strategic interactions and contagion effects under monetary unions this paper applies game theory and a cost benefit analysis to study voluntary exits and contagion effects in countries joined to a monetary union the paper looks at two non core or periphery countries of a large union and examines the role of structural asymmetries and strategic interactions as determinants of equilibrium outcomes following both country specific and common shocks the paper finds that under almost symmetry between countries country specific shocks are never associated with multiple equilibria and if large enough can spread to other countries leading to contagion by contrast common shocks are seen to sustain multiple equilibria if almost symmetric countries are considered and to have implications similar to those found in the country specific case if large structural asymmetries are admitted

structural analysis of cointegrating vars this survey uses a number of recent developments in the analysis of cointegrating vector autoregressions vars to examine their links to the older structural modelling traditions using autoregressive distributed lag ardl and simultaneous equations models sems in particular it emphasizes the importance of using judgement and economic theory to supplement the statistical information after a brief historical review it sets out the statistical framework discusses the identification of impulse responses using the generalized impulse response functions reviews the analysis of cointegrating vars and highlights the large number of choices applied workers have to make in determining a specification in particular it considers the problem of specification of intercepts and trends and the size of the var in more detail and examines the advantages of the use of exogenous variables in cointegration analysis the issues are illustrated with a small u s macroeconomic model

signalling in a dynamic labour market this paper analyzes a multiperiod version of the spence job market signalling model in which workers cannot commit to an education choice and firms make wage offers at any point in time the dynamic competition combined with the incomplete information yield a multiplicity of sequential equilibria including ones that sustain implicit collusion even though the length of the game is finite emphasis is placed on equilibria that satisfy the independence of never weak best response criterion of kohlberg and mertens 1986 it is shown that in the limit as the time between offers tends to zero any such equilibrium results in expectation in the unique stable outcome of the static spence model

dynamic signaling and market breakdown we consider the effects a public revelation of information e g rating grade has on trading in a dynamic signaling model competing buyers offer prices to a privately informed seller who can reject them and delay trade delay is costly and the seller has no commitment to its duration the external public information allows for signaling in equilibrium more interestingly we characterize the dynamics of trade and prices if signals are noisy no trade takes place just before the revelation of external information if signals are fully revealing then trade occurs even close to revelation however transaction prices are discontinuous

education signalling with preemptive offers offers before workers complete their education workers cannot commit to turning down such offers offers are private so that workers are unable to use one firm s offer in an attempt to elicit better offers from other firms in the unique sequential equilibrium outcome of the model with unproductive education there is no wasteful education when education is productive the standard model predicts that more able individuals become overeducated to separate themselves from less able workers in our model less able workers become overeducated to partially pool with more able workers the pooling mutes the incentives of high ability workers who in consequence actually choose to become undereducated we examine the robustness of our result to modifications to the basic model

equity issues with time varying asymmetric information this paper develops a formal model of the effect of time varying asymmetric information on the timing and pricing of equity issues when managers are better informed than outside investors we assume that as time passes the adverse selection problem becomes more severe as more managers receive a private signal under this assumption the model predicts temporal variation in the quantity of issues with a bunching of issues after information releases it also predicts that the price drop at issue announcement increases with the time since the last information release these predictions are consistent with several recent empirical studies relating equity issues to earnings and dividend announcements

inter industry wage differentials in eu countries what do cross country time varying data add to the picture this paper documents the existence and main patterns of inter industry wage differentials across a large number of industries for 8 eu countries belgium germany greece hungary ireland italy netherlands and spain at two points in time in general 1995 and 2002 and explores possible explanations for these patterns the analysis uses the european structure of earnings survey ses an internationally harmonised matched employer employee dataset to estimate inter industry wage differentials conditional on a rich set of employee employer and job characteristics after investigating the possibility that unobservable employee characteristics lie behind the conditional wage differentials a hypothesis which cannot be accepted the paper investigates the role of institutional industry structure and industry performance characteristics in explaining inter industry wage differentials the results suggest that inter industry wage differentials are consistent with rent sharing mechanisms and that rent sharing is more likely in industries with firm level collective agreements and with higher collective agreement coverage jel classification j31 j41 j51

