the demand for physician services evidence from a natural experiment this study exploits a natural experiment in belgium to estimate the effect of copayment increases on the demand for physician services it shows how a differences in differences dd estimator of the price effects can be decomposed into effects induced by the common average proportional price increase income effects and by the change in relative prices substitution effects the price elasticity of a uniform proportional price increase is relatively small 0 13 for men and 0 03 for women substitution effects are large especially for women but imprecisely estimated despite the substantial price increases the efficiency gain of the reform if any is modest

farmers and the u s congress rethinking basic institutional assumptions about agricultural policy abstract an assumption shared by most agricultural economists is that as farm numbers decline in a democratic government farm policy attention from rule makers will decline as well this assumption despite important work to the contrary in institutional economics is often voiced in federated governing units especially the u s where constituents are locally organized and the commitment of rule makers to nationwide policy is limited while significant theoretical literature challenges that majoritarian view from the perspective of interest group theory this is the first empirical test and explanation of the behavior of rule makers the findings of this analysis indicate that classic majoritarian expectations are not met in the u s congress instead unexpectedly large numbers of legislators seek favorable policy action for farmers as distinct minorities within their districts however these same legislators balance their attention to farmers by also taking policy action in agriculture on behalf of other types of contituents legislators explain these actions as the result of their own electoral needs to satisfy vocal minorities from their political districts plus the ease with which they can marginally adjust a large base of u s farm programs thus a kind of neo majoritarianism emerges these results are especially important given the growing attention to federated governance in the european union east europe in north america through free trade agreements and with the gatt they indicate that farmers will continue despite shrinking numbers to be influential in those governing structures that have historically strong farm programs and the capacity to diversify from that policy base

a reexamination of purchasing power parity a multicountry and multiperiod study abstract this paper re examines the purchasing power parity ppp theory in a multiple exchange rate world owing to a lack of precision in estimating the parameters many authors concluded that ppp did not hold very well in the 1970s using a time series cross sectional estimation procedure we are unable to reject the hypothesis that ppp holds in several currencies simultaneously in addition the parameters are precisely estimated this result follows from the estimation procedure which allows us to exploit the cross sectional variation in the data and the contemporaneous correlation in the deviations from ppp

unemployment insurance and the rate of re employment of displaced workers the rate of transition from unemployment to re employment for a sample of displaced workers is estimated using a semiparametric specification which allows the effects of unemployment insurance benefits to vary over time three results which would be missed by more restrictive specifications demonstrate the value of this approach 1 the effects of ui benefits decline and eventually disappear as the date of expiration approaches 2 expiration of ui benefits are an inadequate explanation of the spikes commonly observed in nonparametric sample hazard rates for re employment 3 ui benefits do not significantly affect the rate at which a displaced worker becomes re employed in his or her previous industry but reduce the rate for transitions to other industries copyright 1991 by mit press

the collapse of purchasing power parities during the 1970 s one of the striking facts concerning the relationship beiveen prices and exchange rates during the 1970 s has been the dismal performance of the predictions of the simple versions of the purchasing power parity doctrine ppp that doctrine in its absolute version states that the equilibrium exchange rate between domestic and foreign currencies equals the ratio of domestic to foreign price levels the relative version of the doctrine relates equilibrium changes in exchange rates to changes in the ratio of domestic to foreign prices during the 1970 s short run changes in exchange rates bore little relationship to short run differentials in national inflation rates and frequently divergences from purchasing power parities have been cumulative this paper reviews and analyzes the empirical record of exchange rates and prices during the 1970 s and the analysis is based on the experience of the dollar pound the dollar frecch franc and the dollar dm exchange rates section 2 presents the evidence on ppp during the 1970 s and contrasts it with the evidence from the 1920 s a period during which the doctrine held up reasonably well this analysis is relevant for assessing whether the flexible exchange rate system was successful in providing national economies with an added degree of insulation from foreign shocks and whether it provided policymakers with an added instrument for the conduct of macroeconomic policy the evidence regarding devia tions from purchasing power parities is also relevant for determining whether there is a case for managed float section 3 attempts to explain what went wrong with

how do different entitlements to unemployment benefits affect the transitions from unemployment into employment abstract in portugal duration of benefits is exclusively age determined while replacement rates are essentially uniform we exploit differences in potential maximum duration of benefits for nearly matched pairs of individuals to determine the effects of benefit duration on job finding

