two models of bid taker cheating in vickrey auctions vickrey second price sealed bid auctions have attractive theoretical properties but standard first price sealed bidding is far more common explanations of the rarity of vickrey auctions rely on concern about revelation of private information and on fear of cheating the authors present two models of bid taker cheating a static game theoretic model and a reputation based model of repeated auctions in the first an honest bid taker will not choose a vickrey auction in the second a trusted bid taker who cheats when it pays eventually destroys his or her reputation and the trust on which the use of vickrey auctions depends copyright 1995 by university of chicago press

the behavior of futures prices a review of theory and evidence how do futures prices behave the evidence indicates that they are typically a biased predictor of spot prices at maturity however the typical contention that this bias reflects the existence of a seasonal risk premium is not strongly supported by observations although futures markets are used by risk averse producers seeking the insurance offered by risk bearing speculators hedgers have been able to buy their insurance relatively cheaply in many cases even profiting from their futures trading speculators earnings seem to depend on their forecasting skills not on the mere existence of a risk premium other evidence suggests that the existence of a bias in a particular market owes more to the unique characteristics of the underlying commodity than to the market s structural characteristics tests of the random character of futures prices have found some degree of serial dependence but it is not clear whether these dependencies can be profitably exploited studies of the volatility of futures price indicate that volatility changes over the life of a contract the changes appear to depend upon distributions of the underlying state variables and the time to maturity with the seasonal state variable effect being dominant so that volatility may rise or fall over the contract s life multiperiod equilibrium pricing models of futures and forward contracts show that the futures and forward prices usually differ because of marking to market in the futures market unlike forward trading futures trading represents speculation on both the instantaneous interest rates and the spot prices consequently futures prices depend on the comovement of spot prices and interest rates

updating the reserve price in common value auctions we consider a common value auction model with bidder participation determined jointly by nature and by bidder optimization in this framework an increase in the reserve price as two effects it deters marginal bidders and it deters bidders from becoming informed we then derive a test statistic for establishing when it is optimal to raise the reserve price this statistic is independent of the distribution of valuations we then apply the analysis to u s offshore oil sales and find evidence that the reserve price is dramatically too low this abstract was borrowed from another version of this item

agriculture and the transition to the market agricultural sectors in eastern and central europe are large so that changes in producer prices farm employment and land ownership affect substantial numbers of people in the past food in the region was politicized for decades governments of eastern european countries and the ussr offered their citizens stable subsidized food prices and a steadily improving diet in an effort to demonstrate the superiority of communism over capitalism during the transition the context has changed but food remains politicized many consumers in the region are ill prepared to pay the real costs of food which are quite high the task of reducing those costs will be difficult involving restructuring of farms and fostering competition in processing and distribution management of the agricultural transition will affect the political sustainability of the process and influence agriculture s contribution to the growth of emerging market economies although the agricultural sector of eastern and central europe is large soviet agriculture dwarfs it in its impact on the region and the world a positive program to stop the decline in soviet agriculture could contribute to economic growth and political stability failure to remedy the fundamental flaws in soviet agriculture will speed the country s slide into poverty and ethnic turmoil and undermine the efforts of central and eastern europeans to succeed

the ins and outs of european unemployment in this paper we study the contribution of inflows and outflows to the dynamics of unemployment in three european countries the united kingdom france and spain all countries are interesting in their own right and in the comparison with each other britain s labour markets were strictly regulated up to the mid 1980s but they have been liberalized since then france is still a regulated economy compared with britain with unemployment averaging about 8 spain has had the biggest rise in unemployment in europe reaching 24 in the mid 1990s but policy reforms and fast growth since then brought it down to a level below france s we compare performance in these three countries making use of both administrative and labor force survey data we find that the impact of the 1980s reforms in britain is evident in the contributions of the inflow and outflow rates the inflow rate became a bigger contributor after the mid 1980s although its significance subsided again in the late 1990s and 2000s in france the dynamics of unemployment are driven by the outflow rate virtually entirely which is consistent with a regime with strict employment protection legislation in spain however both rates contribute significantly to the dynamics perhaps as a consequence of the prominence of fixed term contracts since the late 1980s