the effect of house energy efficiency programs on the extensive and intensive margin of lower income households investment behavior abstract this paper examines the biggest house energy efficiency retrofit support program in greece which ran during 2011 2015 and approximately fifty thousand households participated we take advantage of an exogenous policy change resulting in cost reduction for households that occurred while the program was running this change substantially increased the subsidy rate for lower income households we find that this effective cost reduction increased the participation rate extensive margin we add to the literature on retrofits by further showing that this change increased substantially the investment amount intensive margin of these lower income households detailed data on a sub sample of households reveal that this increase was driven primarily by window replacement and thermal insulation investments

high yields the spread on german interest rates this paper is a first attempt at evaluating the determinants of the interest rate differentials on government bonds between high yielders namely italy spain and sweden and germany in particular we concentrate on daily frequencies where the relevance of economic fundamentals is rather limited and address the question of the relative importance of local and global factors in the determination of such spread we identify and measure three components of total yield differentials one due to expectations of exchange rate depreciation which we call the exchange rate factor another which reflects the market assessment of default risk and a last one due to the different taxation treatment of long term yields

yield spreads on emu government bonds government bond spreads we provide evidence that the movements in yield differentials between euro zone government bonds explained by changes in international risk factors as measured by banking and corporate risk premiums in the united states are more pronounced for bonds issued by italy and spain liquidity factors play a smaller role so policies meant to increase financial market efficiency do not appear sufficient to deliver a seamless bond market in the euro area the risk of default is a small but important component of yield differentials movements which signal market perceptions of fiscal vulnerability impose market discipline on national fiscal policies and may be reduced only by further convergence in debt ratios lorenzo codogno carlo favero and alessandro missale

gambling reputation repeated bargaining with outside options we study the role of incomplete information and outside options in determining bargaining postures and surplus division in repeated bargaining between a long run player and a sequence of short run players the outside option is not only a disagreement point but reveals information privately held by the long run player in equilibrium the uninformed short run players offers do not always respond to changes in reputation and the informed long run player s payoffs are discontinuous the long run player invokes inefficient random outside options repeatedly to build reputation to a level where the subsequent short run players succumb to his extraction of a larger payoff but he also runs the risk of losing reputation and relinquishing bargaining power we investigate equilibrium properties when the discount factor goes to 1 and when the informativeness of outside options diffuses in both cases bargaining outcomes become more inefficient and the limit reputation building probabilities are interior publication abstract

was it different the second time an empirical analysis of contagion during the crises in greece 2009 15 over the period between end 2009 and end 2015 greece experienced two discernible financial crises this article undertakes a correlation analysis of risk premia to investigate the nature and extent of contagion from these crises to other selected euro zone countries a commonly expressed view is that the effects of the second crisis were more muted since the systemic risks were seen by markets as being lower however using a rolling correlation model a dcc garch model and a t copula model we find that this is not the case broadly speaking the contagion effects of the second crisis were at least as large as those associated with the first one

is tourism an engine for economic recovery theory and empirical evidence abstract the purpose of this study is to examine the causal relationships between tourism development and economic growth for this purpose the dumitrescu and hurlin 2012 technique was employed to analyze the casual link between tourism development and economic growth in seven european countries the results showed that there is bidirectional causality between growth in tourism receipts and economic growth suggesting that economic growth and tourism development are interdependent and that tourism development stimulates economic growth and vice versa in these countries theoretical and practical implications are discussed within the realms of growth conservation feedback and neutrality hypotheses

