asset prices but it reduces output and welfare finally for low in ation rates the bursting of an asset price bubble can be an optimal response to a shock that reduces assets resalability

technological change occupational tasks and declining immigrant outcomes implications for earnings and income inequality in canada the earnings and occupational task requirements of immigrants to canada are analyzed the growing education levels of immigrants in the 1990s have not led to a large improvement in earnings as one might expect if growing computerization and the resulting technological change was leading to a rising return to non routine cognitive skills and a greater wage return to university education controlling for education we find a pronounced cross arrival cohort decline in earnings that coincided with cross cohort declines in cognitive occupational task requirements and cross cohort increases in manual occupational task requirements the immigrant earnings outcomes had only a small effect on overall canadian earnings inequality resume changement technique t ches occupationnelles et resultats declinants pour les immigrants implications pour l inegalite des gains et des revenus au canada les auteurs analysent les gains et les prerequis des t ches occupationnelles des immigrants les niveaux d education croissants des immigrants dans les annees 1990 n ont pas entraine une grande amelioration dans les gains comme on aurait pu s y attendre si l informatisation accrue et les changements techniques qui s ensuivent ont entraine un rendement croissant sur des habiletes cognitives non routinieres et un rendement salarial plus grand sur l education universitaire normalisant pour le niveau d education on decouvre un declin entre cohortes dans les gains qui coincide avec un declin dans ce que reclament les t ches en termes d habiletes cognitives et un accroissement de ce que reclament les occupations manuelles l effet de ces changements sur les gains des immigrants n a eu qu un faible impact sur l inegalite des gains au canada

money and asset prices with uninsurable risks abstract we present a theory of differences of liquidity across assets based on an endogenous ranking of assets as media of exchange arising from their relative quality as hedging devices when assets have two distinct roles as intertemporal media of exchange and hedging devices buyers have generically a strict preference for paying sellers with the asset which is the relative better hedging device for sellers the consequence of this preference is that there are three monetary policy regimes and these regimes differ in which assets serve as media of exchange whether assets carry a liquidity premium and in the impact that monetary policy has on asset prices

third world competition and de industrialisation in advanced countries rapid industrialization in the third world during the last three decades and the continuing fast expansion of the south s manufacturing exports to the advanced countries has raised the question whether these have or will in the future lead to deindustrialization in the north this paper provides a consistent conceptual framework for analyzing this issue which is then applied to the experience of the u k economy it is concluded that in the 1970s u k manufacturing trade with the south lead to an increase rather than a decline in output and employment however the paper also provides evidence that in the future this trade is likely to become a source of disequilibrium and may contribute to deindustrialization copyright 1989 by oxford university press

a search model of unemployment and inflation in this paper i introduce money in the standard labor matching model mortensen and pissarides 1999 pissarides 2000 a double coincidence problemmakes fiat money necessary as a medium of exchange in the long run a rise inthe rate of money growth leads to higher inflation and higher unemployment sothe long run phillips curve is not vertical the optimal monetary growth ratedecreases with the workers bargaining power the level of unemploymentbenefits and the payroll tax rate

social norms and money abstract in an economy where there is no double coincidence of wants and without public record keeping of past transactions money is usually seen as the only mechanism that can support exchange in this paper we show that as long as the population is finite and agents are sufficiently patient a social norm establishing gift exchange can substitute for money however for a given discount factor population growth eventually leads to the breakdown of the social norm additionally increases in the degree of specialization in the economy can also undermine the social norm by contrast monetary equilibrium exists independent of the population size we conclude that money is essential as a medium of exchange when the population is large

separation of unit of account from medium of exchange the separation of a unit of account uoa from a medium of exchange moe in the commodity money system is investigated by considering explicitly a seller s choice of uoa in terms of either an moe or a unit of metal weight if the likelihood of debasement of an moe and its rate are high enough the price is posted in terms of a unit of metal weight rather than an moe interestingly this moe uoa separated equilibrium yields the flexible nominal price whereas an moe uoa integrated equilibrium yields the sticky one this implies the nominal price rigidity in the fiat money system where moe and uoa are integrated