can a carbon permit system reduce spanish unemployment this paper analyses the impact of carbon policy on unemployment in spain and whether recycling the public revenues earned from permit auctions can alleviate this problem while spain s deviation from the european union s intermediate emission goals is more serious than most other member countries unemployment in spain is also well above average for the european union we use a computable general equilibrium model that includes unemployment in the markets for unskilled and skilled labour we find that introducing carbon permits does not aggravate spanish unemployment in fact if supplied with revenue recycling schemes unemployment rates may actually fall contrary to other european studies we find that the best option is to reduce payroll taxes on relatively skilled types of labour this reform is successful in both increasing labour demand and dampening the supply response to rising wages however while all of the recycling schemes generate dividends in terms of aggregate welfare none entirely offsets the abatement costs

real exchange rates and divisia moments of world trade abstract this paper introduces new indexes of prices and quantities of world trade and demonstrates their link with real exchange rates these indexes are applied to data from the group of seven countries one of our results is that the elasticity of exports with respect to the real exchange rate is 0 4

to search or not to search the effects of ui benefit extension for the older unemployed abstract in finland the older unemployed can collect unemployment insurance benefits until retirement while the entitlement period for younger groups is two years in 1997 the eligibility age of persons benefiting from extended benefits was raised from 53 to 55 this paper takes advantage of this quasi experimental setting to identify the effect of extended benefits on transitions out of unemployment among the older unemployed we apply a competing risks version of a split population duration model to account for multiple exit routes and the possibility that some of the older unemployed may not be active in the labour market due to pension rules our finding is that roughly half of the unemployed with extended benefits withdraw from job search

an international comparison of prices and exchange rates a new test of purchasing power parity abstract this paper introduces a new approach based on divisia index numbers to test ppp with both short run and long run data for all major currencies simultaneously the short run results indicate that the predictions of ppp do not hold up at all well on the other hand however the long run data are quite consistent with the ppp hypothesis the results also identify five years as a broad measure of the length of the long run insolar as ppp is concerned

coordination versus flexibility in wage formation a focus on the nominal wage impact of productivity in germany greece ireland portugal spain and the united states wage coordination between countries of the european monetary union emu aims at aligning nominal wage growth with labour productivity growth at the national level we analyse the developments in germany the emu s periphery countries greece ireland portugal and spain along with the united states over the period 1980 to 2010 apart from the contribution of productivity to nominal wages we take into account the contributions of prices unemployment replacement rates and taxes by means of an econometrically estimated nonlinear equation resulting from a wage bargaining model we further study the downward rigidities of nominal wages the findings show that in past times of low productivity price inflation and reductions in unemployment still put significant upward pressure on nominal wage growth the periphery countries are far from aligning nominal wage growth with productivity growth german productivity is a major wage determinant but surely not the only one within the context of a free bargaining

social employment of welfare recipients in belgium an evaluation in belgium welfare agencies receive a subsidy to employ welfare recipients for a period sufficiently long to entitle them to unemployment benefits we investigate the effect of this programme on the exit rate from welfare we propose a grouping iv estimator of the programme effect that eliminates selection bias the estimator is consistent even if the selection into the programme depends on the average unobserved characteristics of welfare recipients in a region and in a welfare duration interval without correction for selectivity we find that the programme reduces welfare dependence but after correction this conclusion is reversed

how puzzling is the ppp puzzle an alternative half life measure of convergence to ppp summary evidence of lengthy half lives for real exchange rates in the presence of a high degree of exchange rate volatility has been considered as one of the most puzzling empirical regularities in international macroeconomics this paper suggests that the measure of half life used in the literature might be problematic and proposes alternative measures with desirable properties their focus on the cumulative effects of the shocks distinguishes them from the measures used in the literature an empirical analysis of bilateral us dollar real exchange rates employing the alternative half life measure produces results consistent with theory and indicates that the ppp puzzle is less pronounced than initially thought copyright 2012 john wiley sons ltd

measuring international competitiveness experience from east asia this paper uses a new measure of real exchange rates as an indicator of international competitiveness this new measure involves defining all prices and exchange rates on an appropriately weighted basket of currencies rather than a single currency the measure is applied to the data for japan korea thailand malaysia and singapore for comparison purposes we calculate real exchange rates based on purchasing power parity ppp for these countries to check for the relative performance of the two measures cointegration tests are employed the results indicate that the new measure tends to be closely related with the export growth for the sample countries while the ppp based measure is not moreover the ppp based real exchange rates tend to understate the measures of competitiveness for these countries this result has important implications in terms of the levels of these countries exchange rates as well as the well known balassa hypothesis

