the impact of possible climate catastrophes on global warming policy abstract recent studies on global warming have introduced the inherent uncertainties associated with the costs and benefits of climate policies and have often shown that abatement policies are likely to be less aggressive or postponed in comparison to those resulting from traditional cost benefit analyses cba yet those studies have failed to include the possibility of sudden climate catastrophes the aim of this paper is to account simultaneously for possible continuous and discrete damages resulting from global warming and to analyse their implications on the optimal path of abatement policies our approach is related to the new literature on investment under uncertainty and relies on some recent developments of the real option in which we incorporated negative jumps climate catastrophes in the stochastic process corresponding to the net benefits associated with the abatement policies the impacts of continuous and discrete climatic risks can therefore be considered separately our numerical applications lead to two main conclusions i gradual continuous uncertainty in the global warming process is likely to delay the adoption of abatement policies as found in previous studies with respect to the standard cba however ii the possibility of climate catastrophes accelerates the implementation of these policies as their net discounted benefits increase significantly

patents or prizes monopolistic r d and asymmetric information abstract in this paper a model of r d regulation is analysed to compare the effect of two types of asymmetric information on the welfare properties of patents and prizes as r d incentive instruments when there is a technological leader using the case of full information as a benchmark it is found that the trade off between patents and prizes does not change if the innovator s r d costs are private information whereas the relative efficiency of patents decreases if the government is less informed about the market for the innovation

how do people cope with natural disasters evidence from the great hanshin awaji kobe earthquake in 1995 this paper investigates the coping strategies employed by victims of the great hanshin awaji kobe earthquake in 1995 using a unique household data set we show that households that held a large amount of collateralizable assets before the catastrophe and were free from a binding borrowing constraint were able to maintain their consumption levels by borrowing in contrast households subject to a binding borrowing constraint before the disaster were unable to borrow to cope with the losses inflicted by the earthquake on the other hand both types of households relied on private transfers depending on the extent of the damage

tying and innovation a dynamic analysis of tying arrangements this paper analyses the effects of tying arrangements on r d incentives it shows that tying is a means through which a firm can commit to more aggressive r d investment in the tied goods market tying also has the strategic effect of reducing rivals incentives to invest in r d the strategy of tying is a profitable one if the gains via an increased share of dynamic rents in the tied goods market exceed the losses that result from intensified price competition in the market the welfare implications of tying and consequently the appropriate antitrust policy are discussed

obsolescence of knowledge and career publication profiles some evidence of differences among fields in costs of interrupted careers in recent years women have received about 45 percent of all baccalaureate degrees but only approximately 20 percent of all ph d s does this imply that academic careers as compared with careers of the wider market for college graduates are less conducive to dual career family objectives evidence suggesting the relative tradeoff of these objectives is shown by the fact that over the last thirty years the zero order correlation between average cohort fertility and the proportion of ph d recipients who are women is 0 939 a female recipient of a doctorate is twice as likely as a male recipient to have specialized in the humanities and only one third as likely to have specialized in a physical science field furthermore of those who receive a doctorate in physical science a male is 60 percent more likely than a female to pursue research as a primary work activity in the humanities on the other hand a woman is at least as likely as a man to have research as an initial postdoctoral work activity obviously many factors affect opportunities and resultant decisions to enter particular careers and to select specific occupational specialties this study considers only onethe rate of obsolescence or depreciation of knowledge as reflected in the age profile of cited works this measure of the obsolescence of knowledge refers to the rate of decay in the relative frequency at which citations are made to a particular vintage of research communications as the communications age in other words the usefulness of older published research papers as an input to current research depreciates over time the rate at which this depreciation occurs is interpreted as measuring the durability of a professor s accumulated stock of knowledge evidence presented in section ii indicates that the durability of knowledge varies considerably from discipline to discipline this information raises a number of questions concerning how the durability of knowledge influences career decisions one influence considered here is that of a temporary career interruption for example if a woman experiences a break in her academic career such as for the purpose of raising children she will incur an opportunity cost in the sense that her research knowledge will to some extent become obsolete consequently her accumulated stock of knowledge will decline relative to those professors who have continuous careers the relative cost imposed on a woman who pursues dual family career objectives is higher the less durable the jobrelated knowledge this difference in relative costs is expected to alter career incentives the results presented here suggest that women who pursue academic careers have responded to these incentives before discussing the evidence on female careers i consider a more general model in which a professor is assumed to have a continuous career profile this model which is more appropriately viewed as a male model of investment behavior is used to analyze how the durability of a professor s knowledge affects his research productivity over a career interestingly the evidence suggests that a professor s response to less durable knowledge is not to compact all learning early in his career but rather to smooth learning over the career perhaps the most assistant professor arizona state university i would like to thank an anonymous referee and many friends for helpful comments on earlier drafts i am especially indebted to finis welch for valuable suggestions throughout the development of this paper the views expressed are my own and i am responsible for any possible errors

