the cost of market versus regulatory discipline in banking1 abstract we present evidence that insured deposit financing shields banks from the full costs of market discipline moody s downgrades indicators of increasing risk are associated with negative abnormal equity returns that are increasing in the bank s reliance on insured deposits moreover banks raise their use of insured deposits following increases in risk these findings cast doubt on the ability of capital market participants to effectively discipline bank behavior within the current regulatory environment more generally our findings highlight the potential for regulation to undermine market discipline in regulated industries

pro competitive effects of trade reform results from a cge model of cameroon abstract how likely is trade liberalization to produce efficiency gains in the presence of imperfect competition scale economies and higher than average wages in the modern sectors all common features in developing economies these features create a potential conflict to the extent that traditional notions of comparative advantage lead us to expect that the modern sectors will be squeezed with liberalization in this paper we investigate this issue by using an applied general equilibrium model calibrated to cameroonian data under perfect competition we find that the welfare effect is a wash since the beneficial consequence of expanded imports is offset by the reduction in employment in the modern high wage sectors under imperfect competition by contrast trade liberalization produces welfare gains of the order of 1 to 2 percent of income the key is the pro competitive effect of liberalization domestic firms in the modern sectors now perceive themselves as facing a higher elasticity of demand which spurs them to increase production

the finance growth nexus evidence from bank branch deregulation this paper provides evidence that financial markets can directly affect economic growth by studying the relaxation of bank branch restrictions in the united states we find that the rates of real per capita growth in income and output increase significantly following intrastate branch reform we also argue that the observed changes in growth are the result of changes in the banking system improvements in the quality of bank lending not increased volume of bank lending appear to be responsible for faster growth

offshoring and unemployment the role of search frictions labor mobility abstract in a two sector general equilibrium model with labor market search frictions we find that the wage increases and sectoral unemployment decreases upon offshoring in the presence of perfect intersectoral labor mobility if as a result labor moves to the sector with the lower or equal vacancy costs there is an unambiguous decrease in economywide unemployment with imperfect intersectoral labor mobility unemployment in the offshoring sector can rise with an unambiguous unemployment reduction in the non offshoring sector imperfect labor mobility can result in a mixed equilibrium in which only some firms offshore with unemployment in the offshoring sector rising

trade and search generated unemployment we argue that trade economists should begin to seriously consider environments in which unemployment is carefully modeled we introduce such a model derive several results and compare them to results derived in full employment models we argue that some traditional results are probably too narrow the determinants of comparative advantage and that some results do not generalize to models with unemployment the link between trade and income distribution for employed factors we also show that in some important cases results do generalize there is an extended stolper samuelson theorem that links trade to the distribution of income for searching factors and that our model allows us to address issues that traditional models cannot handle the impact of trade on unemployment and the welfare of the unemployed 1999 elsevier science b v all rights reserved

trade liberalization and local labor market adjustment in south africa abstract despite a large literature analyzing trade liberalization in developing countries little evidence exists around its effects in sub saharan african economies characterized by high levels of baseline unemployment and weak manufacturing sectors using a local labor market approach we investigate the causal effects of tariff reforms implemented in south africa between 1994 and 2004 on labor market outcomes at the individual level more specifically we construct a district level measure of exposure to tariff reductions equal to a weighted average of industry tariffs using baseline industry shares as weights and estimate the effect of this shock on local economies we find that workers in districts facing larger tariff reductions experience a significant decline in both formal and informal employment in the tradable sector driven primarily by a decline in manufacturing employment relative to workers in districts less exposed to these reductions there is no evidence of any significant effect on wages for those who remain employed however displaced workers do not show any evidence of transitions into other sectors or migration to less affected regions rather they are more likely to become discouraged workers or exit the labor force entirely and show an increased probability of accessing government transfers

trade turnover and tithing this paper examines the hypothesis that turnover affects trade preferences high turnover industries are similar to the stolper samuelson assumption of perfect factor mobility so factor of production drives trade preferences among low turnover industries as in the specific factors model net export position determines trade preferences we show that pac contribution patterns are consistent with this hypothesis in high turnover industries capital groups give significantly larger shares of their campaign contributions to free trade supporters than labor groups do among low turnover industries on the other hand exporting and import competing groups differ significantly in their financial support for free traders d 2004 elsevier b v all rights reserved