canadian economics research on immigration through the lens of theories of justice we assess the current state of knowledge in the economics of immigration and consider how economic theories of knowledge can be used to further the goal of developing a just immigration policy in the process we highlight the contributions of economists working in canada and canadian economists internationally in furthering our understanding of this important research area we identify research gaps such as the need for more research on the underlying causes of the poor returns to foreign work experience for immigrants from non traditional source countries and the effect of immigrants on stimulating innovation more research is also needed on the implications of temporary foreign worker tfw programs and the growing importance of employers in immigrant selection systems la recherche canadienne en economie de l immigration a travers la lentille des theories de la justice on jauge l etat present des connaissances en economie de l immigration et on examine comment les theories economiques de la connaissance peuvent etre utiles dans la poursuite d un objectif qui serait de mettre en place une politique d immigration juste dans ce processus on souligne les contributions des economistes travaillant au canada a notre comprehension de ce chantier de recherche on identifie certaines zones d ombre comme la recherche pour comprendre les causes sous jacentes aux pauvres rendements de l experience de travail des immigrants en provenance des pays qui ne sont pas des sources d immigration traditionnelles et celle pour comprendre les effets des immigrants sur la stimulation de l innovation il faudra aussi davantage de recherches sur les implications des programmes pour attirer et accueillir les travailleurs etrangers temporairement et sur l importance croissante des employeurs dans les systemes de selection d immigrants

the performance of immigrants in the canadian labor market in this article we examine the economic assimilation of immigrants to canada we provide new evidence on immigrants who arrived in the 1970s and document an increase in the dispersion of labor market outcomes across immigrants of different vintages over time our results confirm u s evidence of permanent differences across immigrant cohorts what distinguishes the canadian experience is small or negative rates of assimilation for most cohorts over the sample period finally we test the overidentification of the assimilation process specified in previous studies and fail to reject the usual cohort fixed effect specification

education credentials and immigrant earnings using 1981 to 2001 census data we study how the human capital of immigrants is rewarded in canada we distinguish between years of schooling and degrees obtained in order to estimate sheepskin effects the gain in earnings associated with receipt of a degree controlling for years of schooling we find that immigrant years of schooling and immigrant work experience accumulated before arrival is valued much less than canadian experience of comparable natives however for immigrants the increase in earnings associated with completing educational programs is generally higher than that of comparable natives we provide both signalling and human capital interpretations of this finding a l aide des donnees de recensement entre 1981 et 2001 on examine la facon dont le capital humain des immigrants est reconnu et remunere au canada on fait la distinction entre les annees de scolarite et les grades obtenus afin de calibrer les effets du diplome les gains associes a l obtention du grade apres avoir pris en compte les annees de scolarite on decouvre que les annees de scolarite et d experience accumulees par les immigrants avant leur arrivee recoivent une ponderation moins grande que l experience comparable des canadiens cependant pour les immigrants le fait de completer leur programme a un effet sur l accroissement des revenus qui est plus important que pour les canadiens de souche on suggere des interpretations de ces resultats a partir de theorisations fondees sur le capital humain et la theorie des signaux

the redistributive effects of inflation and the shape of money demand abstract i quantify the distributional effects of expected inflation in a sample of oecd countries using a microfounded model of money where agents differ in their consumption risk against which they can insure using money and government bonds the model is calibrated using harmonized wealth microdata from the luxembourg wealth study i find that the inflation tax is progressive for low inflation levels but it becomes regressive as inflation increases cut off points vary across countries and depend on discount factors and heterogeneity in consumption risk across agents moreover i find that the magnitude of inflation s distributional impact depends not only on wealth distribution but also and importantly on the curvature and height of the money demand curve indeed a higher and less elastic money demand leads to more regressive effects of inflation thus implying such effects are not necessarily stronger in a country with a more unequal wealth distribution

economic organization with limited communication this paper presents formal stylized representations of communication accounting systems oral assignment portable object written message and telecommunication systems are considered the environments that allow this formalization are characterized by spatial separation private information and a need to keep track of past actions transfers and shocks in environments that have spatial separation and private information beneficial multilateral arrangements can depend critically on agents ability to communicate to one another values of contemporary shocks and to keep track of histories of past transfers or past announced shocks this paper formalizes this idea and focuses on com

lack of recall and centralized monetary trade we introduce lack of recall of past transactions as an alternative assumption to anonymity in a model where trade is centralized in environments where there is an intertemporal lack of double coincidence of wants problem and lack ofcommitment lack of recall can give rise to monetary equilibria that dominate nonmonetary outcomes in terms of welfare

