a panel analysis of job changes and unemployment abstract this paper tests for state dependence in histories of unemployment and job mobility from the first six waves of the german socio economic panel soep transitions between states of employment and unemployment are modelled as outcomes of binomial probit processes which are first and higher order markov the use of simulation estimation allows quite general intertemporal covariance structures in order to capture individual heterogeneity it is investigated how differences in human capital and other personal characteristics and macro or industry determinants such as regional unemployment growth and immigration pressure affect labour mobility

the economic integration of forced migrants evidence for post war germany the flight and expulsion of germans from eastern europe after world war ii constitutes one of the largest forced population movements in history we analyse the economic integration of these migrants and their offspring in west germany a quarter century after displacement first generation migrants still tend to fare worse economically displaced agricultural workers however exhibit higher incomes than comparable natives as displacement caused large scale transitions out of low paid agriculture differences in economic outcomes of second generation migrants resemble those of the first generation

the effects of immigration in frictional labor markets theory and empirical evidence from eu countries immigrants are new comers in a labor market as a consequence they lack of social networks and other country specific and not directly productive valuable assets affecting their relative bargaining position against employers we introduce this simple observation into a matching model of the labor market and show that immigrants increase employment prospects of competing natives to test the predictions of our model we exploit yearly vari ations between 1998 and 2004 in the share of immigrants within occupations of 12 european countries we identify the causal impact of immigrants on natives employment rate using an instrumental variable strategy based on historical settlement patterns across host countries and occupations by origin countries we find that natives employment rate increases in oc cupations and sectors receiving more immigrants moreover we highlight the heterogeneity of this impact across groups of immigrants and host countries along dimensions that affect immigrants natives relative reservation wages

the impact of language ability on employment and earnings of britain s ethnic communities the fourth national survey of ethnic minorities contains useful information about the language ability of britain s non whites as well as a wealth of comparative information for whites the paper attempts to establish how much of the lower unemployment and higher earnings enjoyed by whites is the result of a comparative advantage in language language is shown to contribute to a part of the non white disadvantage but after language effects are removed non whites males still have higher unemployment rates and lower earnings language disadvantage among non white females leads to higher inactivity rates rather than more unemployment

risk aversion and credit constraints in farmers decision making a reinterpretation in 1976 the agricultural development council sponsored a conference on risk uncertainty and agricultural development which has been summarised in a volume edited by james roumasset jean marc boussard and inderjit singh 1979 the volume provides an excellent review of the state of the art at that time however as discussed in the summary chapters of that volume there were few theoretical empirical or policy issues on which clear conclusions could be reached on the basis of knowledge then available in the intervening years progress has been made on a number of issues as a result of both empirical investigations and theoretical advances this paper concentrates on advances which have relevance to the controversy about the relative roles of risk aversion and credit constraints in limiting farmers investment levels especially for purchased inputs such as seeds or fertilizers in particular we review recent experimental studies on the extent of risk aversion among farmer populations in developing

born in britain how are native ethnic minorities faring in the british labour market in spite of the 40 years that have passed since legislation was first introduced to combat racial discrimination british born ethnic minorities fare little better than their immigrant parents in the uk labour market

microcredit and the poorest of the poor theory and evidence from bolivia abstract we construct a theoretical framework that describes the social worth of a microfinance organization in terms of the depth worth to users cost to users breadth length and scope of its output we then analyze evidence of depth of outreach for five microfinance organizations in bolivia most of the poor households reached by the microfinance organizations were near the poverty line they were the richest of the poor group lenders had more depth of outreach than individual lenders the urban poorest were more likely to be borrowers but rural borrowers were more likely to be among the poorest

government debt management the long and the short of it standard optimal debt management dm models prescribe a dominant role for long bonds and advocate against issuing short bonds they require very large positions in order to complete markets and assume each period that governments repurchase all outstanding bonds and reissue r r new ones these features of dm are inconsistent with u s data we introduce incomplete markets via small transaction costs which serves to make optimal dm more closely resemble the data r r are negligible short bond issuance substantial and persistent and short and long bonds positively co vary intuitively long bonds help smooth taxes over states and short bonds over time solving incomplete market models with multiple assets is challenging so a further contribution of this article is introducing a novel computational method to find global solutions