money fame and the allocation of talent brain drain and the institution of science abstract the earning structure in science is flatter than in the private sector which could cause a brain drain toward the latter this paper studies the allocation of talent between both sectors when agents value money and fame assuming that the intrinsic performance is a less noisy signal of talent in science than in the private sector we show that a good institution of science mitigates the brain drain and that introducing extra monetary incentives through the market might induce excessive diversion from pure to applied research we finally show the optimality of a relatively flat earning structure in science

incorporating option values into the economic evaluation of health care technologies abstract despite uncertainty being intrinsic to economic evaluation of health care existing techniques for handling uncertainty remain underdeveloped compared to the formal techniques commonly applied in the business sector this paper develops an alternative approach to handling uncertainty in economic evaluation based on option pricing techniques the presence of uncertainty and the degree of irreversibility of a decision make it clear that some flexibility in the timing of a decision is often a desirable characteristic with an economic value we demonstrate how option pricing techniques can be applied to the decision rules for economic evaluation in health care the key determinants of an option value are the presence and type of uncertainty the ability to defer a decision and the irreversibility of the decision the relative significance of each of these for a particular economic evaluation will depend on the particular characteristics of the technology under consideration

job choice in academia the asymmetric international mobility of talented scientists is well documented yet there is little evidence about the reasons why scientists choose particular jobs building on an extended human capital model of science we unify a dispersed literature relevant for job choice to formulate hypotheses which we test in a unique international quasi experiment among more than 10 000 researchers we find that attractive jobs satisfy researchers taste for science and increase their expected scientific productivity responding to both intrinsic and extrinsic motivations in particular while salaries research funding and working with stimulating peers matter we provide unique estimates of the importance of organisational and institutional factors early stage researchers are willing to trade off a substantial amount of salary for early independence and tenure perspectives later stage researchers favour jobs which make it easy to take up new lines of research research only positions are considered as less attractive than jobs with a moderate amount of teaching our findings have important implications for the organisational design of research universities and the competitiveness of european science in light of the brain drain of highly talented scientists towards the u s

what or who started the great depression abstract herbert hoover i develop a theory of labor market failure for the depression based on hoover s industrial labor program that provided industry with protection from unions in return for keeping nominal wages fixed i find that the theory accounts for much of the depth of the depression and for the asymmetry of the depression across sectors the theory also can reconcile why deflation low nominal spending apparently had such large real effects during the 1930s but not during other periods of significant deflation

are migrants more productive than stayers some evidence from a set of highly productive academic economists this article compares the average productivity of migrants who work in a country different from their country of origin and stayers whose entire academic career takes place in their country of origin in a set of 2 530 highly productive economists that work in 2007 in a selection of the top 81 economics departments worldwide the main findings are the following two first productivity comparisons depend on the cohort and the type of department for example in the top u s departments foreigners are more productive than stayers only among older individuals in the bottom u s departments this is the case for both cohorts while in the other countries the productivity of foreigners and stayers is indistinguishable for both cohorts second when we restrict our attention to an elite consisting of economists with above average productivity all productivity differences between migrants and stayers in the united states vanish as our analysis depends on observational data in which the migration decision is not exogenously identified our estimates have a descriptive rather than a causal interpretation however our results are very robust to the treatment of the elite the partition into several department categories and the definition of the cohorts and the productivity notion jel j61

technology choice under several uncertainty sources abstract we analyze a model of irreversible investment with two sources of uncertainty a risk neutral decision maker has the choice between two mutually exclusive projects under input price and output price uncertainty we propose a complete study of the shape of the rational investment region and we prove that it is never optimal to invest when the alternative investments generate the same payoff independently of its size a key feature of this bidimensional degree of uncertainty is thus that the payoff generated by each project is not a sufficient statistic to make a rational investment in this context our analysis provides a new motive for waiting to invest the benefits associated with the dominance of one project over the other as an illustration we apply our methodology to power generation under uncertainty

