interpreting economic time series this paper explores some of the implications for econometric practice of the principle that people s observed behavior will change when their constraints change in dynamic contexts a proper definition of people s constraints includes among them laws of motion that describe the evolution of the taxes they must pay and the prices of the goods that they buy and sell changes in agents perceptions of these laws of motion or constraints will in general produce changes in the schedules that describe the choices they make as a function of the information that they possess until very recently received dynamic econometric practice ignored this principle the practice of dynamic econometrics should be changed so that it is consistent with the principle that people s rules of choice are influenced by their constraints this is a substantial undertaking and involves major adjustments in the ways that we formulate estimate and simulate econometric models

dynamics of market structure advertising and profitability a var approach the purpose of this study is to provide an econometric characterization of the dynamic interrelationship among structure conduct and performance variables with a vector autoregressive var model particular attention will be given to the causality and response patterns of the variable involved in the light of our desire to ascertain descriptive characterizations of historical behaviour we let the data speak for itself the result suggests a weak realtionship existing between market structure and profitability

representative trust and reciprocity prevalence and determinants this paper provides evidence about the determinants of trust and reciprocal inclinations that is a tendency for people to respond in kind to hostile or kind actions in a representative setting we investigate the prevalence of reciprocity in the population the correlation between trust and positive and negative reciprocal inclinations within person the individual determinants of reciprocity and the relationship with psychological measures of personality we find that most people state reciprocal inclinations in particular in terms of positive reciprocity as well as substantial heterogeneity in the degree of trust and reciprocity trust and positive reciprocity are only weakly correlated while trust and negative reciprocity exhibit a negative correlation in terms of determinants being female and increasing age are associated with stronger positive and weaker negative reciprocal tendencies taller people are more positively reciprocal but height has no impact on negative reciprocity psychological traits also affect trust and reciprocity jel d63 j3 j6

estimating incumbency advantage without bias in this paper we prove theoretically and demonstrate empirically that all existing measures of incumbency advantage in the congressional elections literature are biased or inconsistent we then provide an unbiased estimator based on a very simple linear regression model we apply this new method to congressional elections since 1900 providing the first evidence of a positive incumbency advantage in the first half of the century incumbency advantage is the most frequently studied factor in the last 15 years of congressional elections research discovery of the increase in incum bency advantage has sparked controversy over its origins historical pattern cur rent magnitude and electoral democratic and policy consequences even the most basic descriptive information about incumbency advantage is flawed be cause every previous measure based on aggregate data in this literature is plagued by selection bias inconsistencies and inefficiencies we prove this result and also propose a new unbiased and statistically efficient measure that is very easy to calculate congressional elections from 1900 to the present fit our theoretical model our empirical reanalyses do not challenge the existing scholarly consen sus that incumbency advantage is much larger than it once was however we do challenge the prevailing belief that incumbency advantage was nonexistent and the evidence that it was negative in house elections during the first half of this century alford and brady 1988 we show instead that the average advantage of incumbency in these elections was about two percentage points in section 1 of this paper we define incumbency advantage and section 2 gives an intuitive sense of the problems identifying it even in ideal electoral sys tems section 3 formally proves that sophomore surge and retirement slump are biased estimates of incumbency advantage and section 4 briefly reveals the flaws

regime switching in the reactions of stock markets in saudi arabia to oil price variations the study revisits the stock oil nexus by examining the reactions of equity markets to oil price shocks at national and sectoral levels for saudi arabia in a time varying framework by employing the markov switching egarch model developed by henry 2009 journal of banking and finance 33 405 based on weekly data the findings reveal that the behaviour of all stock markets switches between an expansion regime and a recession regime with more persistence for the expansion state additionally influential international events associated with stock market drops are clearly identified in the recession regime furthermore there is evidence of asymmetric reactions of the equity index returns and the probabilities of transition from one state to another to oil price variations with heterogeneous impacts across sectors and regimes the stock markets are more sensitive to oil price decreases than to oil price increases although the evidence of relatively slight differences in some findings across weekdays the study allows investors and policymakers to understand well the interactions of stock sector markets vis a vis the world oil market in a regime switching framework in order to make the right decision as regards portfolio diversification and regulation of the stock markets