communication by central bank committee members different strategies same effectiveness the paper assesses the communication strategies of the federal reserve the bank of england and the european central bank and their effectiveness we find that the effectiveness of communication is not independent from the decision making process the paper shows that the federal reserve has been pursuing a highly individualistic communication strategy amid a collegial approach to decision making while the bank of england is using a collegial communication strategy and highly individualistic decision making the european central bank ecb has chosen a collegial approach both in its communication and in its decision making assessing these strategies we find that predictability of policy decisions and the responsiveness of financial markets to communication are equally good for the federal reserve and the ecb this suggests that there may not be a single best approach to designing a central bank communication strategy

openness and the market friendly approach to development learning the right lessons from development experience abstract two central policy issues in economic development today are how open should a developing country be to the world economy and what should the government do or not do to promote rapid growth this paper examines these questions in relation to the highly successful east asian countries and contributes to the debate between world bank and heterodox economists the paper suggests that there has been significant convergence between the two schools on analytical and empirical issues but not on policy it takes this debate further by analyzing the principal issues still in contention

on money as a medium of exchange we analyze economies in which individuals specialize in consumption and production and meet randomly over time in a way that implies that trade must be bilateral and quid pro quo nash equilibria in trading strategies are characterized certain goods emerge endogenously as media of exchange or commodity money depending both on their intrinsic properties and on extrinsic beliefs there are also equilibria with genuine fiat currency circulating as the general medium of exchange we find that equilibria are not generally pareto optimal and that introducing fiat currency into a commodity money economy may unambiguously improve welfare velocity acceptability and liquidity are discussed

the evolution of monetary equilibrium abstract the hahn problem is that even if a monetary equilibrium with valued fiat money exists in general equilibrium a nonmonetary equilibrium with a zero price on money generally also exists why should we expect the former over the latter here i consider the preferences that will survive repeated trading in an exchange economy where agents compete in biological fitness with unobservable preferences and positive assortativity in matching evolutionarily stable preferences implement the competitive equilibrium that maximizes the sum of agents fitnesses in a standard bewley townsend model this implies selection of the monetary over the nonmonetary equilibrium and also implies the survival of agents with money in the utility function trust in fiat money is only a recent development and even today such faith is hardly universal cass and shell 1980

social capital and growth we define and characterize social capital in a simple growth model we capture social capital in a model where individuals in a community maximize their lifetime gains to trade each trade between two members of a community has the structure of the prisoners dilemma trades are repeated indefinitely but not necessarily each period social capital is defined as the social structure which facilitates cooperative trade as an equilibrium the trading model is incorporated into a growth model to explore the connections between growth labor mobility and social capital the key assumption is that technological innovation which drives growth involves a reallocation of labor that affects social capital modifying the responsiveness of labor to a technological shock has implications for both labor efficiency and social capital

existence of steady states with positive consumption in the kiyotaki wright model we prove the general existence of steady states with positive consumption in an n goods and fiat money version of the kiyotaki wright model by admitting mixed strategies we also show that there always exists a steady state in which everyone accepts a least costly to store object in particular if fiat money is one such object then there always exists a monetary steady state we also establish some other properties of steady states and comment on the relationship between steady states and incentive feasible allocations

two fallacies concerning central bank independence this paper takes issue with two basic conclusions prevalent in the literature on central bank behavior first the paper argues that it is inappropriate to presume that central banks will in the absence of any precommitment technology necessarily behave in a discretionary fashion that implies an inflationary bias since there is no functional connection between average rates of money creation or inflation and policy responsiveness to cyclical disturbances it is entirely feasible for the bias to be avoided in other words there is no necessary tradeoff between flexibility and commitment second to the extent that the absence of any absolute precommitment technology is nevertheless a problem it will apply to a consolidated central bank plus government entity as well as to the central bank alone thus contracts between governments and central banks do not overcome the motivation for dynamic inconsistency they merely relocate it this abstract was borrowed from another version of this item

efficient propagation of shocks and the optimal return on money abstract we study optimal allocations in an environment in which money is essential due to lack of commitment and anonymity of individuals because the economy features aggregate preference shocks we apply a notion of implementability that allows for allocations with non trivial business cycle dynamics for the propagation of shocks we show that history dependence is predicted by the theory of second best and becomes necessary for optimality when the degree of patience is neither too low nor too high our analysis concludes with a discussion of whether there is a role for the propagation of shocks in alternative economic environments