the ins and outs of uk unemployment this study shows that in the uk increases in unemployment in a recession are driven by rises in the separation rate a new decomposition of unemployment dynamics is devised that does not require unemployment to be in steady state at all times this is important because low uk transition rates one quarter the size of the us imply substantial deviation of unemployment from steady state near cyclical turning points in periods of moderation the job finding rate is shown to have most influence on uk unemployment dynamics evidence comes from the first study of monthly data derived from individuals labour market spells recorded in the british household panel survey from 1988 to 2008

shills and snipes online auctions with a fixed end time often experience a sharp increase in bidding towards the end despite using a proxy bidding format we provide a novel explanation of this phenomenon under private values we study a correlated private values environment in which the seller bids in her own auction shill bidding bidders selected randomly from some large set arrive randomly in an auction then decide when to bid possibly multiple times over a continuous time interval a submitted bid arrives over a continuous time interval according to some stochastic distribution the auction is a continuous time game where the set of players is not commonly known a natural setting for online auctions we show that there is a late bidding equilibrium in which bids are delayed to the latest instance involving no sacrifice of probability of bid arrival but shill bids fail to arrive with positive probability and in this sense optimal late bidding serves to snipe the shill bids we show conditions under which the equilibrium outcome is unique our results suggest that under private values the case against shill bidding might be weak

an equilibrium analysis of hedging with liquidity constraints speculation and government price subsidy in a commodity market we develop a simple commodity model to analyze i the effects of hedgying with liquidity constraints due to producers inability to bear unlimited trading losses ii the role of speculation in the process of risk allocation between consumers and producers and iii the equilibrium implications of government price subsidies to the producers we find that 1 liquidity constraints can cause futures prices to exhibit mean reversion which then makes speculation profitable 2 speculation tends to make futures price volatility an increasing function of futures price and 3 government price subsidy if actively hedged by the producers serves to lower the futures risk premium and reduce futures volatility commodity spot and futures prices are determined by the following types of market participants producers consumers speculators and governments producers have generally taken short futures positions in order to hedge against price declines consumers have generally taken long futures positions in order to hedge against price increases speculators who neither produce nor intend to consume the commodity are present in the spot and futures markets for the purpose of making a profit governments play significant roles in the markets by providing producers with various support programs and in some cases by directly intervening in the markets to affect commodity prices or adjust inventory levels the traditional approach to commodity futures pricing has been based on the theory of storage 1 as fama and french 1987 1988 show this approach to commodity pricing is particularly useful for explaining the basis movement as a function of inventory levels based on the hypothesis that the marginal convenience yield on inventory declines at a decreasing rate as

the time pattern of hedging and the volatility of futures prices the paper proposes a multi period model of hedging which allows for a futures position to be revised within the cash market holding period within this framework we assess the robustness of the two period theory of hedging when generalized to many periods we characterize the normal time path of a hedge and the way it is affected by the requirement that futures accounts mark to market daily finally we show how the resolution of production uncertainty over time affects hedging behavior and determines the volatility of futures prices in the large literature on hedging in futures markets the principal analytical accounts of hedging are framed in a two trade date setting an agent commits himself now to a future purchase or sale of a good whose cash price later is uncertain this risk is hedged by purchase or sale of an appropriate number of futures contracts and holding this futures position until the cash transaction is realized in the present paper we formulate a multi period model of hedging which allows for the futures position to be revised within the cash market holding period the resulting analysis captures an important institutional reality that is absent in a two trade date model namely the fact that the day to day fluctuations of the futures price will generate a series of random cash flows over the period during which a futures position is held this is due to the requirement that futures accounts mark to market daily within this framework we address a number of issues first we assess the robustness of the two period theory of hedging when generalized to many periods second we characterize the normal time path of a hedge and contrast futures and forward contracts from the perspective of an individual hedger finally we show how the resolution of production uncertainty over time affects hedging behaviour and determines the volatility of futures prices while the literature on asset demand in a multiperiod setting is large futures markets are specifically treated in a limited number of studies grauer and litzenberger 1976 are concerned principally with characterizing the relation of spot and futures prices in a market for a storable periodically produced commodity they offer a rationale for positive stock holding in markets where spot price exceeds the futures price richard and sundaresan 1980 are also concerned primarily with characterizing price behaviour since they posit identical consumers in equilibrium individual holdings of futures are zero there is no hedging activity in the sense that we understand it breeden 1980b analyzes the optimal futures position sizes in a multiperiod setting his framework is more general than ours in that his is a multi good multi asset model where preferences