poverty labor markets and trade liberalization in indonesia abstract we measure the effects of trade liberalization over the period of 1993 2002 on regional poverty levels in 259 indonesian districts and investigate the labor market mechanisms behind these effects the identification strategy relies on combining information on initial regional labor and product market structure with the exogenous tariff reduction schedule over four three year periods we add to the literature on local labor market effects of trade policies by distinguishing between tariffs for output markets and for intermediate inputs and finding that poverty reduced especially in districts with a greater sector exposure to input tariff liberalization among the potential channels behind this effect we show that low skilled work participation and middle skilled wages were more responsive to reductions in import tariffs on intermediate goods than to reductions in import tariffs on final outputs these results point towards increasing firm competitiveness as a driving factor behind the beneficial poverty effects

discipline and liquidity in the interbank market using 20 years of panel data i demonstrate that high risk banks have consistently paid more than safe banks for interbank loans and have been less likely to use these loans as a source of liquidity the economic importance of this effect was relatively small until the mid 1990s when regulatory and institutional changes began to impose more of the costs of bank failure on uninsured creditors subsequently interbank market price discipline roughly doubled and risk based rationing effects increased by a factor of six in imposing this discipline lenders seem to care most about credit risk at borrowing institutions

trade liberalization and unemployment theory and evidence from india abstract a widely held view among the public is that trade liberalization increases unemployment using state and industry level unemployment and trade protection data from india we find no evidence of any unemployment increasing effect of trade reforms in fact our state level analysis reveals that urban unemployment declines with trade liberalization in states with flexible labor markets and larger employment shares in net exporter industries moreover our industry level analysis indicates that workers in industries experiencing greater reductions in trade protection were less likely to become unemployed especially in net export industries our results can be explained within a theoretical framework incorporating trade and search generated unemployment and some institutional features of the indian economy

trade liberalization and regional dynamics abstract we study the evolution of trade liberalization s effects on brazilian local labor markets regions facing larger tariff cuts experienced prolonged declines in formal sector employment and

international trade and unemployment theory and cross national evidence abstract we present a model of trade and search induced unemployment where trade results from heckscher ohlin h o and or ricardian comparative advantage using cross country data on trade policy unemployment and various controls and controlling for endogeneity and measurement error problems we find fairly strong and robust evidence for the ricardian prediction that unemployment and trade openness are negatively related this effect dominates the positive h o effect of trade openness on unemployment for capital abundant countries which turns negative for labor abundant countries using panel data we find an unemployment increasing short run impact of trade liberalization followed by an unemployment reducing effect leading to the new steady state

bank size collateral and net purchase behavior in the federal funds market empirical evidence differences between large and small banks net purchase behavior in the uncollaterized federal funds and collateralized repurchase agreements markets are documented the larger a bank s asset size the larger ceteris paribus its federal funds purchases the threshold asset size is in the region of 1 billion to 2 5 billion for any size class banks located in major banking centers are more likely to be net federal funds purchasers than are banks located outside money centers in the collateralized repurchases agreements market there appears to be no size of locational discrimination indeed the smallest banks are the largest net purchasers as a fraction of assets of funds on the repurchases agreements market copyright 1989 by the university of chicago

the gendered labor market impacts of trade liberalization evidence from brazil this paper investigates gender differences in the impact of brazil s trade liberalization on labor market outcomes to identify the causal effect of trade reforms the paper uses difference in difference estimation exploiting variation across microregions in pre liberalization industry composition the analysis finds that trade liberalization reduced male and female labor force participation and employment rates but the effects on men were significantly larger thereby tariff reductions contributed to gender convergence in labor force participation and employment rates gender differences are concentrated among the low skilled population and in the tradable sector where male and female workers are most likely to be imperfect substitutes

effects of pro growth policies on employment evidence of regional disparities the main objective of our research is to study the direct impact of pro growth economic policies on employment creation globally and regionally as evidence has countered policy makers expectation

a north south model of trade with search unemployment abstract in this paper i build a north south model of international trade economic growth and search frictional unemployment in the north growth is driven by a process of creative destruction in the north followed by imitation in the south i study the effects of intellectual property rights protection and trade liberalization on unemployment and welfare in the north intellectual property rights protection decreases unemployment and increases welfare trade liberalization increases welfare but has an ambiguous effect on unemployment it decreases unemployment if workers in the north have a high outside option and increases it if their outside option is low i provide empirical evidence in support of the last result using data for 20 oecd countries