immigration and electoral support for the far left and the far right immigration has become one of the most divisive political issues in the united states the united kingdom france and several other western countries we estimate the impact of immigration on voting for far left and far right parties in france using panel data on presidential elections from 1988 to 2017 to derive causal estimates we instrument more recent immigration flows by past settlement patterns in 1968 we find that immigration increases support for far right candidates and has no robust effect on far left voting the increased support for far right candidates is driven by low educated immigrants from non western countries

differences in work conditions between natives and immigrants preferences vs outside employment opportunities abstract immigrants are disproportionately employed in agriculture and construction sectors with relatively high injury rates what pushes immigrants to accept riskier and more strenuous work conditions we propose a circular model and show that differences in average work conditions borne by natives and immigrants are driven by both preferences and unearned income using french data we find that in line with the model s predictions i rigid wages are associated with a larger immigrant native gap in work conditions ii high unearned income individuals benefit on average from better work conditions iii for immigrants and natives with high unearned income differences in demographic characteristics explain part of the immigrant native gap in work conditions in contrast the gap largely persists among low unearned income people even once we have imposed identical demographic composition among them this suggests that there must be other factors that influence preferences over work conditions and that are missing in our empirical analysis

unequal pay or unequal employment a cross country analysis of gender gaps we analyze gender wage gaps correcting for sample selection induced by nonemployment we recover wages for the nonemployed using alternative imputation techniques simply requiring assumptions on the position of imputed wages with respect to the median we obtain higher median wage gaps on imputed rather than actual wage distributions for several oecd countries however this difference is small in the united states the united kingdom and most central and northern eu countries and becomes sizable in southern eu countries where gender employment gaps are high selection correction explains nearly half of the observed negative correlation between wage and employment gaps

emigration and wages the eu enlargement experiment abstract the enlargement of the european union provides a unique opportunity to study the impact of the lifting of migration restrictions on the migrant sending countries with eu enlargement in 2004 1 2 million workers from eastern europe emigrated to the uk and ireland i use this emigration wave to show that emigration significantly changed the wage distribution in the sending country in particular between young and old workers using a novel dataset from lithuania the uk and ireland for the calibration of a structural model of labor demand i find that over the period of five years emigration increased the wages of young workers by 6 while it had no effect on the wages of old workers contrary to the immigration literature there is no significant effect of emigration on the wage distribution between high skilled and low skilled workers

sustainable plans and mutual default this paper presents a simple general equilibrium model of optimal taxation in which both private agents and the government can default on their debt as a benchmark we consider ramsey equilibria in which the government can precommit to its policies at the beginning of time but in which private agents can default we then consider sustainable equilibria in which both government and private agent decision rules are required to be sequentially rational we adapt abreu s 1988 optimal trigger strategies to completely characterize the entire set of sustainable equilibria in particular we show that when there is sufficiently little discounting and government consumption fluctuates enough the ramsey allocations and policies in which the government never defaults can be supported by a sustainable equilibrium by way of an example we show that the larger the variance of government consumption the easier it is to support good outcomes we also show for moderate discount factors that in the best sustainable equilibrium tax rates are more volatile and debt is smaller than in the ramsey equilibrium

optimal maturity of government debt without state contingent bonds abstract this paper shows that state contingent debt can be synthetically constructed using non contingent debt of different maturities a main policy implication of this principle is that the ramsey allocation with complete markets can be sustained with non contingent debt only by properly managing its maturity structure the numerical experiments however suggest that this policy implication ought to be taken with care we find that the debt positions that sustain the ramsey allocation are very high on the order of a few hundred times total gdp for a very simple four state economy and increasing in the number of states in addition they are very sensitive to small variations in the parameters of the model

optimal taxation without state contingent debt in an economy studied by lucas and stokey tax rates inherit the serial correlation structure of government expenditures belying barro s earlier result that taxes should be a random walk for any stochastic process of government expenditures to recover a version of barro s random walk tax smoothing outcome we modify lucas and stokey s economy to permit only risk free debt having only risk free debt confronts the ramsey planner with additional constraints on equilibrium allocations beyond one imposed by lucas and stokey s assumption of complete markets the ramsey outcome blends features of barro s model with lucas and stokey s in our model the contemporaneous effects of exogenous government expenditures on the government deficit and taxes resemble those in lucas and stokey s model but incomplete markets put a near unit root component into government debt and taxes an outcome like barro s however we show that without ad hoc limits on the government s asset holdings outcomes can diverge in importa