avoiding default the role of credit in the consumption collapse of 1930 high consumer indebtedness threatens future consumption spending if default is expensive consumer spending collapsed in 1930 turning a minor recession into the great depression households were shouldering an unprecedented burden of installment debt down payments were large contracts were short equity in durable goods was therefore acquired quickly missed installment payments triggered repossession reducing consumer wealth in 1930 because households lost all acquired equity cutting consumption was the only viable strategy in 1930 for avoiding default institutional changes lowered the cost of default by 1938 when recession began again indebted households chose to default rather than reduce consumption

fiscal policy and economic recovery the case of the 1936 veterans bonus conventional wisdom has it that in the 1930s scal policy did not work because it was not tried this paper shows that scal policy though inadvertent was tried in 1936 and a variety of evidence suggests that it worked a decit nanced veterans bonus provided 3 2 million world war i veterans with cash and bond payments totaling 2 percent of gdp the typical veteran received a payment equal to annual per capita personal income this paper uses time series and cross sectional data to identify the eects of the bonus i exploit four sources of quantitative evidence a detailed household consumption survey cross state and cross city regressions aggregate time series and a previously unused american legion survey of veterans the evidence paints a consistent picture in which veterans quickly spent the majority of their bonus spending was concentrated on cars and housing in particular narrative accounts support these quantitative results a simple calculation suggests that the bonus added 2 5 to 3 percentage points to 1936 gdp growth

do economics departments with lower tenure probabilities pay higher faculty salaries the simplest competitive labor market model asserts that if tenure is a desirable job characteristic for professors they should be willing to pay for it by accepting lower salaries conversely if an institution unilaterally reduces the probability that its assistant professors receive tenure it will have to pay higher salaries to attract new faculty our paper tests this theory using data on salary offers accepted by new assistant professors at economics departments in the united states during the 1974 75 to 1980 81 period along with data on the proportion of new ph d s hired by each department between 1970 and 1980 that received tenure in the department or at a comparable or higher quality department within the first eight years of receipt of their ph d s we find evidence that supports the hypothesis that a tradeoff existed equally importantly departments that offered low tenure probabilities to assistant professors also paid higher salaries to their tenured faculty we attribute this to low tenur

prizes and productivity how winning the fields medal affects scientific output knowledge generation is key to economic growth and scientific prizes are designed to encourage it but how does winning a prestigious prize affect future output we compare the productivity of fields medal recipients winners of the top mathematics prize to that of similarly brilliant contenders the two groups have similar publication rates until the award year after which the winners productivity declines the medalists begin to play the field studying unfamiliar topics at the expense of writing papers it appears that tournaments can have large postprize effects on the effort allocation of knowledge producers

lumpy consumer durables market power and endogenous business cycles in this paper we show that lumpy consumer durables and market power can generate endogenous cycles consistent with the facts past sales determine the current market size of durable goods larger past sales ceteris paribus thus naturally result in a smaller current market size and income in this manner the seeds of a downturn are sown in an upturn jel classification e32 e13 biens de consommation durables en gros morceaux pouvoir de marche et cycles d affaires endogenes ce memoire montre que des biens de consommation durables en gros morceaux et du pouvoir de marche peuvent engendrer des cycles endogenes qui se calquent sur les chroniques observees les ventes passees determinent la taille du marche present pour les biens durables de plus grandes ventes dans le passe toutes choses etant egales par ailleurs resultent naturellement en un marche present plus petit et des revenus moindres de cette maniere le germe du declin est deja contenu dans l expansion