the price effects of increased competition in auction markets bidding theory predicts low er selling winning bids higher buying winning bids as numbers of bidders incre ase alternative versions predict that winning bids fall rise with the second order statistic the maximum order statistic or 1 n the authors test these pre dictions using data on underwriters spreads on tax exempt bonds offshore oil t racts and national forest timber they estimate winning bids using general vari ables for the product and dummies for 1 2 11 bidders in all cases mor e bidders meansignificantly lower selling winning bids the expected maximum order statistic fits better than either the second order statistic or1 n in te n out of twelve cases copyright 1987 by mit press

asset prices in a huggett economy this paper explores asset pricing in economies where there is no direct insurance against idiosyncratic risks but other assets can be used for self insurance subject to exogenously imposed borrowing limits we analyze an endowment economy based on huggett 1993 11 both with and without aggregate risk our main innovation is that we obtain full analytical tractability by studying the case with maximally tight borrowing constraints we illustrate by looking at riskless bonds equity and the term structure of interest rates and we show that the model can reproduce many features of observed asset prices when idiosyncratic risks are quantitatively reasonable

on the importance of the participation margin for labor market fluctuations abstract conventional analyses of labor market fluctuations ascribe a minor role to labor force participation we show by contrast that flows based analyses imply that the participation margin accounts for around one third of unemployment fluctuations a novel stock flow apparatus establishes these facts delivering three further contributions first the role of the participation margin appears robust to adjustments for spurious transitions induced by reporting error second conventional stocks based analyses are subject to a stock flow fallacy neglecting offsetting forces of worker flows on the participation rate third increases in labor force attachment among the unemployed during recessions are a leading explanation for the role of the participation margin

when does cheating on mail in bids pay a guide for the dishonest auctioneer abstract in english auctions an auctioneer sometimes receives second price bids from bidders who cannot attend the auction these bids are referred to as mail in bids left bids or bookbids and are commonly handled by an auctioneer s assistant in this paper i consider auctions where there is one bid left with the auctioneer in an english auction with no reserve the auctioneer can increase his revenue by cheating at least partially through phantom bids or large bidding increments on the bookbid when the bookbidder s valuation is more likely to be the highest than the second highest among all valuations this is true even if in equilibrium this cheating is perfectly anticipated this implies that the acquisition of a good reputation is not a sufficient incentive for honest auctioneer behavior

separations sorting and cyclical unemployment abstract this paper establishes a new fact about the compositional changes in the pool of unemployed over the us business cycle using microdata from the current population survey for the years 1962 2012 it documents that in recessions the pool of unemployed shifts toward workers with high wages in their previous job and that these shifts are driven by the high cyclicality of separations for high wage workers the paper finds that standard theories of wage setting and unemployment have difficulty in explaining these patterns and evaluates a number of alternative theories that do better in accounting for the new fact jel e24 e32 j31 j63 j64

misclassification errors and the underestimation of the us unemployment rate using recent results in the measurement error literature we show that the official u s unemployment rates substantially underestimate the true levels of unemployment due to misclassification errors in labor force status in current population surveys our closed form identification of the misclassification probabilities relies on the key assumptions that the misreporting behaviors only depend on the true values and that the true labor force status dynamics satisfy a markov type property during the period of 1996 to 2009 the corrected monthly unemployment rates are 1 to 4 6 percentage points 25 to 45 higher than the official rates and are more sensitive to changes in business cycles labor force participation rates however are not affected by this correction we also provide results for various subgroups of the u s population defined by gender race and age

economic insights from internet auctions this paper surveys recent studies of internet auctions four main areas of research are summarized first we survey several studies that document and attempt to explain the frequently observed sniping or last second bidding behavior in these auctions second we summarize several methods proposed to quantify the distortions caused by asymmetric information in these markets most notably due to the winner s curse third we explore research about the role of reputation mechanisms installed to help combat these distortions finally we discuss what internet auctions have to teach us about auction design

the cyclicality of separation and job finding rates this paper uses cps gross flow data to analyze the business cycle dynamics of separation and job finding rates and to quantify their contributions to overall unemployment variability cyclical changes in the separation rate are negatively correlated with changes in productivity and move contemporaneously with them while the job finding rate is positively correlated with and tends to lag productivity contemporaneous fluctuations in the separation rate explain between 40 and 50 percent of fluctuations in unemployment depending on how the data are detrended this figure becomes larger when dynamic interactions between the separation and job finding rates are considered

