revisiting structural change and market integration in late 19th century american capital markets this article draws on a variety of time series tools to more deeply explore issues surrounding the emergence of a national capital market in the late 19th century our focus is on the timing of the emergence of a national capital market rather than relying on the absolute narrowing of regional interest rate differentials which is a common approach in this literature we use gregory and hansen cointegration tests which allow us not only to test for cointegrating relations in the interest rate series but to identify unknown structural change dates as a byproduct we also use dynamic conditional correlations to determine the dates at which regional interest rate correlations began increasing our results suggest that structural changes are centred around the year 1900 which is consistent with sylla s argument that the lowering of capital requirements by the gold standard act of 1900 increased bank entry and competition and facilitated regional capital market convergence

growth and unemployment this paper analyses the effects of growth on long run unemployment using a search model of equilibrium unemployment where growth arises explicitly from the introduction of new technologies that require labour reallocation for their implementation the analysis uncovers and compares between two competing effects of growth on unemployment the first is a capitalisation effect whereby an increase in growth raises the capitalised returns from creating jobs and consequently reduces the equilibrium rate of unemployment the second is a creative destruction effect whereby an increase in growth reduces the duration of a job match thereby raising the equilibrium level of unemployment both directly by raising the job separation rate and indirectly by discouraging the creation of job vacancies this paper asks the question of how the rate of economic growth affects unemployment in the long run the main consideration that leads us to think that this is an interesting question has to do with the re allocative aspect of growth in the long run faster economic growth must come from a faster increase in knowledge to the extent that the advancement of knowledge is embodied in industrial innovations it is likely to raise the job destruction rate through automation skill obsolescence and the bankruptcy associated with the process of creative destruction in short increased growth is likely to produce an increased rate of job turnover and the search theories of lucas and prescott 1974 and pissarides 1990 imply that an increased rate of job turnover will result in a higher natural rate of unemployment this conclusion is also consistent with the empirical results of davis and haltiwanger 1990 which show that periods of high unemployment tend to be periods of high job turnover at the establishment level it suggests the possibility of a positive longrun tradeoff between growth and unemployment at least over some range there has been relatively little attention paid to our question in the literature on longrun determinants of unemployment for example the recent empirical examination by layard nickell and jackman 1991 of unemployment rates among oecd countries did not even consider the rate of economic growth as a possible explanatory variable this is consistent with the seminal theoretical work of phelps 1968 which implies that the natural rate of unemployment is independent of the rate of productivity growth the only

the effects of total factor productivity and export shocks on a small open economy with unemployment abstract the paper analyzes the dynamic effects of a supply side shock and a demand side shock which hit an open economy with unemployment the supply side shock is modeled as a reduction in total factor productivity whereas the demand side shock is caused by a drop in exports the model builds upon the small one sector two good open economy framework described in turnovsky 2000 chapter 11 3 in contrast to this standard framework in which walrasian labor markets are assumed search unemployment and wage bargaining are introduced and unemployment results from time consuming and costly matching of vacancies with searching agents using a plausible calibration of the model the dynamic adjustments of unemployment output and other economic key variables are analyzed we find that a negative export shock primarily has effects on consumption and welfare but not on unemployment and output whereas the supply side shock leads to considerable responses of unemployment output consumption and welfare if both shocks together hit the economy the changes in consumption and welfare almost double