employer attitudes the marginal employer and the ethnic wage gap in most eu countries ethnic minorities have lower wages than does the ethnic majority to what extent these wage gaps are the result of prejudice toward ethnic minority workers is virtually unknown the authors examine the role that prejudice plays in the creation of the ethnic wage gap in one of europe s most egalitarian countries sweden the analysis takes into account the important distinction between average employer attitudes and the attitude of the marginal employer the attitude of the most prejudiced employer hiring the ethnic minority results confirm that the attitudes of the marginal employer but not those of the average employer are important for explaining the ethnic wage gap

optimal fiscal and monetary policy some recent results this paper studies the quantitative properties of fiscal and monetary policy in business cycle models in terms of fiscal policy optimal labor tax rates are virtually constant and optimal capital income tax rates are close to zero on average in terms of monetary policy the friedman rule is optimal nominal interest rates are zero and optimal monetary policy is activist in the sense that it responds to shocks to the economy

the economic situation of first and second generation immigrants in france germany and the united kingdom a central concern about immigration is the integration into the labour market not only of the first generation but also of subsequent generations little comparative work exists for europe s largest economies france germany and the uk have all become perhaps unwittingly countries with large immigrant populations albeit with very different ethnic compositions today the descendants of these immigrants live and work in their parents destination countries this article presents and discusses comparative evidence on the performance of first and second generation immigrants in these countries in terms of education earnings and employment it is widely believed that many european countries have a serious problem with the integration of immigrants and their children leed 2006 many northern european countries have accumulated sizeable populations of immigrants but the lack of longterm strategies and policies to integrate these into societal structures and the labour market is often cited as one reason for social and economic exclusion of the children of these immigrants in the past decade southern european countries such as spain and italy have experienced similar if not larger immigrations than the large northern european economies france germany and the uk in the late 1950s to early 1970s again it seems that there is little thought devoted to long term strategies for immigrants and their descendants the experience of those countries that had large scale immigration in the last half of the twentieth century should be of importance for devising future immigration and integration policies however there is rather little hard evidence in the literature about the relative position of immigrants and their descendants in these countries in a manner that allows comparisons to be made in this article we aim to provide a comparative study of a number of outcomes education earnings and employment of both first and second generation immigrants of different origins in the three largest european economies france germany and the uk

nominal sovereign debt i show that reputation alone can sustain nominal sovereign debt which is subject to both the risks of default and opportunistic devaluations nominal debt combined with a countercyclical exchange rate policy allows more hedging against shocks than real savings if markets are incomplete thus the loss of either repayment or monetary reputation severely affects the government s ability to smooth consumption the model offers a simple explanation for the bulow and rogoff critique while simultaneously helping explain the issuance of nominal sovereign bonds by emerging economies the model also helps explain why many governments borrow and save at the same time

optimal fiscal and monetary policy in an economy without capital abstract this paper is concerned with the structure and time consistency of optimal fiscal and monetary policy in an economy without capital in a dynamic context optimal taxation means distributing tax distortions over time in a welfare maximizing way for a barter economy our main finding is that with debt commitments of sufficiently rich maturity structure an optimal policy if one exists is time consistent in a monetary economy the idea of optimal taxation must be broadened to include an inflation tax and we find that time consistency does not carry over an optimal inflation tax requires commitment by rules in a sense that has no counterpart in the dynamic theory of ordinary excise taxes the reason time consistency fails in a monetary economy is that nominal assets should from a welfare maximizing point of view always be taxed away via an immediate inflation in a kind of capital levy this emerges as a new possibility when money is introduced into an economy without capital