rent seeking in international trade the great tomato war this paper presents a model of international rent seeking activities by producers in both exporting and importing nations the model is applied to the winter vegetable trade between the united states and mexico an analysis is made of the attempts to form export import coalitions reasons for these failures are given due to past failures to impede trade essentially free trade in winter vegetables between the two countries exists

why are services cheaper in the poor countries in their important work on international comparisons of national incomes and of comparative price structure kravis heston and summers i982 p 8 have noted that services are much cheaper in the relative price structure of a typical poor country than in that of a rich country this phenonomen has been documented now fairly systematically by the data gathered under their guiding hand of the united nations international comparison icp which covers 34 countries table i reproduced from their work i982 and fig i based on rows 3 and ii 13 indeed show this tendencyfor the relationship between relative service prices and real per capita gdp in this kravis heston summers 34 country 6 group sample the tendency is strongly evident except for the intermediate groups iii and iv

reduction in the long term unemployment of the elderly a success story from finland in finland the elderly unemployed are allowed to collect unemployment benefits up to the age of 60 when they can retire via a particular unemployment pension in 1997 the eligibility age of persons benefiting from this scheme was raised from 53 to 55 we consider changes in the risk of unemployment unemployment durations and the exit states before and after the reform in the duration analysis a flexible treatment design is adopted by allowing for quantile treatment effects we apply three different non and semiparametric methods which all produce robust and coherent results since the reform the group aged 53 54 has had a lower risk of unemployment shorter unemployment durations and higher exit rates to employment and it is no longer distinguishable from the group aged 50 52 we estimate the amount of unemployment benefits saved due to the reform

institutional change in the common agricultural policy of the european community the common agricultural policy cap of the european community ec is a complex institutional structure with major effects on world agriculture this study analyzes the cap from a public choice perspective as a case of induced institutional innovation the demand for change is analyzed as a function of a newly enlarged community time consuming decisions unequal distribution of net benefits increasing budget expenditures and rising pressures to renationalize farm subsidies drive the demand for change alternative institutional arrangements respond to these demands which reflect preferences for fairness and equity as well as improved efficiency in the cap

sticky prices and time to equilibrium evidence from asia pacific trade related economies the theoretical relation between exchange rate and prices has been a difficult proposition to find supporting evidence despite many studies of developed economies using standard research methods the exchange rate to price relation appears to hold in the long run only a result consistent with sticky price hypothesis there is a need to add to this sticky price literature by examining more yet studied economies to this area of research this article presents results to support long run equilibrium in the asia pacific economies as being 5 years the methodology is used to group countries with high trade intensity within a region and value weight the resulting variables to test the theory in a regional context our positive finding on the long run equilibrium we believe helps in some ways to enrich the literature on the exchange rate behaviour of an important region for world trade

federalism opportunism and multilateral trade negotiations in agriculture when federalist nations are signatories to international economic agreements potential problems arise because of the inherent conflicts between federal law and legitimate state interests this paper presents a conceptual framework for analyzing problems surrounding negotiation ratification and implementation of international agreements when federations are signatories the economic model isolates three factors the variance of state net benefits under an agreement individual states opportunity costs associated with the agreement and state supported opportunism as cost increasing impediments to the successful institution of international economic agreements and highlights opportunism containment as fundamental to credible commitments in international agreements

analyzing the length of welfare spells abstract this paper studies the determinants of the length of individual spells of welfare focusing on how the length of a spell affects the probability of its termination the analysis utilizes six years of monthly data on time spent in the afdc program among female household heads a variety of duration dependence models are estimated monthly afdc participation does not show strong evidence of duration dependence two distinct groups appear to utilize welfare one with a very low and constant probability of leaving welfare and a second group which is more affected by time on the program