oil price shocks economic policy uncertainty and industry stock returns in china asymmetric effects with quantile regression abstract this paper investigates the impact of crude oil shocks and china s economic policy uncertainty on stock returns at different locations on the return distributions based on monthly data from 1995 1 to 2016 3 we address this issue by employing the quantile regression technique this approach enables a more detailed investigation in different market circumstances namely bearish normal and bullish markets empirical results indicate that the effects of oil price shocks and economic policy uncertainty are asymmetric and highly related to stock market conditions moreover both the nexus of oil and economic policy uncertainty stock are changed at the onset of a crisis specially rising oil prices have greater negative effects on stock returns when stock markets are bullish extreme higher quantiles before a crisis whereas the effects are significantly positive under different market conditions after the onset of the crisis falling oil prices lower stock returns when stock markets are bullish and normal before the crisis whereas lower stock returns under different market conditions except extreme bullish after the onset of the crisis these findings might be related to the optimistic or pessimistic investor sentiments and investors might become more frightened after the crisis

a demand determined model of the residual fuel oil market abstract this paper examines several questions concerning the equilibrating nature of markets including the flexibility of the price mechanism in equating supply and demand and the impact of government price regulations the residual fuel oil market an important submarket of the us petroleum industry and one closely related to the natural gas market is used as a case study a variety of alternative models are examined both equilibrium and disequilibrium the most important results suggest that the residual fuel oil market should best be pictured using a disequilibrium model that emphasizes the role of inventories

pay reference points and police performance several theories suggest that pay raises below a reference point will reduce job performance final offer arbitration for police unions provides a unique opportunity to examine these theories as the police officers either receive their requested wage or receive a lower one in the months after new jersey police officers lose in arbitration arrest rates and average sentence length decline and crime reports rise relative to when they win these declines in performance are larger when the awarded wage is further from the police union s demand the findings support the idea that considerations of fairness disappointment and more generally reference points affect workplace behavior

the marginals never vanished incumbency and competition in elections to the u s house of representatives 1952 82 the average vote margin enjoyed by incumbent candidates for the u s house of representatives increased sharply during the 1 960s despite this and contrary to assumptions common in the literature on recent congressional elections electoral data show that house incumbents are no safer now than they were in the 1950s the marginals properly defined have not vanished the swing ratio has diminished little if at all and competition for house seats held by incumbents has not declined vote margins increased without adding to incumbent security diminishing competition or dampening swings because the heterogeneity of interelection vote swings increased at the same time

oil and the macroeconomy since world war ii all but one of the u s recessions since world war ii have been preceded typically with a lag of around three fourths of a year by a dramatic increase in the price of crude petroleum this does not mean that oil shocks caused these recessions evidence is presented however that even over the period 1948 72 this correlation is statistically significant and nonspurious supporting the proposition that oil shocks were a contributing factor in at least some of the u s recessions prior to 1972 by extension energy price increases may account for much of post opec macroeconomic performance

gift giving and worker productivity evidence from a firm level experiment abstract we present results from a field experiment designed to measure worker response to a monetary gift from their employer the experiment took place inside a tree planting firm paying its workforce incentive contracts firm managers told a crew of tree planters they would receive a pay raise for one day as a result of a surplus not attributable to past planting productivity we compare planter productivity the number of trees planted per day on the day the gift was handed out with productivity on previous and subsequent days of planting on the same block and thus under similar planting conditions we find direct evidence that the gift had a significant and positive effect on daily planter productivity controlling for planter fixed effects weather conditions and other random daily shocks

implicit contracts in the japanese bank loan market the implicit contract theory explored by azariadis 2 suggests that wage rigidity and underemployment are explained by the microeconomic optimizing behavior of each agent in the labor market in this theory the former phenomenon is interpreted as risk sharing arrangements between firms and workers whereas the latter may occur when workers have the opportunity to use leisure or unemployment insurance benefits

corporate borrowing and credit constraints structural disequilibrium estimates for the u k this paper develops a structural model of the market for corporate borrowing in the united kingdom the authors allow trade to be dispersed across a number of submarkets and suppose that disequilibrium operates at this disaggregated level solving for the level of aggregate trade they can estimate nonlinear equations for the demand and supply of borrowing and for the associated interest rate the authors use survey data to measure the strength of spillover from other markets the estimates reveal that disequilibrium has had substantial effects the authors also obtain interesting and plausible estimates for the parameters of the behavioral equations copyright 1990 by mit press