microenterprise finance is there a conflict between growth and poverty alleviation abstract microenterprise finance has generated enormous enthusiasm among aid donors and nongovernment organizations ngos as an instrument for reducing poverty in a manner that is financially self sustaining although something of a consensus has emerged concerning the principles by which such institutions should be designed however we know little about their impact the paper reports on a research project which estimated the impact of 13 microfinance institutions in seven developing countries on poverty and other target variables and attempted to relate such impact to the institutions design features for each of the institutions studied the impact of lending on the recipient household s income tended to increase at a decreasing rate as the recipient s income and asset position improved a relationship which can easily be explained in terms of the greater preference of the poor for consumption loans their greater vulnerability to asset sales forced by adverse income shocks and their limited range of investment opportunities there are significant outliers to this general pattern in particular very poor people who have been able to achieve significant loan impact but they are the exception rather than the rule and the relationship is significant at the 1 level for all the institutions studied except the malawi mudzi fund this relationship defines in the short term an impact frontier which serves as a tradeoff lenders can either focus their lending on the poorest and accept a relatively low total impact on household income or alternatively focus on the not so poor and achieve higher impact the position and slope of the estimated impact curve vary however with the design of the institution for well designed schemes impact at all levels of income is higher than for ill designed schemes hence for many lender institutions the tradeoff can often be moved by appropriate innovations in institutional design in particular modifications to savings loan collection and incentive arrangements for borrowers and staff

assimilation changes in cohort quality and the earnings of immigrants this paper reexamines the empirical basis for two facts that seem to be found in most cross section studies of immigrant earnings 1 the earnings of immigrants grow rapidly as they assimilate into the united states and 2 this rapid growth leads to many immigrants overtaking the earnings of the natives within 10 15 years after immigration using the 1970 and 1980 u s censuses this paper studies the earnings growth experienced by specific immigrant cohorts during the period 1970 80 it is found that within cohort growth is significantly smaller than the growth predicted by cross section regressions for most immigrant groups this differential is consistent with the hypothesis that there has been a secular decline in the quality of immigrants admitted to the united states

optimal time consistent government debt maturity this paper develops a model of optimal debt maturity in which the government cannot issue statecontingent debt as the literature has established if the government can perfectly commit to fiscal policy it fully insulates the economy against government spending shocks by purchasing short term assets and issuing long term debt these positions are quantitatively very large relative to gdp and do not need to be actively managed by the government our main result is that these conclusions are not robust when lack of commitment is introduced under lack of commitment large and tilted debt positions are very expensive to finance ex ante since they ex post exacerbate the government s problem stemming from a lack of commitment in contrast a flat maturity structure minimizes the cost entailed by a lack of commitment though this structure also limits the ability to insure against shocks and increases the volatility of fiscal policy distortions we show that the optimal time consistent maturity structure is nearly flat because reducing average borrowing costs is quantitatively more important for welfare than reducing fiscal policy volatility thus under lack of commitment the government actively manages its debt positions and can approximate optimal policy by confining its debt instruments to consols

bond market clienteles the yield curve and the optimal maturity structure of government debt we propose a clientele based model of the yield curve and optimal maturity structure of government debt clienteles are generations of agents at different life cycle stages in an overlappinggenerations economy an optimal maturity structure exists in the absence of distortionary taxes and induces efficient intergenerational risksharing if agents are more risk averse than log then an increase in the long horizon clientele raises the price and optimal supply of long term bonds but while a welfare maximizing government caters to clienteles it does not accommodate fully their demand and limits issuance of long term bonds to a level where these earn negative expected excess returns

unemployment dynamics among migrants and natives unemployment rates are often higher for migrants than for natives this could result from longer periods of unemployment as well as from shorter periods of employment this paper jointly examines male native migrant differences in the duration of unemployment and subsequent employment using german panel data and bivariate discrete time hazard rate models compared to natives with the same observable and unobservable characteristics unemployed migrants do not flnd less stable positions but they need more time to flnd these jobs the probability of leaving unemployment also varies strongly between ethnicities while flrst and second generation turks are identifled as the major problem group therefore policy should concentrate on the job flnding process of turkish migrants to flght their disadvantages on the labor market

european welfare states and migrant poverty the institutional determinants of disadvantage in almost all european welfare states immigrants face a higher risk of poverty than natives but the gap between the two groups varies in examining this variation our article contributes to the nascent literature on the impact of welfare states on immigrants we hypothesize that whether immigrants benefit from welfare generosity depends on three intervening factors immigration policy labor market regulation and welfare eligibility rules we use fuzzy set analysis to examine the interplay of these determinants in 16 west european states the findings show that in most countries a high migrant disadvantage results from the combination of a large share of humanitarian and family immigrants and generous social policies the underlying mechanism is that unwanted immigrants are institutionally impeded from full access to generous welfare states