how does the benefit effect vary as unemployment spells lengthen summary this paper investigates how the effect of income while unemployed on the probability of an individual leaving unemployment varies with the length of time that the individual has been unemployed we examine this question in the context of a variety of alternative econometric models we extend the proportional hazards model with unrestricted baseline hazard to one in which there are unrestricted effects of a subset of the explanatory variables and also consider models that can be estimated as series of binary response models the proportional hazard restrictions are rejected for the sample of british unemployed men analysed and in the binary sequence framework logit and probit models based on symmetric distributions dominate in likelihood terms the extreme value form model implied by extension of the proportional hazards formulation logit models with a flexible form for the duration dependence which also incorporate unobserved heterogeneity in a flexible way are estimated the results for all formulations indicate a rapidly declining effect of unemployment income as a spell lengthens with no significant effect for the long term unemployed the preferred specifications which allow for omitted heterogeneity indicate no significant effect after about 5 months and this result is robust to the inclusion or exclusion of previous labour market experience variables and to the choice of mixing distribution

labour market outliers lessons from portugal and spain iberian labour markets why spain and portugal are oecd outliers spain has the highest unemployment rate 22 2 of any european union country portugal one of the lowest 7 3 superficially these countries share many labour market features the toughest job security rules in the oecd an apparently similar architecture of wage bargaining and comparable generosity of their unemployment insurance systems at least since 1989 we address the puzzle by examining portuguese and spanish labour market institutions in particular job security unemployment benefits and the system of wage bargaining we then conduct empirical analysis of spanish and portuguese unemployment outflows and wage distributions using micro data we find differences in unemployment benefits non existent in portugal until 1985 and less generous nowadays differences in wage flexibility wage floors by category established by collective agreements are set at a lower relative level in portugal and in practice higher firing costs in spain a key explanation of the difference in portuguese and spanish unemployment rates is the wage adjustment process generous benefit levels may have been necessary for the path spanish unions took but this was not the sole explanation of different wage setting in spain and portugal olympia bover pilar garcia perea and pedro portugal

how to quickly get a job the transition from higher education to french labour market by a survival model this article analyses how long former university students stay unemployed when searching for a new job after the leaving of the french higher education cox duration models are used to account for the proportional hypothesis the main result of this article is that the worker s recruitment is based more on the choice of the faculty of initial training than the educational level attainment some policy implications are derived from our results to give some recommendations for individual job search and policy makers in education

equilibrium relationships between money and other economic variables central to the quantity theory of money are a number of important propositions about the long run equilibrium effects of changes in the nominal stock of money on other economic variables a standard way of testing these propositions is to use quarterly or annual data explicitly model the lag structure and then derive the long run solution of the model from the empirical estimates an alternative is to use some type of smoothing procedure to approximate positions of equilibrium and then to use these transformed data directly in testing hypotheses the national bureau technique of averaging data over reference cycle phases is one such method robert lucas s application of fourier transforms in two illustrations of the quantity theory of money 1980 is another and john geweke s method 1982 of frequency decomposition is a third an entirely different way of approaching the problem is to use cross country average rather than time series data as the basic units of observation the advantage according to lucas is that since the two quantity theoretic laws that he examines are obtained as characteristics of steady states or limiting distributions of theoretical models the ideal experiment for testing them would be a comparison of long term average behavior across economies with different monetary policies but similar in other respects p 1006 in this paper i conduct such an experiment the data that i use are for 20 oecd countries over the period 1956 80 the specific relationships that i examine are those between money and the price level money and real income money and interest rates and money and exchange rates in the main the data accord well with the quantity theoretic model classical neutrality holds there is evidence of a fisher effect albeit a less than complete effect on interest rates finally the data are consistent with long run purchasing power parity and hence correspondingly with a long run monetary approach to exchange rate determination

purchasing power parity in the 1920s and the 1970s a note abstract in a recent article of the european economic review frenkel 1981 claims that purchasing power parity ppp held farily well in the 1920s but collapsed in the 1970s frenkel s study does not include the swiss case the present paper aims to answer three questions 1 to what extend does the evidence of the 1920s and the 1970s support ppp for switzerland 2 is there a significant difference of price level and exchange rate behavior between the 1920s and the 1930s as claimed by frenkel and 3 is the swiss experience significantly different from that of the countries