efficiency in auctions with private and common values an experimental study this discussion has resulted in a publication in the american economic review 2002 92 3 625 43 auctions are generally not efficient when the object s expected value depends on private and common value information we report a series of first price auction experiments to measure the degree of inefficiency that occurs with financially motivated bidders while some subjects fall prey to the winner s curse they weigh their private and common value information in roughly the same manner as rational bidders with observed efficiencies close to predicted levels increased competition and reduced uncertainty about the common value positively affect revenues and efficiency the public release of information about the common value also raises efficiency although less than predicted

optimal bidding in auctions from a game theory perspective abstract the game theoretic perspective in auction bidding has provided a powerful normative framework for the analysis of auctions and it has generated an impressive volume of research contributions tracing this research we review key recent advances which have greatly expanded our understanding of the operation of auctions and produced a more accurate analysis of mechanism design and optimal bidding we follow various experimental studies which have shown that the predictive power of auction theory remains in many cases limited for this reason we concentrate on research themes which enhance the applicability of auction theory leading to more realistic descriptions of bidding behaviors we identify important innovations which expand the environment of auction bidding and carry us beyond rational decision making we conclude providing directions of future research and discussing their implications

the effect of shill bidding upon prices experimental evidence this paper explores through a series of experiments the effect of shill bidding upon revenues and prices in auctions we study the practice of shill bidding in a common value framework our findings are consistent with the prediction that if bidders are aware of the possibility of seller participation in an auction profits will be reduced on average we also study factors that affect bidder and seller participation decisions shill bidding can alleviate the problem of the winner s curse by lowering the price and it can thus provide benefits to bidders

landlords and farmers implications of disparities in bargaining power for tenancy in agriculture abstract the equilibrium allocation of owner operated and rental land in the agricultural sector is examined given risk averse agents risky returns and asset price risk the model is extended to account for disparities in bargaining power among landlords and farmers in the absence of disparities the competitive equilibrium allocation satisfies the general conditions for optimal risk sharing with an adjustment factor similar to the optimal hedge ratio differences in bargaining power result in deviations from the optimal risk sharing conditions numerical simulations of tenancy structure are conducted for a developed agricultural economy exposed to various forms of risk estimates of parameter values representing the riskiness of returns and asset prices in this study are based on vector auto regressive techniques the simulations show that a substantial reduction of the rental ratio is obtained in a situation where farmers are equally or more risk averse than landlords consequently the results indicate that the importance of the tenancy institution as a risk sharing mechanism is severely mitigated in the presence of asset price risk risky returns relatively risk averse farmers and disparities in bargaining power

household search and the aggregate labor market we develop a theoretical model with labour market frictions incomplete financial markets and with households which have two members households face unemployment risks but their members adjust their labour supplies to insure against unemployment we use the model to explain the cyclical properties of aggregate employment and participation as in the u s data the model predicts that the participation rate the fraction of individuals that want jobs is not strongly correlated with aggregate economic activity this property is in sharp contrast to the strongly procyclical participation predicted by both neoclassical models and models with search frictions when we assume bachelor households or households with infinitely many members complete markets in the two member household model and in the data primary earners are always in the labour force secondary earners have a mildly countercyclical participation rate and a mildly procyclical employment rate their behaviour insures the household against unemployment risks

5 information impact and allocation rules in auctions with affiliated private values a laboratory study in affiliated private value auctions each bidder has perfect information regarding his her own value for the object at auction but higher values of the item for one bidder make higher values for other bidders more likely we report on a series of experiments examining three key implications of these auctions i in a first price auction public information about rivals values increases expected revenue ii an english auction increases expected revenue compared to a first price auction and iii a second price auction is isomorphic to an english auction in examining these issues we compare predictions of some ad hoc bidding models with nash equilibrium predictions in the first price auction experiments nash equilibrium bidding theory organizes the data better than either of two ad hoc bidding models public information about others valuations does increase average revenue but the increase in revenue is smaller and less reliable than predicted under risk neutral nash equilibrium bidding lower average revenue might be attributed to risk aversion while the high variability is attributed to a sizable frequency of individual bidding errors relative to the theory bidding theory precisely organizes english auction outcomes after a brief initial learning period the dominant strategy equilibrium does not organize second price auctions nearly as well as market prices persistently exceed predicted prices the difference between english and second price outcomes is attributed to effects of different information flows inherent in the structure of the two institutions on eliminating bidding errors revenue impacts of these two institutions relative to a first price auction are examined in light of observed bidding patterns