structural reforms and labor market outcomes international panel data evidence this paper explores the impact of structural reforms on a comprehensive set of macro level labor market outcomes including the unemployment rate the average wage index and overall and female employment levels and labor force participation rates together these outcome variables capture the overall health of the labor market and the aggregate welfare of workers yet there seems to be no other comprehensive empirical investigation in the existing literature of the impact of structural reforms at the cross country macro level on labor market outcomes other than the unemployment rate data were collected from a variety of sources including the world bank world development indicators the international monetary fund international financial statistics and the international labor organization key indicators of the labor market the resulting dataset covers up to 88 countries the majority being developing for 10 years on either side of structural reforms that took place between 1960 and 2001 after documenting the average trends across countries in the labor market outcomes up to 10 years on either side of each country s structural reform year the authors run fixed effects ordinary least squares as well as instrumental variables regressions to account for the likely endogeneity of structural reforms to labor market outcomes overall the results suggest that structural reforms lead to positive outcomes for labor unlike related literature the paper does not find conclusive evidence on unemployment redistributive effects in favor of workers along the lines of the stolper samuelson effect may be at work

behavioral equilibrium in economies with adverse selection i propose a new solution concept behavioral equilibrium to study environments with players who are naive in the sense that they fail to account for the informational content of other players actions a behavioral equilibrium requires that i players have no incentives to deviate given their beliefs about the consequences of deviating ii these beliefs are consistent with the information obtained from the actual equilibrium play of all players and iii when processing this information naive players fail to account for the correlation between other players actions and their own payouncertainty i apply the framework to certain adverse selection settings and show that contrary to the received literature the adverse selection problem is exacerbated when naive players fail to account for selection more generally the main distinguishing feature of the framework is that in equilibrium beliefs about both fundamentals and strategies are jointly restricted consequently whether a bias may arise or not is determined endogenously in equilibrium jel c72 d82 a large literature presents evidence that psychological and cognitive biases aect people s be havior this evidence raises some questions what are the eects of these biases and can they persist at all in economic settings where people strategically interact with each other and have the opportunity to learn from their experience 1 in this paper i introduce a game theoretic equilibrium framework to study these questions in the context of a particular bias people s failure to take into account the informational content of other people s actions i apply the framework to a class of games that arises naturally in adverse selection settings and then show that the adverse selection

trade wages and the political economy of trade protection evidence from the colombian trade reforms abstract worker industry affiliation plays a crucial role in how trade policy affects wages in many trade models yet most research has focused on how trade policy affects wages by altering the economy wide returns to a specific worker characteristic i e skill or education rather than through worker industry affiliation this paper exploits drastic trade liberalizations in colombia in the 1980s and 1990s to investigate the relationship between protection and industry wage premiums we relate wage premiums to trade policy in an empirical framework that accounts for the political economy of trade protection accounting for time invariant political economy factors is critical when we do not control for unobserved time invariant industry characteristics we find that workers in protected sectors earn less than workers with similar observable characteristics in unprotected sectors allowing for industry fixed effects reverses the result trade protection increases relative wages this positive relationship persists when we instrument for tariff changes our results are in line with short and medium run models of trade where labor is immobile across sectors or alternatively with the existence of industry rents that are reduced by trade liberalization in the context of the current debate on the rising income inequality in developing countries our findings point to a source of disparity beyond the well documented rise in the economy wide skill premium because tariff reductions were proportionately larger in sectors employing a high fraction of less skilled workers the decrease in the wage premiums in these sectors affected such workers disproportionately

margins of labor market adjustment to trade abstract we use both longitudinal administrative data and cross sectional household survey data to study the margins of labor market adjustment following brazil s early 1990s trade liberalization we document how workers and regional labor markets adjust to trade induced changes in local labor demand examining various adjustment margins including earnings and wage changes interregional migration shifts between tradable and nontradable employment and shifts between formal employment informal employment and non employment our results provide insight into the regional labor market effects of trade and have important implications for policies that address informal employment and that assist trade displaced workers