burgernomics the economics of the big mac standard abstract in the course of ppp research much of the debate over the validity has been over the choice of an appropriate basket for making purchasing power comparisons the different compositions of goods and services in these baskets across countries have resulted in arguments against their usefulness for ppp purposes this problem is augmented by the existence of productivity differentials in traded and non traded goods across countries therefore we consider the use of the big mac as the international monetary standard as being a more palatable alternative it is produced locally in over 80 countries around the world with only minor changes in recipe and thus has the flavour of the perfect universal commodity our results indicate that the big mac index is surprisingly accurate in tracking exchange rates over the long term which is consistent with previous ppp research findings we subsequently enhance our ppp comparisons by taking into account the productivity differentials between countries and excluding non traded goods from the big mac index to derive the no frills index

flexible parametric estimation of duration and competing risk models in this paper we specify and estimate a flexible parametric proportional hazards model the model specification is flexibly parametric in the sense that the baseline hazard is non parametric while the effect of the covariates takes a particular functional form we also add parametric heterogeneity to the underlying hazard model specification we specify a flexible parametric proportional competing risks model which permits unrestricted correlation among the risks unemployment duration data are then analysed using the flexible parametric duration and competing risks specifications we find an important effect arising from the exhaustion of unemployment insurance and significantly different hazards for the two types of risks new jobs and recalls

social spending and automatic stabilizers in the oecd the macroeconomic literature on automatic stabilization tends to focus on taxes and dismiss the relevance of government expenditure except for unemployment compensation our results go sharply contrary to this view we engage in an empirical analysis of 21 oecd countries from 1982 to 2003 and find that age and health related social expenditure as well as incapacity and sick benefits all react to the cycle in a stabilizing manner while possibly new in the macro literature this conforms to many results in studies in labour economics the policy implications are broad since much previous analysis of discretionary fiscal policy rests on official figures for automatic stabilization there are also major implications for efforts to incorporate automatic fiscal policy in simulation models julia darby and jacques melitz

long run purchasing power parity revisited a monte carlo simulation the existence of long run purchasing power parity ppp implies that a cointegration vector of nominal exchange rate domestic price and foreign price is expected regardless of using the engle granger two step method or johansen maximum likelihood approach however this paper has found conflicting results the engle granger technique tends to reject the long run ppp hypothesis whereas the johansen method is generally supportive of long run ppp via monte carlo simulations the present paper finds that the johansen approach has a bias toward supporting long run ppp especially under the circumstances in which the assumption of normally or and independently and identically distributed disturbance terms is violated

short and long term unemployment abstract this paper estimates a semi parametric hazard model for unemployment duration that accommodates time varying covariate effects for both baseline hazard functions selected some dramatic changes are detected in the regression coefficients the results are robust to the incorporation of unobserved heterogeneity

the evolution of purchasing power parity abstract a large body of literature in international finance has attempted to estimate the speed of convergence between countries aggregate price indices to those levels predicted by purchasing power parity ppp this paper takes a novel approach by considering how this speed of convergence itself has evolved over time using a dynamic common correlated effects dcce framework from chudik and pesaran 2015 applied to a panel of countries real exchange rates over the years 1960 2015 we find an average half life of around 3 years moreover we show that the estimated half life fell by about 2 years over the course of the past five decades suggesting that the so called ppp puzzle rogoff 1996 may abating over time our results also serve to contextualize past estimates by demonstrating a high degree of sample selection sensitivity in this literature furthermore we propose explanations for the observed increase in the speed of international price adjustments focusing primarily on the increasingly tradable nature of the composition of the u s consumer price index cpi we build a measure of tradability of the cpi and show that despite an increase in the proportion of services in the average consumer s basket the cpi has become more tradable over time thus offering a potential explanation for the observed increase in adjustment speed

tests of exchange market efficiency fragile evidence from cointegration tests abstract several recent papers have employed engle and granger 1987 cointegration tests to determine whether or not markets are efficient we use a new test for cointegration due to johansen 1988 to examine market efficiency with respect to the us dollar exchange rates for canadian japanese and west german currencies the fragile nature of the test indications suggests that cointegration methodologies cannot be relied upon to provide reliable evidence on market efficiency

exchange rate volatility before and after the float this paper provides a descriptive analysis of broad features of major exchange rates since the early 1970s and compares these features with those of the 1960s the analysis is then extended to investigate whether these features are manifested in interest rates and in commodity prices the results indicate that while the exchange rates have become more volatile during the current floating rate regime the moments are comparable with those for interest rates and commodity prices