a three state model of worker flows in general equilibrium abstract we develop a simple model featuring search frictions and a nondegenerate labor supply decision along the extensive margin the model is a standard version of the neoclassical growth model with indivisible labor and idiosyncratic productivity shocks and frictions characterized by employment loss and employment opportunity arrival shocks we argue that it is able to account for the key features of observed labor market flows for reasonable parameter values persistent idiosyncratic productivity shocks play a key role in allowing the model to match the persistence of the employment and out of the labor force states found in individual labor market histories

a continuous time equilibrium model of forward prices and futures prices in a multigood economy abstract this paper is a theoretical investigation of equilibrium forward and futures prices we construct a rational expectations model in continuous time of a multigood identical consumer economy with constant stochastic returns to scale production using this model we find three main results first we find formulas for equilibrium forward futures discount bond commodity bond and commodity option prices second we show that a futures price is actually a forward price for the delivery of a random number of units of a good the random number is the return earned from continuous reinvestment in instantaneously riskless bonds until maturity of the futures contract third we find and interpret conditions under which normal backwardation or contango is found in forward or futures prices these conditions reflect the usefulness of forward and futures contracts as consumption hedges

dynamics of part time employment to an aggregate shock a sign restriction approach abstract this paper provides new stylized facts about the responses of the part time employment share the transition probability from full time to part time and the one from part time to full time jobs to a negative aggregate shock the recessionary aggregate shock is identified within a sign restriction var framework by imposing a short run negative co movement between unemployment and vacancies the negative aggregate shock pushes the part time employment share up the latter increase is mainly due to a rise in the probability at which full time work is transformed into part time work without an intervening spell of unemployment given that such transitions mainly take place at the same firm worker pair these findings indicate that us firms use in addition to the creation destruction process within employment reallocation to adjust their labor input in recessionary episodes

detecting unemployment hysteresis a simultaneous unobserved components model with markov switching abstract we construct a new markov switching unobserved components framework for analysing hysteresis effects featuring trend cycle decomposition identification of spillovers between the components and asymmetry over the business cycle the decades long upward trend in german unemployment is fully explained by hysteresis the great recession was well absorbed because both hysteresis and structural unemployment were substantially reduced after institutional reforms in contrast u s unemployment was not driven by hysteresis effects

lessons learned generalizing learning across games this paper synthesizes findings from an ongoing research program on learning in signaling games the present paper focuses on crossgame learning the ability of subjects to take what has been learned in one game and generalize it to related games an issue that has been ignored in most of the learning literature we begin by laying out the basic experimental design and recapitulating early results characterizing the learning process we then report results from an initial experiment in which we find a surprising degree of positive cross game learning contrary to the predictions of commonly employed learning models and to the findings of cognitive psychologists we next explore two features of the environment that help to explain when and why this positive transfer occurs first we examine the effects of

search frictions and labor market participation abstract cross country differences in labor market participation are often larger than differences in unemployment rates the same holds true across demographic groups within a given economy we argue that the interaction between labor force participation decisions and labor market frictions can help us understand these patterns this interaction highlights dynamic aspects of the participation decision in contrast to standard textbook treatments that emphasize static costs and benefits of participation we extend the standard labor market search problem to allow for a third state non participation and assumes that stochastic participation costs precipitate flows into and out of non participation we fully characterize the worker s decision problem and use numerical simulations to demonstrate how participation patterns vary with individual characteristics and with labor market conditions

generalized optimal hedge ratio estimation a generalized approach to estimating optimal hedge ratios on futures markets is developed the generalized approach is not difficult to apply and provides a framework for evaluating the appropriateness of conventional simple regression approaches to optimal hedge ratio estimation in an application to storage hedging of corn soybeans and wheat it is found that simple regression using price levels or returns leads to errors in optimal hedge ratio estimation but that simple regression using price changes provides reasonably accurate estimates