waiting for news in the market for lemons econometrica vol 80 no 4 july 2012 1433 1504 waiting for news in the market for lemons b y b rendan d aley and b rett g reen 1 we study a dynamic setting in which stochastic information news about the value of a privately informed seller s asset is gradually revealed to a market of buyers we con struct an equilibrium that involves periods of no trade or market failure the no trade period ends in one of two ways either enough good news arrives restoring confidence and markets reopen or bad news arrives making buyers more pessimistic and forcing capitulation that is a partial sell off of low value assets conditions under which the equilibrium is unique are provided we analyze welfare and efficiency as they depend on the quality of the news higher quality news can lead to more inefficient outcomes our model encompasses settings with or without a standard static adverse selection problem in a dynamic setting with sufficiently informative news reservation values arise endogenously from the option to sell in the future and the two environments have the same equilibrium structure k eywords dynamic games adverse selection information economics signaling 1 introduction c onsider an entrepreneur who is interested in selling her company due to liquidity constraints naturally she is better informed than the market about her company s fundamentals she would like to sell yet there is no reason she is forced to do so on any given day nor can she commit to delaying trade with every passing day that she retains ownership she gains or loses the day s profit and maintains the option to sell the next day if trade is in fact delayed then the market may learn about the value of the firm by observing cash flows investments customer base and so forth herein lies the key innovation of this paper we introduce an exogenous public information process news into a model of such settings we then study the implications for trading behavior efficiency and welfare we model the environment as a game played in continuous time where a risk neutral seller faces a competitive market there is common knowledge of gains from trade but the seller is privately informed about the asset s value i e her type which may be either high or low at each point in time prior to trade the seller receives offers from the market if an offer is accepted then the trade is consummated and the game ends if all offers are rejected then the seller consumes the type dependent flow payoff endowed by the asset contemporaneously information about the seller s type is publicly revealed we are grateful to a co editor and three anonymous referees for helpful comments and sug gestions we are greatly indebted to jeremy bulow michael harrison and andrzej skrzypacz for useful conversations comments and encouragement special thanks also to peter demarzo johannes horner ilan kremer jon levin paul milgrom yuliy sannikov bob wilson and sem inar participants at chicago chicago gsb duke mit kellogg nyu penn stanford olin wharton unc yale and the 7th annual duke northwestern texas io theory conference 2012 the econometric society doi 10 3982 ecta9278

the european sovereign debt crisis the origin and propagation of the european sovereign debt crisis can be attributed to the flawed original design of the euro in particular there was an incomplete understanding of the fragility of a monetary union under crisis conditions especially in the absence of banking union and other european level buffer mechanisms moreover the inherent messiness involved in proposing and implementing incremental multicountry crisis management responses on the fly has been an important destabilizing factor throughout the crisis after diagnosing the situation we consider reforms that might improve the resilience of the euro area to future fiscal shocks

wto accession the changing competitiveness of foreign financed firms and regional development in guangdong of southern china this paper investigates the changing competitiveness of foreign financed manufacturing firms and its implications for regional development in guangdong province of southern china in the run up to world trade organization wto accession it is argued that transnational corporations tncs and some competitive large scale locally funded firms in guangdong will triumph after wto accession the crowding out process of small and medium sized enterprises smes in guangdong will be accelerated in the near future as they are competing directly with tncs and as their competitive advantages are diminishing due to bureaucratic red tape and the rigorous enforcement of new government policies due to close business linkages with local privately funded firms the competitiveness and vitality of foreign financed enterprises will have profound long term effects on the economic development of guangdong before and after wto accession cet article cherche a etudier l evolution de la competitivite des entreprises ind

the greek financial crisis growing imbalances and sovereign spreads abstract we discuss the origins of the greek financial crisis as manifested in the growing fiscal and current account deficits since euro area entry in 2001 we then extend a model typically used to explain risk premia to assess the extent to which credit ratings captured these premia next we estimate a cointegrating relationship between spreads and their long term fundamental determinants and compare the spreads predicted by this estimated relationship with actual spreads we find that spreads were significantly below what would be predicted by fundamentals from end 2004 up to the middle of 2005 by contrast since may 2010 actual spreads have exceeded predicted spreads by some 400 basis points