comments on money is privacy by charles kahn james mcandrews and william roberds monetary theory and game theory three classes of models on money closely related to game theoretic models are i search theoretic models ii repeated games in a narrow sense and iii trading post games this note tries to point out the sense of affinity between the theory of microfoundations of money and the theory of repeated games in a broad sense of the term

the visible minority earnings gap across generations of canadians abstract to what extent the earnings gaps facing canada s visible minorities reflect discrimination is a question of tremendous policy interest this paper argues that failing to account for the limited canadian ancestry of visible minorities overestimates discrimination if immigrant assimilation is an intergenerational process using the 2001 and 2006 canadian censuses weekly earnings conditional on a rich set of worker and job characteristics are compared with child immigrant second and third and higher generation canadian men the results reveal a tendency for earnings to increase across subsequent generations of visible minority but not white men though the pattern is strongest between the first and second generation for black men it is also evident between the canadian born with and without a canadian born parent despite this progress for most visible minority groups earnings gaps are identified even among third and higher generation canadians

long term trends in the world economy the gender dimension abstract this paper considers the implications of long term trends in the international economy for the relative employment and income of men and women in developed and developing countries we find that given a persistent gender division of labor mass unemployment in the north is due to different forces operating on men and women the rate of growth of men s jobs has fallen because of deindustrialization but men have not withdrawn from the labor force at a comparable rate women have been entering the labor force in feminized jobs at a faster rate than they have been created in the south women have largely taken traditionally feminized jobs in the labor intensive export oriented growing manufacturing sectors in latin america entry has been largely in the service sector men have been losing jobs in agriculture and domestic manufacturing the paper proposes that the optimal solution to the mass unemployment problem in the north as well as in the south and the apparent competition for jobs between the north and the south and between men and women lies in achieving a trend increase in the growth rate of oecd and world aggregate demand and output but such a trend rise in the long term rate of growth of demand would only be possible if there were new cooperative institutional arrangements within and between countries in such arrangements women need to have an important independent role

human capital specificity evidence from the dictionary of occupational titles and displaced worker surveys 1984 2000 measures of four basic skills constructed from the dictionary of occupational titles are used to examine the source of human capital specificity the measures are used to characterize the skill portfolio of each job and to construct distance measures between jobs wage losses in the displaced worker surveys are shown to be more closely associated with switching skill portfolios than switching industry or occupation code per se these switches represent large decreases in the skill portfolio in the postdisplacement job the recent evidence for industry specific capital is reexamined the results suggest a difference between fluid and crystallized skills

contracts constraints and consumption the paper compares implications of three kinds of models of households consumption behaviour the basic permanent income model several models of liquidity constrained households and a model of an informationally constrained efficient contract these models are distinguished in terms of implications regarding the present discounted values of net trades to households at various levels of temporary income and the households marginal rates of substitution martingale consumption is studied as an approximation to the predicted consumption process of the efficient contract model

forward and backward intergenerational goods why is social security good for the environment this paper studies the ability of nonmarket institutions to invest optimally in forward intergenerational goods figs such as education and the environment when agents are selfish or exhibit paternalistic altruism we show that backward intergenerational goods bigs such as social security play a crucial role in sustaining investment in figs without them investment is inefficiently low but with them optimal investment is possible we also show that making the provision of bigs mandatory crowds out the voluntary provision of figs and that population aging can increase investment in figs

incomplete record keeping and optimal payment arrangements abstract we study a random matching absence of double coincidence environment in which people cannot precommit and in which there are two imperfect ways to keep track of what other people have done in the past money and a public record of all past actions that is updated with an average lag we study how the magnitude of that lag affects the allocations that are optimal from among allocations that are stationary and feasible and that satisfy incentive constraints which arise from the absence of commitment and the imperfect ways of keeping track of what others have done in the past journal of economic literature classification numbers e40 c73 d82

a new suggestion for simplifying the theory of money we propose a new search theoretic model of monetary exchange with indivisible assets based on price posting instead of bargaining and incorporating noisy search this yields some familiar results plus a lot more the model admits multiple steady states due to the self referential nature of liquidity it admits cyclic chaotic and stochastic equilibria and compared to bargaining versions the dynamics are more general and have better microfoundations it generates price dispersion with interesting efficiency implications plus sticky prices and rational inattention parametric examples yield closed form solutions based on these results we suggest this should become a benchmark model in monetary economics