fiscal policy and growth in a small open economy with elastic labour supply endogenizing labour supply leads to fundamental changes in the equilibrium structure of the ak growth model of a small open economy the balanced growth equilibrium is described by two tradeoff loci relating the equilibrium growth rate to the fraction of time devoted to leisure the implications of endogenous labour supply for fiscal policy are addressed the effects of distortionary taxes and government expenditure on the equilibrium growth leisure employment tradeoff are analysed the responses contrast with both those of a closed economy having an elastic labour supply and an open economy with fixed labour supply optimal fiscal policy is also characterized jel classification f41 f43 politique fiscale et croissance dans une petite economie ouverte quand l offre de travail est elastique l endogeneisation de l offre de travail entraine des changements fondamentaux dans la structure d equilibre du modele de croissance du type ak d une petite economie ouverte l equilibre de croissance balancee est decrit par deux lieux de relations d equivalence reliant le taux de croissance d equilibre a la fraction du temps allouee au loisir on examine les implications de cette endogen6isation de l offre de travail pour la politique fiscale on analyse les effets de taxes distorsionnantes et des depenses gouvemementales sur la relation d 6equivalence entre taux de croissance et loisir et donc emploi on obtient des reactions differentes de celles qu on obtient en economie ferm6e quand l offre de travail est elastique et en economie ouverte quand l offre de travail est fixe on proc ede alors a la definition de la politique fiscale optimale

business cycles and bank regulations what happens to bank provisioning a more comprehensive look at 49 countries numerous researchers provide evidence that many banks intend to increase their loan loss provisioning llp when the economy is in a downward trend however the answer whether banks provide sufficient provisions when the economy is in an upturn trend remains unsolved furthermore provisioning must be influenced not only by business cycles and bank earnings but also by the regulatory system nevertheless empirical research on this issue has been scarce thus this study intends to answer two questions shown above the evidence shows that with steady growth in both the economy and bank earnings the bank management will tend to increase llp whereas with a buoyant economy but negative growth in bank earnings the management will exhibit an inclination to reduce llp as regards the influence of bank regulation on provisions the evidence shows that under certain circumstances banks make more provision based on regulatory considerations this explains why bank regulations regarding llp across countries

schooling and public capital in a model of endogenous growth this paper studies the allocation of public spending between education services and infrastructure investment in an endogenous growth model where public capital in infrastructure affects the process of human capital accumulation the balanced growth path is derived and the dynamics associated with a budget neutral reallocation of spending from education to infrastructure are studied through numerical simulations the growth maximizing tax rate is shown to depend only on the production technology as in standard flow models of public expenditure whereas the optimal share of infrastructure investment depends also on the productiveness of infrastructure relative to education services in the schooling technology

what have we learned from three decades of research on the productivity of public capital the last three decades have witnessed a great deal of research effort devoted to measuring the private output elasticity of public capital the wide range of available estimates have precluded any consensus so far however this paper reconciles the empirical findings of the literature by quantitatively analyzing a sample of 578 estimates collected from 68 studies for the 1983 2008 period using meta regression analysis we show how study design characteristics and publication bias can explain a large fraction of the variation across estimates we find a short run output elasticity of public capital supplied at the central government level of 0 083 which increases to 0 122 in the long run if in addition only core infrastructure at a regional local level of government is considered these estimates are almost doubled the average output elasticity of public capital amounts to 0 106 our results suggest that public capital is undersupplied in oecd economies

is the relationship between financial development and economic growth monotonic evidence from a sample of middle income countries summary we revisit the relationship between financial development and economic growth in a panel of 52 middle income countries over the 1980 2008 period using pooled mean group estimations in a dynamic heterogeneous panel setting we show that there is an inverted u shaped relationship between finance and growth in the long run in the short run the relationship is insignificant this suggests that too much finance can exert a negative influence on growth in middle income countries the finding of a non monotonic effect of financial development on growth is confirmed by estimating a threshold model

an alternative to steady state comparisons in perfect foresight models abstract this note examines a technique for the computation of the welfare impact of a pertubation of the steady state in a typical perfect foresight model the major innovation is the ability to analyze non stationary perturbations

public budgetary rules and gdp growth an empirical study on oecd and twelve european countries we study the long term effects of budgetary rules on gdp growth rate and analyse the determinants of the short term gdp growth dynamics for both a sample of 19 oecd and a subsample of 12 european countries we show that in the long run improvements in the cyclically adjusted budget balance as well as increases in the tax burden have negative effects on gdp growth the highest effect of fiscal policy on gdp growth would be obtained if the structural deficits were used to increase the market size by reducing the tax burden in line with barro 1990 a deficit financed reduction of tax burden has a stronger effect for european than for oecd countries because in europe the government size with respect to market size is too large therefore if gdp growth is a dominant policy objective in europe specific actions should redress the 2012 treaty toward a reduction of the tax burden