oil price shocks and emu sovereign yield spreads abstract this study examines for the first time the relationship among the oil price shocks and the sovereign yield spreads in the emu which is collectively the largest oil importer of the world in a time varying environment in particular we examine the time varying correlation between oil price shocks and the 10 year sovereign yield spread of core and periphery countries in the emu by employing a scalar bekk framework the main findings reveal that the correlations between sovereign yield spreads and oil price shocks are indeed time varying and are influenced by specific economic and geopolitical events that took place during the study period furthermore even though the correlation patterns are constantly low or zero prior to the great recession a change is revealed in the post 2008 period when correlations become moderate and more volatile finally we do not observe noteworthy differences in the correlation behaviour between core and periphery countries to different oil price shocks the findings of this study are particularly useful and provide valuable information to marketplace participants

profit strategy of greek banks cross subsidization and diversification versus complementarity abstractthis study analyses the profit strategy employed by banks in greece using dynamic panel data techniques and a data set which includes proprietary supervisory data covering the whole greek commercial banking system from 2004 to 2011 we provide evidence that banks use interest and non interest income non ii as substitutes rather than complements with non ii representing an indirect competition instrument by the more efficient banks used in place of direct competition with their peers through prices on loans and deposits this behaviour is explained by further decomposing the non ii into the relatively stable fees component and the volatile trading income moreover we provide evidence that the net interest income is primarily affected by the banks market power and their operating costs while more efficient banks exploit their core deposit base to lever their non ii finally macroeconomic developments affect both income components which are found to be procyclical with respect to economic ac

downward nominal and real wage rigidity survey evidence from european firms it has been well established that the wages of individual workers react little especially downwards to shocks that hit their employer this paper presents new evidence from a unique survey of firms across europe on the prevalence of downward wage rigidity in both real and nominal terms the authors analyse which firm level and institutional factors are associated with wage rigidity the results indicate that it is related to workforce composition at the establishment level in a manner that is consistent with related theoretical models e g efficiency wage theory insider outsider theory the analysis also finds that wage rigidity depends on the labour market institutional environment collective bargaining coverage is positively related with downward real wage rigidity measured on the basis of wage indexation downward nominal wage rigidity is positively associated with the extent of permanent contracts and this effect is stronger in countries with stricter employment protection regulations

heterogeneity of the determinants of euro area sovereign bond spreads what does it tell us about financial stability abstract in this paper we assess the movements of euro area sovereign bond yield spreads vis a vis the german bund as processes specified across different levels of volatility and subject to movements in asset prices and economic conditions the determinants we use are grouped into domestic and euro area aggregates thus allowing us to derive results on their relative explanatory power and compare them across time and the spectrum of countries we find that volatility influences the deterministic processes of the euro area sovereign spreads and that identical determinants have effects on spreads that vary considerably across countries furthermore we find that variables reflecting investment confidence conditions and perceptions for the upcoming economic activity are significant determinants and their significance remains to a large extent even when controlling for fiscal variables

determinants of sovereign bond yield spreads in the emu an optimal currency area perspective in the light of the recent financial crisis we take a panel cointegration approach that allows for structural breaks to the analysis of the determinants of sovereign bond yield spreads in nine economies of the european monetary union we find evidence for a level break in the cointegrating relationship moreover results show that i fiscal imbalances namely expected government debt to gdp differentials are the main long run drivers of sovereign spreads ii liquidity risks and cumulated inflation differentials have non negligible weights but iii all conclusions are ultimately connected to whether or not the sample of countries is composed of members of an optimal currency area oca in particular we establish i that results are overall driven by those countries not passing the oca test and ii that investors closely monitor and severely punish the deterioration of expected debt positions of those economies exhibiting significant gaps in competitiveness

strategic delay in bargaining this paper analyses a bargaining model with incomplete information in which the time between offers is an endogenous strategic variable we find equilibria involving a delay to agreement that is due to the use of strategic time delay by bargainers to signal their relative strength under some specifications of the parameters delay is present in the unique sequential equilibrium whose beliefs satisfy one intuitive restriction this delay does not vanish as the minimal time between offers becomes small