learning in common value auctions some initial observations abstract inexperienced bidders in first price common value auctions suffer from a winner s curse losing money on average with experience bidders approximate the nash equilibrium the mechanisms underlying this adjustment are 1 a market selection effect as the most aggressive bidders are less likely to return for subsequent sessions and 2 players who lose money bid less experiential learning and those who would have lost money had they won the auction with the high bidder s signal bid less observational learning

labor force participation and monetary policy in the wake of the great recession in this paper we provide compelling evidence that cyclical factors account for the bulk of the post 2007 decline in the u s labor force participation rate we then proceed to formulate a stylized new keynesian model in which labor force participation is essentially acyclical during normal times that is in response to small or transitory shocks but drops markedly in the wake of a large and persistent aggregate demand shock finally we show that these considerations can have potentially crucial implications for the design of monetary policy especially under circumstances in which adjustments to the short term interest rate are constrained by the zero lower bound

equilibria in open common value auctions abstract a sufficient condition for uniqueness of nash equilibrium in second price common value auctions is identified we establish that there exists a continuum of equilibria in irrevocable exit common value auctions for the case of two bidders we provide plausible sufficient conditions under which the expected seller revenue is maximized at the symmetric equilibrium an example in which the auctioneer s revenue at the symmetric equilibrium in a second price auction is strictly greater than the revenue at many asymmetric equilibria in the corresponding irrevocable exit auction is provided

a quantitative analysis of unemployment benefit extensions abstract extensions of unemployment insurance ui benefits have been implemented in response to the great recession this paper measures the effect of these extensions on the unemployment rate using a calibrated structural model featuring job search and consumption saving decisions skill depreciation and ui eligibility the ongoing ui benefit extensions are found to have raised the unemployment rate by 1 4 percentage points which is about 30 of the observed increase since 2007 moreover the contribution of the ui benefit extensions to the elevated unemployment rate increased during 2009 2011 while the number of vacancies recovered the successive extensions kept search intensity down

unemployment at risk the policy determinants of labour market exposure to economic shocks this paper examines the vulnerability of labour markets to adverse economic shocks we define labour market exposure as the cumulated amount of excess unemployment generated by a shock before unemployment returns to steady state we use a panel of 19 countries covering the period 1985 2010 to assess the influence of labour market policies on labour market exposure which is also calculated country by country we find that less generous unemployment insurance more active labour market policies or a lower minimum wage imply a trade off between average unemployment and labour market exposure as they help low skilled workers to get out of unemployment at the cost of increased vulnerability to adverse shocks on the other hand reducing the tax wedge is conducive to both lower steady state unemployment and labour market exposure alain de serres and fabrice murtin

gross worker flows over the business cycle we build a hybrid model of the aggregate labor market that features both standard labor supply forces and frictions in order to study the cyclical properties of gross worker flows across the three labor market states employment unemployment and nonparticipation our goal is to assess the relative importance of frictions and labor supply in accounting for fluctuations in labor market outcomes our parsimonious model is able to capture the key features of the cyclical movements in gross worker flows and indicates an important role for both frictions and labor supply

labor market participation unemployment and monetary policy models of unemployment and monetary policy usually assume constant participation incorporating a participation decision into a standard new keynesian model with matching frictions we show that market tightness becomes endogenously more volatile because both the opportunity cost of home production and the reservation wage vary with participation the model can simultaneously explain the low volatility of participation the high volatility of unemployment and a procyclical workers outside option of working a policy of strict inflation targeting is close to optimal and increasing the response of the interest rate to inflation does not have a large impact on the volatility of unemployment because of the endogenous response of participation

lost generations of firms and aggregate labor market dynamics abstract can the unprecedented lack of startups during the u s great recession have persistently negative effects while fewer firms hiring workers can mechanically reduce employment for many years this may be offset by feedback effects on lower wages slacker labor markets and higher profits an estimated model of firm dynamics and frictional labor markets suggests that such feedback effects are too weak to offset the direct impact of fewer startups had firm entry remained constant during the great recession output would have recovered 4 6 years earlier and unemployment would have been 0 5 percentage points lower even 10 years after the crisis