transitional dynamics of the search model with endogenous growth abstract this paper studies the steady state and dynamics of the standard matching model allowing for endogenous capital accumulation and endogenous growth the existence and uniqueness of a balanced growth path is shown along which the relationship between unemployment and growth may not be considered clear cut the model also exhibits interesting dynamic features and suggests some kind of asymmetry in the adjustment of employment over the cycle a collection of numerical experiments finally shows that a linear approximation of the model may yield a dynamic scheme that is reasonably close to the one obtained with the nonlinear model and that this feature is very robust to changes in particular assumptions made on the specification of various functions

growth unemployment and labour market institutions evidence from a cross section of eu regions the responsiveness of unemployment to growth is an issue of ongoing political and academic interest economic growth is supposed to be the key to increase labour demand and reduce unemployment departing from okun s law most research on the unemployment intensity of growth has focused on national disparities and the role of labour market institutions empirical evidence at the regional level is scarce we investigate differences in regional labour market responsiveness and their potential determinants for a cross section of european regions the data set covers the nuts 2 regions in the eu15 for the period 1980 to 2002 following a spatial modelling approach interaction among neighbouring labour markets is taken into account our findings point to substantial differences in labour market effects of output growth among european countries and regions both national labour market institutions and regional characteristics such as structural change explain a significant part of these disparities

fiscal policy elastic labor supply and endogenous growth abstract endogenizing labor supply leads to fundamental changes in the equilibrium structure of the ak growth model the balanced growth equilibrium can be described in terms of two tradeoff loci relating the equilibrium growth rate to the fraction of time devoted to leisure the implications of endogenous labor supply for fiscal policy are analyzed three issues are addressed first the effects of various distortionary tax changes and government expenditure changes on the equilibrium growth leisure employment tradeoff are analyzed second optimal fiscal policy is characterized finally the formal analysis is supplemented by numerical results focusing particularly on the quantitative welfare implications

infrastructure and inequality abstract we develop a model in which public capital is both an engine of growth and a determinant of the distributions of wealth income and welfare government investment increases wealth inequality over time regardless of its financing the time path of income inequality is however highly sensitive to financing policies and is often characterized by sharp intertemporal tradeoffs with income inequality declining in the short run but increasing in the long run public investment generates a positive correlation between growth and income inequality along the transition path but their short run and long run relationship depends critically on i how externalities impinge on allocation decisions ii financing policies and iii the time period of consideration finally these policies also generate sharp trade offs between average welfare and its distribution with government investment improving average welfare but also increasing its dispersion our results are obtained numerically but extensive sensitivity analysis confirms their robustness across key parameter values

welfare costs of inflation in a dynamic economy with search unemployment abstract we present a monetary general equilibrium model with labor market frictions in the form of search unemployment which is calibrated for the us economy interestingly both employment and output may even increase with the rate of inflation depending on the elasticity of labor supply considering the transition dynamics following a change in the monetary policy the optimal quarterly inflation rate is found to amount to approximately 0 6 in the benchmark case a reduction of the inflation rate from its current level to its optimal value only results in small welfare gains equal to 0 08 of total consumption

debt ownership structure and legal system an international analysis this paper is concerned with the ownership structure of corporate debt from an institutional perspective an attempt is made to identify the factors affecting bank debt use from an international sample of companies from austria germany japan belgium france italy holland spain portugal finland sweden and the usa the results show that bank debt depends both on factors specific to each company and on institutional features of each country more exactly it is found that bank loans are related to firm size to the quality and risk of the projects and to the collateral it is also found that a number of legal institutional factors are impacting on the source of firms debt such as creditor protection firm disclosure requirements and law enforcement