frames of reference and the quality of life asked to choose most people state confidently that they would rather be killed in an automobile accident than to survive a quadraplegic and so we are not surprised to learn that severely disabled people experience a period of devastating depression and disorientation in the wake of their accidents what we do not expect however are the speed and extent to which many of these victims accommodate to their new circumstances within a year s time many quadraplegics report the same mix of moods and emotions as able bodied people do there is also evidence that the blind the retarded and the malformed are no less happy than other people ads for the new york state lottery show participants fantasizing about how their lives would change if they won i d buy the company and fire my boss people who actually do win the lottery report the anticipated rush of euphoria in the weeks after their good fortune followup studies done after several years however indicate that these people are no happier indeed are in many ways less happy than before as a young man fresh out of college i served as a peace corps volunteer in rural nepal my one room house had no electricity no heat no indoor toilet no running water the local diet offered little variety and virtually no meat and yet at no time during my two year stay in nepal did i experience a sense of material deprivation on the contrary my monthly stipend of 40 was much more than most others in my village had and with it i experienced a feeling of prosperity that i have recaptured only in recent years these observations illustrate the critical role of context as a determinant of human satisfaction the neoclassical economic model of choice abstracts from context saying that utility depends only on the level of consumption consumption levels obviously are important and the neoclassical model performs reasonably well in many instances and yet its narrow focus misses something important to predict people s behavior to draw inferences about their well being or to make intelligent policy decisions we must not only know the relevant levels of consumption but also have an appropriate frame of reference within which to evaluate them

supplier induced demand a disequilibrium test this paper tests the hypothesis of market disequilibrium and supplier induced demand in the market for physicians services using canadian data from the period prior to the introduction of national health insurance the results support the hypothesis of disequilibrium with rapid upward adjustment of fees in the face of excess demand and extremely slow downward adjustment of fees in response to excess supply they do not support the hypothesis that physicians induced demand in the face of an excess supply of services

wage increases and the dynamics of reciprocity we investigate how workers performance is affected by the timing of wages in a real effort experiment in all treatments agents earn the same wage sum but wage increases are distributed differently over time we find that agents work harder under increasing wage profiles if they do not know these profiles in advance a profile that continuously increases wages by small amounts raises performance by about 15 relative to a constant wage the effort reactions can be organized by a model in which agents reciprocally respond to wage impulses comparing wages to an adaptive reference standard determined by the previous wage

changes in the vote margins for congressional candidates a specification of historical trends recent research on house elections has focused on the decline in congressional competition since the mid 1960s however this body of research suffers from three major problems 1 an imprecise specification of the nature of change in the degree of congressional competition 2 its exclusive reliance on a limited time frame which calls into question the generalizability and adequacy of its explanations and 3 its overemphasis on incumbency oriented explanations using a multiple interrupted time series mits analysis of trends in aggregate electoral data from 1824 to 1980 we find that current low levels of congressional competition are not historically unique but instead constitute a continuation of a long term trend established in the mid 1890s in addition and in contrast to the general thrust described in the literature there appears to be a post 1965 trend toward greater competition although the absolute level of competition is lower after the mid 1960s finally a disaggregation of electoral results by incumbency status suggests a growth in the incumbency advantage since the mid 1890s but that lower post 1965 levels of congressional competition are the result of a winners and not an incumbency advantage such findings cast doubt on the adequacy of explanations that focus on post 1965 incumbency oriented factors

win lose or withdraw a categorical analysis of career patterns in the house of representatives 1948 1978 the literature on incumbency advantage has focused on margin as an indicator for electoral security but while electoral margin is a goodex ante measure it is a poorex post measure of security further existing work has not integrated the choice of retirement with changes in the level of security to improve the specification and definition of marginality a multinomial logit model is proposed where the dependent variable is categorical account is therefore taken of all the ways a representative s term in office can end including reelection defeat retirement or pursuit of other office the sample includes all u s representatives elected for the first time between 1948 and 1978 the results indicate that 1 margin in the previous election is a significantex ante proxy for the probability of electoral defeat and 2 while the electoral safety of all incumbents in the house has been increased the increases are greater for members elected for the first time in the period since 1965

loan commitments and monetary policy abstract in this paper we examine the impact of loan commitment agreements on the way in which monetary policy affects the economy we estimate a vector autoregressive var model and find evidence of a smaller impact of monetary policy on loans made under commitment agreements than on loans not made under commitment our conclusion is that loan commitments effectively protect borrowers from quantity credit rationing and thus force monetary policy to work mainly through interest rate channels