classifying monetary economics fields and methods from past to future we propose a simple yet sufficiently encompassing classification scheme of monetary economics it comprises three fundamental fields and six recent areas that expand within and across these fields the elements of our scheme are not found together and in their mutual relationships in earlier studies of the relevant literature neither is this an attempt to produce a relatively complete systematization our intention in taking stock is not finality or exhaustiveness we rather suggest a viewpoint and a possible ordering of the accumulating knowledge our hope is to stimulate an improved understanding of the evolving nature and internal consistency of monetary economics at large

the optimal degree of competition and dynamic efficiency in japan and korea abstract this paper is concerned with the neglected role of competition policy in east asian development michael porter considers japan s development to have benefitted from intense competition among firms by contrast caves and uekusa criticize miti s role in creating recession cartels and entry barriers which are thought to have resulted in allocative inefficiency this paper argues that competition policy in both japan and korea was oriented towards creating dynamic efficiency the highest long term productivity growth rate it did so by measures operating at both the industry and firm level which sometimes restricted competition and sometimes encouraged it

search based models of money and finance an integrated approach many applications in monetary economics of search and bargaining theory use shi trejos wright hereafter stw many applications in finance use duffie g rleanu pedersen hereafter dgp these models share several features and both concern liquidity yet they also differ in stw agents use assets as payment instruments when trading goods in dgp they pay with goods or transferable utility when trading assets we integrate the two this clarifies connections between the literatures and generates novel insights several new results are provided for the baseline stw and dgp models while the integrated structure generates even more interesting outcomes including endogenous transactions patterns and belief based dynamics

the declining fortunes of the young since 2000 abstract we document that successive cohorts of college and post college degree graduates experienced an increase in the probability of obtaining cognitive jobs both at the start of their careers and with time in the labor market in the 1990s however this pattern reversed for cohorts entering after 2000 profiles of the proportion of a cohort in cognitive occupations since school completion fall and become flatter with successive cohorts since cohort wage profiles display a similar pattern these findings appear to fit with a strong increase in demand for cognitive tasks in the 1990s followed by a decline in the 2000s

the earnings of immigrant men in canada job tenure cohort and macroeconomic conditions using eleven cross sectional surveys spanning 1981 92 the authors compare the earnings of immigrant and native born men in canada apparently recent immigrant cohorts have suffered no decline in earnings job tenure is found to be a strongly significant determinant of earnings previous estimates of immigrant earnings differentials which have not incorporated job tenure information may partly reflect differences in tenure between immigrants and the native born when the sample is restricted to pairs of surveys that are close to the census survey years the estimates of cohort effects are sensitive to the choice of survey years one possible explanation for that sensitivity is suggested by the finding that macroeconomic conditions are a statistically significant determinant of the rate of assimilation of recent immigrants

money is memory abstract this paper examines the sets of feasible allocations in a large class of economic environments in which commitment is impossible following myerson 8 the standard definition of feasibility is adapted to take account of the lack of commitment the environments feature either memory or money memory is defined as knowledge on the part of an agent of the full histories of all agents with whom he has had direct or indirect contact in the past money is defined as an object that does not enter utility or production functions and is available in fixed supply the main proposition is that any allocation that is feasible in an environment with money is also feasible in the same environment with memory depending on the environment the converse may or may not be true hence from a technological point of view money is equivalent to a primitive form of memory journal of economic literature classification numbers e40 c73 d82

evidence of new immigrant assimilation in canada previous studies of the labour market experience of male immigrants to canada have uncovered two disturbing trends declining entry earnings for successive new immigrant cohorts and low assimilation rates these findings suggest that many of these cohorts may never assimilate the 1991 census provides a first look at the immigrant cohorts arriving in the 1980s these immigrants appear to avoid the plight of their predecessors entry earnings have stopped falling and those immigrants arriving between 1981 and 1985 experienced a 17 per cent assimilation rate i am unable to explain this turnaround based on the observable characteristics recorded in the census data