transitional dynamics in two sector models of endogenous growth the steady state and transitional dynamics of two sector models of endogenous growth are analyzed in this paper we describe necessary conditions for endogenous growth the conditions allow us to reduce the dynamics of the solution to a system with one state like and two control like variables we analyze the determinants of the long run growth rate we use the time elimination method to analyze the transitional dynamics of the models we find that there are transitions in real time if the point in time production possibility frontier is strictly concave which occurs for example if the two production functions are different or if there are decreasing point in time returns in any of the sectors we also show that if the models have a transition in real time the models are globally saddle path stable we find that the wealth or consumption smoothing effect tends to dominate the substitution or real wage effect so that the transition from relatively low levels of physical capital is carried over through high work effort rather than high savings we develop some empirical implications we show that the models predict conditional convergence in that in a cross section the growth rate is predicted to be negatively related to initial income but only after some measure of human capital is held constant thus the models are consistent with existing empirical cross country evidence authors

perishable inventory management with stochastic leadtime and different selling prices abstract this paper discusses a model for a perishable product with stochastic procurement leadtime and different selling prices this model is a generalization of the one period horizon model of nahmias 4 5 ishii et al 3 and nose et al 7 for the model the optimal ordering policy and its properties are derived

capital adequacy ratio regulations and accounting choices in commercial banks abstract this study examines a commercial bank manager s incentives to reduce regulatory costs imposed when the bank s capital adequacy ratio falls below its regulatory minimum it also tests the general political sensitivity hypothesis that a manager seeks to reduce political costs incurred when revenue is unusually large tests of adjustments to the loan loss provision loan charge offs and securities gains and losses attempt to control for exogenous economic conditions and previous investing decisions results are consistent with hypotheses associating accounting adjustments with capital adequacy ratio guidelines but fail to support the political sensitivity hypothesis

spill over effects of supply side changes in a two country economy with capital accumulation abstract using a two country dynamic optimization model with capital accumulation we explore the effect of such supply side changes as a rise in productivity and a reduction in the corporate tax rate on the equilibrium path and the welfare of two countries the welfare effect consists of a tax distortion term and a wealth term those supply side changes in the creditor country increase its welfare but unambiguously decrease the debtor country s welfare as capital moves from the debtor country to the creditor country

growth versus welfare in a model of nonrival infrastructure abstract the paper constructs a model of endogenous growth where infrastructure acts as an accumulable stock generating a nonrival input service steady state growth paths are studied for market and command economies in the former a final good is produced privately and as in many developing economies infrastructure accumulated on noncompetitive basis by the state the command economy allocates resources by solving a grand optimization exercise the transitionally stable steady growth rate for the market economy dominates the command economy growth rate due to the joint presence of noncompetitive behaviour by the state and noninternalizable externalities

budget balance welfare and the growth rate dynamic scoring of the long run government budget this paper determines conditions under which a reduction in the role of government either through a tax cut alone or together with accompanying expenditure cuts will improve long run government fiscal balance for a ceteris paribus cut in the income tax rate to improve long run government balance the intertemporal elasticity of substitution must exceed unity a tax cut balanced by an expenditure cut is likely to improve the long run balance even if it does not improve the short run balance the relationship between improving the long run fiscal balance and economic welfare is also analyzed

infrastructure provision and macroeconomic performance this paper studies the differences between private and government provision of infrastructure capital utilization decisions and their differential role in determining market prices for capital goods under the two regimes of infrastructure provision serve as a critical transmission mechanism for fiscal policy a subsidy to private providers of infrastructure is preferable to direct government provision irrespective of how the subsidy or expenditure is financed the case for private provision is much stronger in economies characterized by high levels of congestion the choice between private and government provision also has a crucial effect on the design of optimal fiscal policy 2011 elsevier b v all rights reserved