screening competition and job design economic origins of good jobs in recent decades many firms offered more discretion to their employees often increasing the productivity of effort but also leaving more opportunities for shirking these high performance work systems are difficult to understand in terms of standard moral hazard models we show experimentally that complementarities between high effort discretion rent sharing screening opportunities and competition are important driving forces behind these new forms of work organization we document in particular the endogenous emergence of two fundamentally distinct types of employment strategies employers either implement a control strategy which consists of low effort discretion and little or no rent sharing or they implement a trust strategy which stipulates high effort discretion and substantial rent sharing if employers cannot screen employees the control strategy prevails while the possibility of screening renders the trust strategy profitable the introduction of competition substantially fosters the trust strategy reduces market segmentation and leads to large welfare gains for both employers and employees

a global model of oecd aggregate supply and demand using vector autoregressive techniques this paper presents a vector autoregressive model of the aggregate oecd economy using a theoretical model of global aggregate supply and demand relationships between industrial production cpi money supply and energy prices are examined using f tests variance decompositions and impulse response functions the empirical results are consistent with theory energy prices influence output and the price level in the short run while money influences the price level in the long run despite data problems this approach appears to be a reasonable compromise between simple arima models and the very detailed link type models

international business cycles world region and country specific factors the paper investigates the common dynamic properties of business cycle fluctuations across countries regions and the world we employ a bayesian dynamic latent factor model to estimate common components in macroeconomic aggregates output consumption and investment in a 60 country sample covering seven regions of the world the results indicate that a common world factor is an important source of volatility for aggregates in most countries providing evidence for a world business cycle we find that region specific factors play only a minor role in explaining fluctuations in economic activity we also document similarities and differences across regions countries and aggregates jel f41 e32 c11 c32

credit rationing and implicit contract theory an empirical study abstract this paper investigate whether or not implicit contract relations predominate in the japanese bank loan market and produce equilibrium credit rationing the empirical evidence suggests that risks are shared between banks and firms through interest rate arrangements this implies that commercial banks in japan operate in a market dominated by implicit contract relations however the evidence does not support the view that japanese commercial banks execute credit rationing in the sense of fried and howitt 1980 furthermore the results show that large banks differ from small banks in the risk consideration of loan contracts these empirical results are completely consistent with the intermarket business group hypothesis such that the group formation aims to share risks and profits among members

declining electoral competitiveness in the house of representatives the differential impact of improved transportation technology this paper advances the hypothesis that improvements in the national transportation and communication infrastructure are responsible for the vanishing marginals or the increased electoral security of u s representatives we assume that margin and security are directly affected by the amount of time a legislator or a member of her staff devotes to direct contact with constituents in the home district formally we demonstrate that a decline in the time opportunity cost associated with travel to the district improves victory margins where we proxy improvement in transportation technology by using a distance variable across three different historical samples 1890 1928 and 1970 this proposition offers a potentially more fundamental explanation of declining electoral competition than existing explanations focusing on professionalism careerism redistricting and bureaucratic casework in fact the technology communication hypothesis may well encompass such explanations the model specified here offers at best a crude test of the hypothesis that technology and communication are the cause of the vanishing marginals a superior test would include the actual time required to travel to each district in each sample year because a closer but more inaccessible location would be less electorally favorable according to the logic underlying our model while distance is therefore an imperfect proxy we are encouraged by the results of the preliminary test the next step for future research is to identify which technological innovations have had the greatest impact in order to accomplish this a more complete model of the link between legislators and constituents must be established

realized volatility transmission between crude oil and equity futures markets a multivariate har approach this paper differs from extant literature because it studies volatility co movements with a multivariate orthogonalized har model a flexible specification for the time series of realized volatility which is able to identify short mid and long term spillover effects we examine volatility transmission mechanisms using high frequency data of the stock index futures on s p 500 nikkei 225 ftse 100 and the futures on the west texas intermediate crude oil during the period from september 2002 to september 2012 considering the full sample the short term volatility of the equity futures contains information about future oil volatility incremental to the information inherent in the time series of oil volatility on the other hand weekly and monthly volatilities do not exhibit a significant spillover effect breaking the whole sample into three subsamples no significant granger causalities are observed in the pre crisis period while in the crisis time and its aftermath we document that the us and uk equity market volatilities to granger cause the oil futures volatility which itself leads the japanese market in terms of magnitude we observe an increase in the short term volatility spillover over time studying the residuals of the har transmission models within a ccc dcc garch framework reveals increasing instantaneous correlation between the energy and equity volatilities in the course of time