optimal monetary policy distribution efficiency versus production efficiency this paper investigates the trade off between distribution effect and production effect of monetary policy when there exist unobservable idiosyncratic liquidity shocks in the absence of risk sharing arrangements such as a credit market monetary policy serves to provide ex post insurance to smooth consumption specifically issuing interest bearing bonds restores credit transactions on money through bond money exchanges such a policy has a positive distribution effect but the resulting inflation hampers production efficiency it is demonstrated that the trade off between distribution efficiency gain and production efficiency loss would result in net welfare enhancement if consumers are relative risk averse enough politique monetaire optimale efficacite dans la distribution versus efficacite dans la production ce memoire examine la relation d equivalence entre l effet sur la distribution et l effet sur la production de la politique monetaire quand existent des chocs de liquidite idiosyncratiques non observables en l absence d arrangement pour le partage des risques tel qu un marche du credit la politique monetaire sert d assurance ex post pour lisser les variations dans les niveaux de consommation specifiquement emettre des obligations qui paient des interets restore les transactions monetaires de credit via les echanges obligations monnaie une telle politique a un effet positif sur la distribution mais l inflation qui en resulte nuit a l efficacite de la production on montre que la relation d equivalence entre les gains d efficacite dans la distribution et la perte d efficacite dans la production resultent en une amelioration du niveau net de bien etre si les consommateurs ont une aversion suffisamment grande au risque relatif

how robust is the folk theorem the folk theorem of repeated games has established that cooperative behavior can be sustained as an equilibrium in repeated settings early papers on private monitoring and a recent paper of cole and kocherlakota games and economic behavior 53 2005 59 72 challenge the robustness of this result by providing examples in which cooperation breaks down when players observe only imperfect private signals about other players actions or when attention is restricted to strategies with finite memory this paper shows that cole and kocherlakota s result is an artefact of a further restriction that they impose we prove that the folk theorem with imperfect public monitoring holds with strategies with finite memory as a corollary we establish that the folk theorem extends to environments in which monitoring is close to public yet private

ethnic enclaves and immigrant earnings growth the impact of living in an ethnic enclave on earnings growth of immigrants in canada is examined using the 1981 2001 censuses consistent with u s findings enclaves are found to have a negative impact on the earnings growth of male immigrants a negative impact is also found for female immigrants living in an enclave was found to be particularly harmful for individuals immigrating as adults especially for females but did not affect immigrants who arrived at a young age enclaves had a more negative impact on high skilled male immigrants especially if they had received the bulk of their education outside canada enclaves were also found to hinder language skills l impact du fait de vivre dans une enclave ethnique sur la croissance des gains des immigrants au canada est analysea l aide des donnees de recensements de 1981 a 2001 en concordance avec les resultats des etudes americaines on decouvre que les enclaves ont un effet negatif sur la croissance des gains des hommes immigrants il y a aussi un impact negatif sur la croissance des gains des femmes immigrantes vivre dans une enclave est particulierement dommageable pour les personnes qui immigrent au stade adulte et ce particulierement pour les femmes les effets negatifs ne se font pas sentir sur les immigrants qui arrivent en bas ge les enclaves ont un effet davantage negatif pour les hommes immigrants hautement qualifies en particulier s ils ont recu le gros de leur education hors du canada on montre que de vivre en enclaves retarde le developpement d habiletes langagieres

cohort patterns in canadian earnings assessing the role of skill premia in inequality trends in this paper we document the pattern of change in age earnings profiles across cohorts and evaluate its implications using synthetic cohorts from the survey of consumer finances over the period 1971 to 1993 wwe show that the age earnings profiles of canadian men have been deteriorating for more recentcohorts in comparison with older cohorts we find this pattern for both high school and university educated workers in no case do we find evidence that the return to gaining experience has been increasing over time nor do we find increased within cohort dispersion of earnings we view these findings as conflicting with the hypothesis that increased skill premia largely explain the observed increase in dispersion of male weekly earnings jel classification j31 o33 ce memoire documente le pattern de changements dans les relations ges gains d une cohorte a l autre et en analyse les implications utilisant des cohortes synthetiques pour la periode 1971 93 on montre que les profils ges gains des hommes au canada se sont deteriores dans les cohortes les plus recentes on ne trouve pas de resultats qui montreraient que le rendement sur l experience accumulee s est accru dans le temps ou qu il y a dispersion accrue des gains a l interieur des cohortes les auteurs suggerent que ces resultats contredisent l hypothese que des primes accrues pour les habiletes expliqueraient l accroissement qu on a observe dans la dispersion des gains des hommes au canada