financial efficiency and social impact of microfinance institutions using self organizing maps summary this paper contributes to the literature by investigating whether the increased focus on financial self sustainability of microfinance institutions has been disadvantageous to the target audience we investigate the association between social efficiency and financial performance using a comprehensive data set that includes 650 microfinance institutions a self organizing map methodology is used to fully capture the existing heterogeneity among institutions the results show that we cannot support the hypothesis that there exists a trade off on the contrary we find evidence of a significant positive relationship between social efficiency and financial performance

sovereign debt portfolios bond risks and the credibility of monetary policy we document that governments whose local currency debt provides them with greater hedging benefits actually borrow more in foreign currency we introduce two features into a government s debt portfolio choice problem to explain this finding risk averse lenders and lack of monetary policy commitment a government without commitment chooses excessively countercyclical inflation ex post which leads risk averse lenders to require a risk premium ex ante this makes local currency debt too expensive from the government s perspective and thereby discourages the government from borrowing in its own currency

fiscal policy and debt management with incomplete markets a ramsey planner chooses a distorting tax on labor and manages a portfolio of securities in an economy with incomplete markets we develop a method that uses second order approximations of ramsey policies to obtain formulas for conditional and unconditional moments of government debt and taxes that include means and variances of the invariant distribution as well as speeds of mean reversion the asymptotic mean of the planner s portfolio minimizes a measure of fiscal risk we obtain analytic expressions that approximate moments of the invariant distribution and apply them to data on a primary government deficit aggregate consumption and returns on traded securities for u s data we find that the optimal target debt level is negative but close to zero the invariant distribution of debt is very dispersed and mean reversion is slow

monetary policy bond returns and debt dynamics abstract using the government s intertemporal budget constraint we quantify the contribution of returns paid on the u s government s debt portfolio to the evolution of the debt to gdp ratio we show that announcements of unconventional monetary policy measures by the federal reserve between 2008 iv and 2012 as a part of macroeconomic stabilization were associated with a sizable increase in returns and debt to gdp ratios and contributed to fiscal imbalances we use the federal reserve s portfolio composition as a proxy for unconventional monetary policy measures and show that it is significantly related to future bond returns and fiscal balances

the effect of language training on immigrants economic integration empirical evidence from france abstract we examine the impact of language training on the economic integration of immigrants in france the assignment to this training offered by the french ministry of the interior depends mainly on a precise rule the training is provided if the test score of an initial language exam is below a certain threshold this eligibility rule creates a discontinuity in the relation between the test result and the variables of interest which is used to estimate the causal effect of language training through the method of regression discontinuity design we find that the number of assigned hours of training significantly increases labor force participation of the treated individuals the language classes appear to have a larger effect for individuals with higher levels of education while there is no robust differential effect by type of migration gender or age our estimated coefficients are remarkably similar when we rely on local linear regressions using the optimal bandwidth with few observations around the threshold and when we control parametrically for a polynomial of the forcing variable and use the whole estimation sample we conclude with a discussion of the candidate mechanisms for the improved labor market participation of immigrants

optimal debt management in a liquidity trap we study optimal debt management in the face of shocks that can drive the economy into a liquidity trap and call for an increase in public spending in order to mitigate the resulting recession our approach follows the literature of macroeconomic models of debt management which we extend to the case where the zero lower bound on the short term interest rate may bind we wish to identify the conditions under which removing long maturity government debt from the secondary market can be an optimal policy outcome we show that the optimal debt management strategy is to issue short term debt if the government faces a sizable exogenous increase in public spending and if its initial liability is not very large in this case our results run against the standard prescription of the debt management literature in contrast if the initial debt level is high then issuing long term government bonds is optimal finally we find a role for revisions in the debt management strategy during lt episodes whereby the government actively manages the maturity structure in some cases removing long bonds from the secondary market

access to citizenship and the economic assimilation of immigrants immigrants often have lower employment rates and earnings than natives our empirical analysis relies on two reforms generating exogenous variation in the waiting time for citizenship we find that faster access to citizenship improves the economic situation of immigrant women especially their labour market attachment with higher employment rates longer working hours and more stable jobs immigrants also invest more in host country specific skills like language and vocational training faster access to citizenship seems a powerful policy instrument to boost economic integration in countries with traditionally restrictive citizenship policies