the long run relationship between interest rates and inflation some cross country evidence abstract this paper analyzes the effect of anticipated inflation on nominal interest rates paying special attention to the stability of this relationship over various regimes these regimes are analyzed to find out whether the inflation forecastability proposition recently advanced by barsky explains the observed poor performance of the fisher equation with historical data the analyses make use of the so called threshold and digression models and data from 11 western countries for 1875 1984 the main result of this paper is that the forecastability proposition does not explain the weakness of the anticipated inflation effect on interest rates rather various institutional factors seem to be of more importance

sluggish quantity adjustment in a non clearing market a disequilibrium econometric application to the loan market the paper argues that the estimated speed of price adjustment in a disequilibrium econometric model is likely to be biased if allowance is not made for quantity adjustment inertia on both sides of the market furthermore if the model estimated is static rather than dynamic then in certain circumstances an excess demand regime may be mistaken for one of excess supply and vice versa in an empirical application to the loan market for the clearing banks in ireland we can claim to have obtained some support for this belief

monetary control with an exchange rate objective the bank of japan 1973 86 abstract this paper analyzes the switch in monetary control procedures by the bank of japan toward a so called money focused monetary policy in the mid 1970s the extent to which monetary control under the new regime has been limited by an exchange rate objective is examined through estimation of an explicit bank of japan boj reaction function we find evidence that the boj operating instrument has been systematically manipulated with a view to maintain short term money control but that this objective has often been dominated by an attempt to moderate yen dollar exchange rate fluctuations

electoral equilibria with restricted strategies we construct a spatial election model in which candidates inherit initial positions in the strategy space presumably from previous political activity and they are restricted to strategies close to their initial positions we establish sufficient conditions for the existence of an equilibrium the equilibrium need not entail an expectation of a zero plurality for each candidate we then apply this model to a sequence of elections in which a series of opposition candidates challenge incumbents given certain regularity conditions the result will be an apparent incumbency advantage corresponding to that observed in recent congressional elections

oil price shocks and stock markets in the u s and 13 european countries abstract oil price shocks have a statistically significant impact on real stock returns contemporaneously and or within the following month in the u s and 13 european countries over 1986 1 2005 12 norway as an oil exporter shows a statistically significantly positive response of real stock returns to an oil price increase the median result from variance decomposition analysis is that oil price shocks account for a statistically significant 6 of the volatility in real stock returns for many european countries but not for the u s increased volatility of oil prices significantly depresses real stock returns the contribution of oil price shocks to variability in real stock returns in the u s and most other countries is greater than that of interest rate an increase in real oil price is associated with a significant increase in the short term interest rate in the u s and eight out of 13 european countries within one or two months counter to findings for the u s and for norway there is little evidence of asymmetric effects on real stock returns of positive and negative oil price shocks for oil importing european countries

a wavelet analysis of mean and volatility spillovers between oil and brics stock markets this paper investigates the spillover effects of volatility and shocks between oil prices and the brics stock markets using multivariate approach and wavelet analysis at different time horizons hence we combine a multivariate arma garch model and wavelet multiresolution analysis to study this phenomenon a bivariate arma 1 1 garch 1 1 cdcc student t model was joined with modwt filter to capture a broad range of possible spillover effects in mean and variances of level prices at various time horizons generally empirical results provide strong evidence of time varying volatility in all markets under study however our proposed approach shows that oil price and stock market prices are directly affected by their own news and volatilities and indirectly affected by the volatilities of other prices and wavelet scale the results show also that mean and volatility spillover effects was decomposed into many sub spillovers on different time scales according to heterogeneous investors and market participants the practical implications of this study are critical innovative and useful for the local and international investors and also for the portfolio managers they can utilize this study to formulate the optimal oil bricks stock portfolios as well as lead to more accurate predictions of volatility spillovers patterns also in developing their hedging strategies