unemployment participation and worker flows over the life cycle we estimate and report life cycle transition probabilities between employment unemployment and inactivity for male workers using current population survey monthly files we assess the relative importance of each probability in explaining the life cycle profiles of participation and unemployment rates using a novel decomposition method a key robust finding is that most differences in participation and unemployment over the life cycle can be attributed to the probability of leaving employment and the probability of transiting from inactivity to unemployment while transitions from unemployment to employment the job finding probability play secondary roles we then show that a simple life cycle extension of a three state labor search model with leisure shocks can qualitatively replicate the empirical unemployment and participation life cycle profiles without introducing age or worker heterogeneity in market abilities we conclude that models that seek to explain life cycle work patterns should not ignore transitions to and from inactivity

private versus public ownership investment ownership distribution and optimality examined in this paper is the choice between private and public incorporation of an asset for an entrepreneur asset owner who hires a manager with superior information about the asset s return distribution public sale of equity is shown to be the preferred alternative when a capital market issue costs are low or b the asset s idiosyncratic risk is high and the owner is either sufficiently risk averse or sufficiently optimistic about the asset s expected return thus those as sets deemed most valuable by their owners will tend to be publicly incorporated the paper also explores the impact of incorporation mode private versus public and information structure on the firm s investment policy and ownership distribution the determinants of corporate ownership structure have attracted much attention see for example demsetz and lehn 7 the recent spate of leveraged buyouts lbo s and other activities designed to consolidate ownership structure and often to take it out of the public domain have raised questions about the optimality of public ownership of corporations a related issue is the link between real output and the mode of incorporation in firms with a separation of ownership and control do privately incorporated firms have systematically different investment policies from publicly incorporated firms if so aggregate output must be a function of the cross sectional distribution of incorporation modes in the economy there is also considerable interest in the impact of insider information a topic that concerns us in this paper we have two principal objectives the first is to explore the conditions that determine an asset owner s choice of incorporation for the asset that is when would the owner prefer to keep asset ownership private as opposed to having a portion of that ownership publicly traded in particular what is the role of the owner s perception of the value of the asset in this determination are the assets being taken privately more or less valuable than those that are publicly traded insights on this score should help in understanding corporate ownership structure evolution our second objective is to examine the impact of information structure symmetric versus asymmetric information and the firm s incorporation

labor supply factors and economic fluctuations we propose a new v ar identication scheme that enables us to disentangle labor supply shocks from wage bargaining shocks identication is achieved by imposing robust sign restrictions that are derived from a new keynesian model with endogenous labor force par ticipation according to our analysis on us data over the period 1985 2014 labor supply shocks and wage bargaining shocks are important drivers of output and unemployment both in the short run and in the long run these results suggest that identication strategies used in estimated new keynesian models to disentangle labor market shocks may be misguided we also analyze the behavior of the labor force participation rate through the lenses of our model wend that labor supply shocks are the main drivers of the participation rate and account for about half of its decline in the aftermath of the great recession

on the cyclical behavior of employment unemployment and labor force participation abstract in this paper i evaluate to what extent a real business cycle rbc model that incorporates search and home production decisions can simultaneously account for the observed behavior of employment unemployment and out of the labor force this contrasts with the previous rbc literature which analyzed employment or hours fluctuations either by lumping together unemployment and out of the labor force into a single non employment state or by assuming a fixed labor force once the three employment states are explicitly introduced i find that the rbc model generates highly counterfactual labor market dynamics

phantom bidding against heterogeneous bidders abstract if ipv bidders are distributionally heterogeneous then a revenue maximizing english auctioneer will in general find it optimal to use a non constant reserve price that is a function of the observed bid sequence an example is provided

skill accumulation in the market and at home abstract an evolving outside option is introduced into a stochastic directed search model with skill loss during non employment using multi spell data from the sipp i show that average reemployment wages are only mildly sensitive to unemployment duration while the job finding probability is highly sensitive to duration with evidence of true duration dependence in both variables though untargeted the model produces a quantitatively accurate decline in the job finding probability and starting wage improving over a model with a fixed outside option the addition of aggregate shocks leads to an nonlinear response of the unemployment and participation rates during and after recessions with more severe recessions resulting in stronger hysteresis

on the demographic adjustment of unemployment the unemployment rate is one of the most important business cycle indicators but its interpretation can be difficult because slow changes in the demographic composition of the labor force affect the level of unemployment and make comparisons across business cycles difficult to purge the unemployment rate from demographic factors labor force shares are routinely used to control for compositional changes this paper shows that this approach is ill defined because the labor force share of a demographic group is mechanically linked to that group s unemployment rate as both variables are driven by the same underlying worker flows we propose a new demographic adjustment procedure that uses a dynamic factor model for the worker flows to separate aggregate labor market forces and demographic specific trends using the u s labor market as an illustration our demographic adjusted unemployment rate indicates that the 2008 2009 recession was much more severe and generated substantially more slack than the early 1980s recession