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

perishable inventory management subject to stochastic leadtime abstract this paper discusses the model for a perishable product with the stochastic procurement leadtime zero or 1 unit leadtime is considered and its optimal ordering policy is derived this is a generalization of the one period horizon model of nahmias 4 further the chance constraint as for shortage is added and under this additional constraint again optimal ordering policy is obtained

the unemployment volatility puzzle is wage stickiness the answer i discuss the failure of the canonical search and matching model to match the cyclical volatility in the job finding rate i show that job creation in the model is influenced by wages in new matches i summarize microeconometric evidence and find that wages in new matches are volatile and consistent with the model s key predictions therefore explanations of the unemployment volatility puzzle have to preserve the cyclical volatility of wages i discuss a modification of the model based on fixed matching costs that can increase cyclical unemployment volatility and is consistent with wage flexibility in new matches

growth and unemployment short run and long run tradeoffs abstract we consider the role of search unemployment and wage bargaining in determining the relationship between growth and unemployment while the long run tradeoffs between unemployment and growth are weak the short run tradeoffs are much stronger their comovement varies along the transitional path and depends upon the underlying structural change the consequences of the growth unemployment nexus for fiscal policy are addressed the analysis provides insights into the debate regarding the appropriate fiscal policy in light of the increased debt following the initial response to the recent financial crisis our analysis strongly supports an increase in government investment as the appropriate fiscal policy

the effect of risk based capital requirements on profit efficiency in banking the purpose of this paper is twofold to show how to measure profit efficiency in banking using a newly developed technique and to use that technique to determine the effect of risk based capital requirements on the profit performance of us banks the measure of profit efficiency used captures deviations from profit maximization arising from technical inefficiency caused by a lack of managerial oversight and allocative inefficiency which is caused by managers choosing a nonoptimal mix of inputs and outputs a leverage ratio constraint and a risk weighted capital ratio constraint are explicitly included in the model which allows identification of the effect on profits of those constraints the techniques are applied to random samples of us banks for 1990 1992 and 1994 the results indicate that allocative inefficiency is a larger source of profit loss than technical inefficiency and that the risk based capital standards have a significant effect on bank allocative efficiency

perishable inventory control with two types of customers and different selling prices under the warehouse capacity constraint abstract this paper discusses an inventory model for a single perishable product with two types of customers high priority and low priority ones the former buys only the newest commodity while the latter buys either one whether the newest or not different selling prices reflecting the remaining lifetime of commodity and the constraint of the warehouse capacity i e the capacity of own warehouse and so the excess inventory are stored in the rental warehouse further demands in successive periods are assumed to be independent nonnegative random variables with known distribution functions and high priority and low priority demands are independent stock is depleted by high priority demand first and then low priority demand using fifo issuing policy assuming two types of shortage costs different selling prices outdating cost purchasing cost two types of holding costs an optimal ordering policy to maximize the expected profit is derived

an optimal procurement policy for items with an inventory level dependent demand rate and fixed lifetime abstract this paper investigates an optimal procurement policy for items with an inventory level dependent demand rate and fixed lifetime the demand rate is assumed to be a function of current inventory level and each unit has its fixed expiry date so any units which remain unused by their expiry date are considered outdated and must be disposed of for the system presented a mathematical model and solution methodology were developed sensitivity of the decision variables to changes in the parameter values is examined and future research needs are discussed in brief

optimal taxation of capital income in general equilibrium with infinite lives this paper analyzes the optimal tax on capital income in general equilibrium models of the second best agents have infinite lives and utility functions which are extensions from the koopmans form the population is heterogeneous the important property of the models is the equality between the social and the private discount rates in the long run i find that the optimal tax rate is zero in the long run for a special case of additively separable utility functions i then determine the tax rates along the dynamic path and conditions that are sufficient for the local stability of the steady state

analysis of the effect of various unit costs on the optimal incoming quantity in a perishable inventory model abstract in a previous paper we presented a periodic review perishable inventory model and showed how to compute the optimal incoming order quantity for a single period model with useful shelf lifetime of two periods and no backlogging on demand the incoming order quantities were computed as a function of the inventory on hand and on order for different demand distributions with different levels of demands and for lead times up to four periods this paper utilizes the same model and examines the effect of four unit costs ordering holding shortage and outdating costs on the optimal incoming quantity for the case of one period lead time