unemployment insurance and unemployment spells this paper tests the effects of the level and length of unemployment insurance benefits on unemployment durations the paper particularly studies individual behavior during the weeks just prior to when benefits lapse higher unemployment insurance benefits are found to have a strong negative effect on the probability of leaving unemployment however the probability of leaving unemployment rises dramatically just prior to when benefits lapse individual data are used with accurate information of spell durations and the level and length of benefits the semiparametric estimation techniques used in the paper yield more plausible estimates than conventional approaches and provide useful diagnostics copyright 1990 by the econometric society

econometric methods and purchasing power parity short and long run ppp this paper defines the different versions of the purchasing power parity and establishes the existing relationships between them in the light of econometric techniques monthly and annual data for real exchange rates are studied through a variance ratio test unlike other authors it is found that there is not explosive behaviour in the real exchange rate when monthly data are used besides stationarity is easily accepted using annual data these results allow to reconcile the two main versions of the purchasing power parity and also explain why trade imbalances are persistent but not permanent

professors and hamburgers an international comparison of real academic salaries in recent years academic staff unions and associations have argued for higher salaries for academics on the grounds that existing salaries have not kept pace with inflation are well below commercial salaries and most glaringly are much lower than the salaries of their overseas counterparts however most international comparisons are made based on exchange rate conversions which is inappropriate since purchasing power differentials are only reflected in exchange rates in the long term furthermore the volatility of exchange rates makes such conversions highly inaccurate in this chapter we provide a comparison of real academic salaries by converting the nominal salaries in each country to their purchasing power equivalents using the big mac index our results show that real academic salaries are highest in hong kong and singapore relative to the developed countries while hong kong tax and social security deductions are lowest furthermore real salary levels combined with intrinsic considerations such as the quality of life indicate that canada and new zealand are unattractive places for visiting migrating academics while australia and the us are relatively attractive we suggest that our findings could be of use to policy makers and academic unions in salary negotiations as well as academics making relocation decisions

duration dependence in the exit rate out of unemployment in belgium is it true or spurious on the basis of aggregate data for the early 1990s we analyse the determinants of unemployment duration for laid off male workers in wallonia belgium our results indicate that if ranking in recruitment occurs the standard mixed proportional hazard specification can be too restrictive leading to an overstatement of the extent of true negative duration dependence we conclude that negative duration dependence is largely spurious we also decompose the time variation of the hazard in unobserved compositional and direct cyclical and seasonal effects we find counter cyclical variation in the quality of young workers but none for the prime aged copyright c 2004 john wiley sons ltd

real dollar exchange rate under the bretton woods and floating exchange rate regimes abstract the focus of the paper is on real exchange rates for the dollar over the period 1957 to 1985 most such exchange rates followed an almost steplike pattern showing relatively little movement in the late 1950s and 1960s falling abruptly and then remaining low in the 1970s and finally in the 1980s rising back to levels close to those that prevailed initially contrary to much recent commentary therefore the period that appears different is not the last five years but the decade that preceded them an important factor underlying this pattern of exchange rate movement according to results presented in the paper was the behavior of monetary policy and hence inflation in the united states what remains to be established is the precise mechanism linking money and real exchange rates and the relative strength of those links

ranking unemployment duration and wages it explores the implication of one central assumption when firms receive multiple acceptable applications they hire the worker who has been unemployed for the least amount of time this assumption ranking is contrasted with the assumption of random hiring no ranking by embodying this assumption in a model of the labour market with job creation destruction and matching the joint behaviour of unemployment the distribution of unemployment durations and wages are characterized the implication that the re employment prospects of employed workers were they to become unemployed are better than those of the currently unemployed appears to have been an important feature of european unemployment experience in the 1980 s this paper examines the effects of the composition of unemployment on wage determination it explores one central assumption when firms receive multiple acceptable applications they hire the worker who has been unemployed for the least amount of time we refer to this assumption as ranking and contrast it throughout to the assumption of random hiring or no ranking by embodying this assumption in a model of the labour market with job creation destruction and matching we characterize the joint behaviour of unemployment the distribution of unemployment durations and wages ranking has a number of important implications first in addition to the obvious result that the exit rate from unemployment is a decreasing function of duration we show that the effect of duration is stronger the higher the rate of unemployment second with the wage depending on the distributions of prospective unemployment durations the presence of long term unemployed per se has little effect on wages third looking at the relation between the wage and the aggregate level of unemployment and comparing ranking to the case of no ranking the wage moves less with the level of unemployment but more with the change in unemployment put simply ranking and no ranking models show exactly the same aggregate unemployment slightly different long run responses of wages to unemployment and sharply different wage dynamics the paper is organized as follows section i characterizes the matching process and derives a matching function based on an urn ball process with vacancies as urns and applications by unemployed workers as balls thus the distribution of applications per vacancy depends on aggregate unemployment and vacancies vacancies with at least one acceptable application are filled when a vacancy receives more than one acceptable application firms use a rule to choose among applicants thus the rule determines who is hired but does not affect the number of hires section ii uses this matching function in a model of the labour market with continual job creation and destruction and characterizes the equilibrium values of unemployment vacancies and hires