long term unemployment and the great recession the role of composition duration dependence and nonparticipation we explore the role of composition duration dependence and labor force nonparticipation in accounting for the sharp increase in the incidence of long term unemployment ltu during the great recession we show that compositional shifts account for very little of the observed increase in ltu using panel data from the current population survey for 2002 7 we calibrate a matching model that allows for duration dependence in unemployment and transitions between employment unemployment and nonparticipation the calibrated model accounts for almost all of the increase in ltu and much of the observed outward shift in the beveridge curve between 2008 and 2013

the shadow margins of labor market slack we use a mix of new and existing data to develop the aggregate hours gap ahg a novel measure of labor market underutilization our measure differentiates individuals by detailed categories of labor market participation and uses data on their desired work hours as a measure of their potential labor supply we show that desired hours vary widely by demographics and detailed labor force status and that the gap between desired and actual work hours is strongly positively correlated with reported search effort the aggregate hours gap suggests a more sluggish labor market recovery since the great recession than either the official unemployment rate or alternative measures of labor market underutilization modest amounts of underutilization among the part time employed and a substantial degree of underutilization among those out of the labor force account for the disparity the aggregate hours gap also does well in accounting for wage movements over our sample period

bidding off the wall why reserve prices may be kept secret abstract this note shows by means of an example that in a common value auction a seller with a random reservation value can increase her ex ante expected profits by following a policy of conducting an auction in which her reserve price is kept secret compared to an auction in which the reserve price is announced by keeping the reserve price secret the seller is able to encourage greater participation from the bidders and can therefore increase the linkage of the price paid to the value of the purchased object journal of economic literature classification numbers d82 d44

information returns and bidding behavior in ocs auctions 1954 1969 this paper examines federal auctions for leases on the outer continental shelf in the light of the predictions of the first price sealed bid common values model of auctions the authors find that the data strongly support the model for auctions in which one bidder is better informed than the other bidders the evidence for auctions in which bidders have noisy but qualitatively similar information is less conclusive but is consistent with a model in which each bidder does not know either the actual or potential number of bidders on a lease copyright 1987 by blackwell publishing ltd

mismatch shocks and unemployment during the great recession summary we investigate the macroeconomic consequences of fluctuations in the effectiveness of the labor market matching process with a focus on the great recession we conduct our analysis in the context of an estimated medium scale dynamic stochastic general equilibrium model with sticky prices and equilibrium search unemployment that features a shock to the matching efficiency or mismatch shock we find that this shock is not important for unemployment fluctuations in normal times however it plays a somewhat larger role during the great recession when it contributes to raise the actual unemployment rate by around 1 3 percentage points and the natural rate by around 2 percentage points the mismatch shock is the dominant driver of the natural rate of unemployment and explains part of the recent shift of the beveridge curve copyright 2016 john wiley sons ltd

the beveridge curve a survey important progress has been made in economists understanding of the beveridge curve from its measurement to its expression in canonical labor market models yet enduring puzzles remain chief among these are the empirical role of vacancies in the recruitment process the amplitude comovement and persistence of cyclical unemployment vacancy dynamics and the sources of lateral shifts in the beveridge curve the synthesis of these themes identifies several priorities for ongoing research including the role of entry costs into vacancy creation in shaping beveridge dynamics the cyclicality of search intensity both off and on the job and its relation to participation and job to job transitions the theory and measurement of mismatch and the sources of hysteresis in unemployment flows

persistence and volatility of beveridge cycles this paper aims to explain the magnitude and cyclical behavior of the fluctuations in unemployment and vacancies adding demand externalities to an otherwise standard search and matching model reduces the need for exogenous shocks in explaining these fluctuations under plausible parameter values the equilibrium dynamics include a stable limit cycle that resembles the empirically observed counterclockwise cycles around the beveridge curve quantitatively these endogenous beveridge cycles can explain half of the volatility and almost all persistence of unemployment without any exogenous forces avoiding the amplification and propagation problems of the standard model