taxation and income distribution dynamics in a neoclassical growth model we examine how changes in tax policies affect the dynamics of the distributions of wealth and income in a ramsey model in which agents differ in their initial capital endowment the endogeneity of the labor supply plays a crucial role in determining inequality as tax changes that affect hours of work will affect the distribution of wealth and income reinforcing or offsetting the direct redistributive impact of taxes our results indicate that tax policies that reduce the labor supply are associated with lower output but also with a more equal distribution of after tax income we illustrate these effects by examining the impact of recent tax changes observed in the us and in european economies

factor substitution and factor augmenting technical progress in the united states a normalized supply side system approach abstract using a normalized ces function with factor augmenting technical progress we estimate a supply side system of the u s economy from 1953 to 1998 avoiding potential estimation biases that

search wage bargains and cycles in this paper i describe an equilibrium model of job matchings with perfect foresight that has the following property the number of people looking for work changes temporarily when there is a temporary shock to the value of labour s marginal product it does not change when the shock is permanent by contrast real wages change temporarily by a small amount when the shock is temporary but change permanently and by a bigger amount when the shock is permanent thus the model offers an explanation for the observation that over the cycle small wage changes are associated with changes in unemployment whereas secularly wage growth does not seem to affect the rate of unemployment the two most common explanations for this observation in the literature the phelps lucas misperceptions model and the lucas rapping intertemporal substitution model are well grounded in equilibrium theory but they have not stood up well to empirical testing the misperceptions model requires more ignorance of aggregate changes than can be reasonably assumed whereas the intertemporal substitution model requires bigger wage elasticities of labour supply than those estimated in the model of this paper neither misperceptions nor changes in the supply of labour play a role in generating the unemployment cycle all agents observe the shocks when they occur and they anticipate correctly the economy s adjustment path but like the new classical explanations of the cycle the model is an equilibrium one in the sense that all private gains from trade are fully exploited at all phases of the cycle although the social gains from trade may not be fully exploited because of search externalities the cycle i derive here is not due to externalities unlike other related perfect foresight models such as diamond s 1982a the structure of the model is such that the externalities do not give rise to multiple equilibria the key element of the model which is responsible for the transmission of output shocks to unemployment is the equation for wages in markets where the allocation of jobs takes place through search both firms and workers have some monopoly power a point emphasised by mortensen 1970 though he attributed only temporary monopoly power and only to firms i use the nash bargaining solution to solve for the equilibrium wage rate and show that the firm s and worker s alternative returns threat points or

smoothing income in anticipation of future earnings abstract recent theory argues that concern about job security creates an incentive for managers to smooth earnings in consideration of both current and future relative performance we find support for this theory our evidence suggests that when current earnings are poor and expected future earnings are good managers borrow earnings from the future for use in the current period conversely when current earnings are good and expected future earnings are poor managers save current earnings for possible use in the future however sensitivity analysis indicates that we cannot rule out selection bias as a potential alternative explanation for our findings

employment efficiency and sticky wages evidence from flows in the labor market i consider three views of the labor market in the first wages are flexible and employment follows the principle of bilateral efficiency workers never lose their jobs because of sticky wages in the second wages are sticky and inefficient layoffs do occur in the third wages are also sticky but employment governance is efficient i show that the behavior of flows in the labor market strongly favors the third view in the modern u s economy recessions do not begin with a burst of layoffs unemployment rises because jobs are hard to find not because an unusual number of people are thrown into unemployment

dynamic analysis of an endogenous growth model with public capital this paper develops an endogenous growth model with productive public capital along with private capital in a spirit similar to that of r j barro 1990 since the authors model includes two stock variables it has transitional dynamics unlike most of the previous studies on endogenous growth including barro s where concerns are restricted to the steady state analysis first they show that the transitional path is unique and stable second the character of the transitional path is explored third the authors show that the optimal tax rate is smaller than the rate that maximizes the national growth rate with a log linear utility function copyright 1993 by the editors of the scandinavian journal of economics

job finding and separation rates in the oecd abstract we provide a set of comparable estimates of average monthly job finding and separation rates for over 20 oecd countries that can be used for the cross country analysis of labor markets