do microfinance institutions benefit from integrating financial and nonfinancial services this article examines the impact of microfinance plus i e coordinated combination of financial and nonfinancial services on the performance of microfinance institutions mfis using a global data set of mfis in 77 countries we find that the provision of nonfinancial services does not harm nor improve mfis financial sustainability and efficiency the results however suggest that the provision of social services is associated with improved loan quality and greater depth of outreach

a field study of rental market discrimination across origins in france abstract discrimination against particular groups in the housing market increases search costs and limits optimal matching thus resulting in economic and social inefficiencies this paper tests for the existence of discrimination in the french rental market against individuals with names which signal their connection to five immigrant groups northern africa sub saharan africa turkey poland portugal spain by implementing an online field study using one of france s largest online advertisements website the results show that applicants with foreign sounding names coming from northern africa sub saharan africa and turkey are 16 to 22 percentage points less likely to receive a response than applicants with french names or names associated with poland portugal or spain in addition when applicants with foreign sounding names from any origin receive a response it is significantly more likely to be negative or include a request for more information than responses to emails including french sounding names finally we find some geographic differences in response rate differentials that are correlated with differences in the local income and share of immigrants this provides evidence that landlords use names as a proxy for economic and other sociodemographic characteristics

do microfinance institutions accomplish their mission evidence from the relationship between traditional financial sector development and microfinance institutions outreach and performance this article analyses the relationship between outreach and performance of microfinance institutions mfis on the one hand and traditional financial sector development on the other the results indicate that mfis reach more clients and are more profitable in countries where access to the traditional financial system is low this finding is in line with the market failure hypothesis mfis respond to a need that banks do not fulfill and mfis flourish where the formal financial sector fails along the same line the results demonstrate that mfis serve poorer people in countries with well developed financial systems the results suggest that in countries with well developed financial systems the two sectors stand in more direct competition with each other this competition pushes mfis down the market and makes mission drift by mfis less likely

microenterprise lending to female entrepreneurs sacrificing economic growth for poverty alleviation abstract this research compares the performance of female and male entrepreneurs in a microenterprise credit program in guatemala previous research and field practice has suggested that targeting credit at female borrowers allows for greater increases in household welfare but that male entrepreneurs may more aggressively expand enterprises when given access to credit in this paper we develop a model that shows that increases in value of home time during childbearing years for women may substantially account for gender differences in responses to credit access empirical results from guatemalan survey data yield estimations consistent with the predictions from our model

fiscal hedging with nominal assets abstract we analyze optimal fiscal and monetary policy in an economy with distortionary labor income taxes nominal rigidities nominal debt of various maturities and short selling constraints optimal policy prescribes the almost exclusive use of long term debt such debt mitigates the distortions associated with hedging fiscal shocks by allowing the government to allocate them efficiently across states and periods

the impact of debt levels and debt maturity on inflation marcet is grateful for support from dges monfispol and excellence program if banco de espana faraglia and scott gratefully acknowledge funding from the esrc s world economy and finance program oikonomou is grateful to hec montreal for funding

migrants ancestors and foreign investments we use 130 years of data on historical migrations to the u s to show a causal effect of the ancestry composition of u s counties on foreign direct investment fdi sent and received by local firms to isolate the causal effect of ancestry on fdi we build a simple reduced form model of migrations migrations from a foreign country to a u s county at a given time depend on 1 a push factor causing emigration from that foreign country to the entire u s and 2 a pull factor causing immigration from all origins into that u s county the interaction between time series variation in origin specific push factors and destination specific pull factors generates quasi random variation in the allocation of migrants across u s counties we find that doubling the number of residents with ancestry from a given foreign country relative to the mean increases the probability that at least one local firm engages in fdi with that country by 4 percentage points we present evidence that this effect is primarily driven by a reduction in information frictions and not by better contract enforcement taste similarities or a convergence in factor endowments