a model of exchange rate dynamics this model treats the exchange rate as an asset price that depends on expectations concerning exogenous real and monetary factors that will affect relative prices and absolute price levels in future periods changes in exchange rates reflect both expected changes in these exogenous factors and changes in expectations occasioned by new information the model explains the random component in exchange rate behavior the source of divergences from purchasing power parity the anticipatory response of exchange rates to future expected disturbances and the causes of exchange rate overshooting

the changing nature of gender selection into employment europe over the great recession the aim of this paper is to evaluate the role played by selectivity issues induced by nonemployment in explaining gender wage gap patterns in the eu since the onset of the great recession we show that male selection into the labour market traditionally disregarded has increased this is particularly the case in peripheral european countries where dramatic drops in male unskilled jobs have taken place during the crisis as regards female selection traditionally positive we document mixed findings while it has declined in some countries as a result of increasing female lfp due to an added worker effect it has become even more positive in other countries this is due to adverse labour demand shifts in industries which are intensive in temporary work where women are over represented these adverse shifts may have more than offset the rise in unskilled female labour supply

analysis of transition data by the minimum chi square method an application to welfare spells in belgium in this paper we analyze transition data by means of the minimum chi square mcs method instead of the more commonly used maximum likelihood ml method the analysis includes exits to multiple destinations and unmeasured heterogeneity in the empirical application turnover in the welfare system in belgium is found to be very high median duration is 4 5 months for men and 7 months for women although these figures overstate turnover in that exits out of welfare include those occurring as a consequence of recipients moving to another municipality while remaining on welfare

unemployment duration competing and defective risks this paper examines the determinants of unemployment duration in a competing risks framework with two destination states inactivity and employment the innovation is the recognition of defective risks a polynomial hazard function is used to differentiate between two possible sources of infinite durations the first is produced by a random process of unlucky draws the second by workers rejecting a destination state the evidence favors the mover stayer model over the search model refinement of the former approach using a more flexible baseline hazard function produces a robust and more convincing explanation for positive and zero transition rates out of unemployment

time or state dependent price setting rules evidence from micro data we use two rich micro datasets on portuguese firms to analyse the ability of time and state dependent price setting rules to explain durations of price spells or the probability of price changes using a duration model with time varying regressors we find some evidence of state dependent price setting behaviour which suggests that time dependent models are unable to fully describe the features of the data specifically we find statistically significant impacts on the probability of a price change of inflation the level of economic activity and the magnitude of the last price change besides being statistically significant in some cases these effects are also economically important finally it is found that negative and positive values of the covariates have different impacts on the expected duration of prices

welfare benefits and the duration of welfare spells evidence from a natural experiment in canada abstract this paper uses a major reform of the welfare program implemented in the province of quebec canada in 1989 to analyze the impact of benefits on the length of welfare spells an important feature of this reform was the abolishment of discrimination based on age that applied to benefits as a result the monthly benefits of single individuals aged less than 30 increased from 173 to 425 1986 an increase of over 145 to assess the impact of the reform we estimate a series of semi parametric hazard models analogous to the regression approach to difference in differences estimation the estimated duration elasticities with respect to benefits for single men and women aged 22 29 are 0 25 and 0 28 respectively

purchasing power parity and relative price variability evidence from the 1970s abstract one curious fact to emerge from the return to flexible exchange rates in the 1970s was the failure of empirical tests of simple versions of the purchasing power parity ppp doctrine this paper seeks to establish whether that observed poor performance of ppp can be attributed to uncertainty regarding the rate of inflation due to the large variations in relative prices experienced during the 1970s the evidence is found to be unsupportive of the notion