a model of candidate location when one candidate has a valence advantage that under some fairly weak assumptions for all levels of the valence advantage the advantaged candidate chooses a more moderate position than the disadvantaged candidate empirical studies of congressional elections by fiorina 1973 and ansolabehere snyder and stewart 2001 support this result d owns 1957 seminal work presents a puzzle for scholars of u s elections why do candidates not converge to the median voter one of the best explanations is that the candidates themselves have ideological preferences as calvert 1985 and wittman 1977 1983 have shown when candidates have such preferences and they are sufficiently uncertain about the preferences of the median voter then they do not converge although they may moderate their positions from their ideal point the basic version of the calvert wittman model however does not account for another basic fact of u s elections often one of the candidates has an advantage due to a nonpolicy factor such as incumbency greater campaign funds better name recognition superior charisma superior intelligence and so on stokes has dubbed such factors valence factors and he has noted their importance in u s elections stokes 1963 1992 1 in this article i extend the basic calvert wittman model by giving one candidate a valence advantage over the other i show that if the valence characteristics of the candidates are approximately equal then when a candidate s valence advantage increases this causes her to move toward the

the dynamic behavior of business loans and the prime rate a comment abstract in a recent paper published in this journal kling uses a vector autoregressive model to study the market for bank loans in the united states the paper s analytical method consisting of reduced form estimation orthogonal transformation of the residuals and innovation analysis suffers however from certain methodological difficulties that put its results and suggested interpretations into question the purpose of this note is to enlighten the nature of these problems through a simple example and to show that the evidence presented by the author is not sufficient to resolve them

money real interest rates and output a reinterpretation of postwar u s data this paper reexamines both monthly and quarterly u s postwar data to investigate if the observed comovements between money real interestrates prices and output are compatible with the money real interest output link suggested by existing monetary theories of output which include both keynesian and equilibrium models the major empirical findings are these 1 in both monthly and quarterly data we cannot reject the hypothesis that the ex ante real rate is exogenous or granger causally prior in the context of a four variable system which contains money prices nominal interest rates and industrial production 2 in quarterly data there is significantly more information con tained in either the levels of expected inflation or the innovationof this variable for predicting future output given current and lagged output than in any other variable examined money actualinflation nominal interest rates or ex ante real rates the effect of an inflation innovation on future output is unambiguously negative the first result casts strong doubt on the empirical importance of existing monetary theories of output which imply that money should have a causal role on the ex ante real rates the second result would appear incompatible with most demand driven models of output in light of these results we propose an alternative structural model which can account for the major dynamic interactions among the variables this model has two central features i output is unaffected by money supply and ii the money supply process is motivated by short run price stability this abstract was borrowed from another version of this item

modeling winegrape prices in disequilibrium this article presents an econometric model of winegrape prices which recognizes the existence of demand and supply imbalances in the australian market a markets in disequilibrium framework is employed to motivate modeling price changes as responding to variations in excess demand solidus supply the disequilibrium price equation provides estimates of regional and varietal price discounts solidus premiums and a measure of the speed of disequilibrium price adjustment the equilibrium assumption is rejected for the market and substantial differences between equilibrium and disequilibrium estimates point to the inaccuracies of assuming market clearing disequilibrium estimates point to significant differences between warm and cool regions and changing speed of disequilibrium adjustment over time

exogenous oil supply shocks how big are they and how much do they matter for the u s economy abstract the paper proposes a new measure of exogenous oil supply shocks the timing the magnitude and the sign of this measure may differ greatly from current state of the art estimates it is shown that only a small fraction of the observed oil price increases during oil crisis periods can be attributed to exogenous oil production disruptions exogenous oil supply shocks cause a sharp drop of u s real gdp growth after five quarters rather than an immediate and sustained reduction in economic growth and a spike in cpi inflation after three quarters overall exogenous oil supply shocks made remarkably little difference for the evolution of the u s economy since the 1970s although they did matter for some historical episodes

if wages fell during a recession abstract many economies exhibit downward wage rigidity surveys of managers indicate that employers hold wages rigid because they believe morale will suffer after a wage cut otherwise there is little evidence for how employers beliefs contribute to wage rigidity and whether those beliefs are accurate using an experiment we demonstrate that effort falls after workers experience a wage cut despite this partial confirmation of the bewley 1999 morale theory half of the employers in our experiment cut wages and lose money as a result under nominal inflation real wage cuts do not have a significant effect on effort