exit voice and vouchers using vouchers to train microentrepreneurs observations from the paraguayan voucher scheme abstract the use of vouchers is increasingly advocated in development practice compared to the vast existing literature on microfinance however research on voucher projects is still scarce this paper examines the training voucher scheme in paraguay by applying the theory of exit and voice to this case and to voucher systems in general a theoretical framework is provided that identifies the advantages and limitations of training voucher schemes it will be shown that voucher systems cannot solve the information problems inherent in markets and that not all microentrepreneurs benefit from voucher schemes in the same way the concepts of voice ex ante and voice ex post as necessary ingredients of voucher schemes are introduced

optimal fiscal and monetary policy with sticky prices in this paper i consider the role of state contingent inflation as a fiscal shock absorber in an economy with nominal rigidities i study the ramsey equilibrium in a monetary model with distortionary taxation nominal non state contingent debt and sticky prices with sticky prices the ramsey planner must balance the shock absorbing benefits of state contingent inflation against the associated resource misallocation costs for government spending processes resembling post war experience introducing sticky prices generates striking departures in optimal policy from the case with flexible prices for even small degrees of price rigidity optimal policy displays very little volatility in inflation tax rates display greater volatility compared to the model with flexible prices with sticky prices tax rates and real government debt exhibit behavior similar to a random walk for government spending processes resembling periods of intermittent war and peace optimal policy displays extreme inflation volatility even when the degree of price rigidity is large as the variability in government spending increases smoothing tax distortions across states of nature becomes increasingly important and the shock absorber role of inflation is accentuated

is there monopsonistic discrimination against immigrants the authors investigate immigrants and natives labor supply to the firm within an estimation approach based on a dynamic monopsony framework applying duration models that account for unobserved worker heterogeneity to a large administrative employer employee data set for germany they find that immigrants supply labor less elastically to firms than do natives under monopsonistic wage setting the estimated elasticity differential predicts a 7 7 log points wage penalty for immigrants thereby accounting for the entire unexplained native immigrant wage differential of 5 8 to 8 2 log points when further distinguishing immigrant groups differing in their time spent in the german labor market their immigration cohort and their age at entry the authors find that the observed unexplained wage differential is larger for those groups that show a larger elasticity differential relative to natives these findings not only suggest that search frictions are a likely cause of employers more pronounced monopsony

interest costs and the optimal maturity structure of government debt the government faces a trade off between the benefits of tax smoothing and an associated increase in expected interest costs when choosing its optimal debt portfolio the article solves for optimal policies in an incomplete markets model where the government uses two debt instruments long term and short term non contingent nominal bonds in this setup the basic prescription is to borrow long and invest short even though equilibrium expected interest costs are higher on long term debt the resulting welfare gains are close to what the government could achieve with complete markets significant welfare gains are possible even in the presence of leverage constraints

in search of a theory of debt management the complete market approach to government debt management argues that a portfolio of non contingent bonds at different maturities should be chosen so that fluctuations in market value offset changes in expected future deficits however this approach recommends huge fluctuations in positions enormous changes in portfolios for minor changes in maturities and no presumption it is always optimal to issue long and invest short term in a wide array of model specifications these extreme volatile and unstable features are undesirable for two reasons firstly fragility of portfolios to small changes in assumptions means that it is often better to follow a balanced budget rather than issue the optimal debt portfolio under some possibly misspecified model secondly for even miniscule transaction costs governments prefer a balanced budget rather than the large positions complete markets recommends the complete market recommendations conflict with a number of features we believe are integral to bond market incompleteness e g transaction costs liquidity effects robustness etc and which need to be explicitly incorporated into the portfolio problem

sovereign debt maturity structure under asymmetric information abstract this paper studies the optimal choice of sovereign debt maturity when investors are unaware of the government s willingness to repay under a pooling equilibrium there is a wedge between the borrower s true default risk and the default risk priced in debt and its size differs with the maturity of debt safe borrowers tilt their debt maturity towards short term relative to the optimal choice under perfect information since long term debt pools more default risk that is not inherent to them risky borrowers mimic their behavior of safe borrowers to preclude the market from identifying their type in times of financial distress spreads increase and the default risk wedge of long term debt relative to short term debt increases which makes borrowers shorten their debt maturity data on bond issuances for a panel of countries show that consistent with the model maturities co vary negatively with spreads and that this co movement is stronger in those situations in which informational asymmetries are larger