intertemporal incentives under loss aversion this paper studies the intertemporal allocation of incentives in a repeated moral hazard model with reference dependent preferences as in k oszegi and rabin 2009 besides consumption utility the agent experiences utility from the change in his beliefs about present and future eort and income when eort plans are rational the prospect of being disappointed by the outcome realization equals that of being pleasantly surprised and hence the loss averse agent is on net hurt by news in contrast to the prediction with classical preferences but consistent with real world contracts if consumption utility is not too concave and news about present income carries suciently larger weight in utility than news about future income a contract setting a current

incumbency electoral safety and turnover in the house of representatives 1952 76 two hypotheses have received a great deal of attention from students of congressional elections first many analysts have concluded that an increase in the electoral value attached to incumbency accounts for the rise in incumbents victory margins observed since the mid sixties second many scholars have attributed the decline in electoral turnover to the percentage increase in victory margins analyzing the electoral histories of 13 house cohorts 1952 76 this study reexamines these two hypotheses within theframework of a quasi experimental design the results presented here in contrast to those of previous studies cast doubt on the increased incumbency effect moreover little relationship is found between an increase in electoral safety as reflected by increased victory margins and a decline in electoral turnover

labor supply of new york city cabdrivers one day at a time life cycle models of labor supply predict a positive relationship between hours supplied and transitory changes in wages because such changes have virtually no effect on life cycle wealth previous attempts to test this hypothesis empirically with time series data have not been supportive estimated elasticities are typically negative or nonsignificant such analyses however are vulnerable to measurement error and other estimation problems we use data on daily observations of wages and hours for new york city cab drivers to estimate the supply response to transitory fluctuations in wages cab drivers decide daily how many hours to supply and face wages that are positively correlated within days but largely uncorrelated between days using these data our central finding is that wage elasticities are persistently negative from 5 to 1 in three different samples even after correcting for measurement error using instrumental variables these negative wage elasticities challenge the notion that cab drivers trade off labor and leisure at different points in time and question the empirical adequacy of life cycle formulations of labor supply

the timing of discretionary bonuses effort signals and reciprocity abstract in a real effort experiment we investigate the relationship between reciprocity and the timing of discretionary bonuses in a two period principal agent manager worker setting we vary the timing of the manager s bonus decision in order to examine two main channels reward and trust through which discretionary bonuses may operate average worker performance improves when bonus decisions are made between the two periods since both channels are simultaneously active first period output significantly increases as workers attempt to signal their trustworthiness to managers when the bonus decision is made upfront or at the end average output is no different than in a baseline setting without the bonus mechanism furthermore output after a bonus is not paid decreases substantially consistent with negative reciprocity our main findings are reinforced by using time spent on the available real leisure activity as an alternative measure of subjects effort

the dynamic behavior of business loans and the prime rate abstract the purpose of this research is to determine the relevant variables channels of influence and dynamics characterizing the business loan market to achieve this goal the statistical approach of vector autoregressive time series analysis popularized by sims 1980 1981 and litterman 1979 is applied to a group of variables suggested by the portfolio and liability allocation problems of a representative bank and a representative business firm the variance and historical decomposition analyses suggest that innovations in the level of business inventories and commercial bank financial assets are the most important casual variables in the business loan market

incumbency effects in political campaigns in this paper we examine two effects of incumbency first an incumbent may have an advantage in creating a favorable image in the eyes of the voters second the incumbent may have to chose a position before the challenger this second aspect of incumbency is modelled as stackelberg leadership in the model two candidates run for election by choosing a position in an ideological spectrum voters care about candidates chosen positions as well as non policy attributes of candidates which we call charisma charismata are not known when candidates choose policy positions they are only revealed on election day so that winning is not usually a certain prospect candidates care about the probability of winning but they also dislike compromising their own ideals

economic voting and the symbolic politics argument a reinterpretation and synthesis economic voting is generally regarded as a straightforward political demand for the amelioration of economic grievances this assumption about motives underlies the implicit theories of politicians and the imputations of interests to voters in aggregate time series models several recent articles have argued that voting is not self interested but a manifestation of symbolic preferences at the level of the collectivity this article places the dispute between personal and collective decision referents into the broader perspective of a multi stage model of information processing and decision making personal and collective decision referents are shown to define the poles of a continuum and several hypotheses are derived to predict the relative weights assigned to each in the voter s calculus the model is used in analyses of both the public s evaluations of incumbent economic management and economic voting in different electoral arenas by varying issue publics designed to maximize comparability with aggregate studies this research includes both objective and subjective measures of economic conditions and indexes changes in personal conditions over time from panel data