strategic real option and flexibility analysis for nuclear power plants considering uncertainty in electricity demand and public acceptance nuclear power is an important energy source especially in consideration of co2 emissions and global warming deploying nuclear power plants however may be challenging when uncertainty in long term electricity demand and more importantly public acceptance are considered this is true especially for emerging economies e g india china concerned with reducing their carbon footprint in the context of growing economic development while accommodating a growing population and significantly changing demographics as well as recent events that may affect the public s perception of nuclear technology in the aftermath of the fukushima daiichi disaster public acceptance has come to play a central role in continued operations and deployment of new nuclear power systems worldwide in countries seeing important long term demographic changes it may be difficult to determine the future capacity needed when and where to deploy it over time and in the most economic manner existing studies on capacity deployment typically do not consider such uncertainty drivers in long term capacity deployment analyses e g 40 years to address these issues this paper introduces a novel approach to nuclear power systems design and capacity deployment under uncertainty that exploits the idea of strategic flexibility and managerial decision rules the approach enables dealing more pro actively with uncertainty and helps identify the most economic deployment paths for new nuclear capacity deployment over multiple sites one novelty of the study lies in the explicit recognition of public acceptance as an important uncertainty driver affecting economic performance along with long term electricity demand another novelty is in how the concept of flexibility is exploited to deal with uncertainty and improve expected lifecycle performance e g cost new design and deployment strategies are developed and analyzed through a multistage stochastic programming framework where decision rules are represented as non anticipative constraints this approach provides a new way to devise and analyze adaptation strategies in view of long term uncertainty fluctuations that is more intuitive and readily usable by system operators than typical solutions obtained from standard real options analysis techniques which are typically used to analyze flexibility in large scale irreversible investment projects the study considers three flexibility strategies subject to uncertainty in electricity demand and public acceptance 1 phasing or staging capacity deployment over time and space 2 on site capacity expansion and 3 life extension numerical analysis shows that flexible designs perform better than rigid optimal design deployment strategies and the most flexible design combining the above strategies outperforms both more rigid and less flexible design alternatives it is also demonstrated that a flexible design benefits from the strategies of phasing and capacity expansion most significantly across all three strategies studied the results provide useful insights for policy and decision making in countries that are considering new nuclear facility deployment in light of ongoing challenges surrounding new nuclear builds worldwide

vertical foreclosure with the choice of input specifications we develop an equilibrium model of vertical foreclosure with the choice of input specifications vertical foreclosure occurs as the upstream division of the integrated firm makes a specialized input for its sister downstream division while it would as an independent firm provide a generalized input the changes in incentives with vertical integration can be explained by the externalities the choice of a specialized input entails vertical integration allows the upstream firm to internalize the benefit of raising the rival firm s costs at the downstream level we derive conditions for equilibrium vertical foreclosure to occur and discuss its welfare consequences

is commercialization good or bad for science individual level evidence from the max planck society abstract based on new data this paper studies the invention disclosure licensing and spin off activities of max planck institute directors over the time period 1985 2004 analyzing their effects on the scientists subsequent publication and citation records consistent with prior findings inventing does not adversely affect research output mixed results are obtained with regard to commercialization activities the analysis suggests qualifications to earlier explanations of positive relationships between inventing and publishing

income uncertainty and the onset of the great depression income uncertainty and the onset of the great depression income uncertainty contributes substantially to explaining the fall in consumption that marks the onset of the great depression consistent estimates of the variance of income measure income uncertainty from 1921 30 and are produced using a linear moment model this series provides a statistical link between the large erratic swings in income uncertainty after september 1929 and the great crash in the stock market comparison of the behavior of income uncertainty in the 1920s to the pre world war i and post world war ii eras suggests that the experience after the great crash was historically unique i introduction the great depression of 1929 41 can be broken down into several phases i the initial recessionary phase from october 1929 to october 1930 ii the first two waves of bank failures between november 1930 and december 1931 iii the incipient recovery of late 1932 and the impending collapse in march 1933 iv the recovery of the financial system and the economy from the cyclical trough and v the recession of 1937 38 among others many researchers have presented well articulated theories and extensive empirical analyses for each phase of the depression friedman and schwartz 1963 hamilton 1987 gordon and wilcox 1981 and burbidge and harrison 1985 have examined the role of money and monetary policy during the depression brown 1956 examined the stance of fiscal policy during this period bernanke 1983b provided an explanation of the role of the financial crisis in the propagation of the great depression most of this research has focused on the events that turned a recession in 1929 30 that was not historically unprecedented that is it is comparable to the recession of 1920 22 into the deepest slide in the history of the american business cycle explanations of the depression s initial phase from late 1929 to october 1930 however are much less satisfactory meltzer 1976 and mishkin 1978 examined this period and concluded that the fall in output can be attributed largely to the stance of monetary policy and the stock market s impact on the household balance sheet respectively the remainder of the existing literature centers around a debate between temin 1976 1981 and schwartz 1981 that has produced no consensus about the role of monetary and nonmonetary factors in providing the impetus for the great depression hence the period sometimes called the mysterious first year 1 is the least understood of all the phases of the depression we think that recent advances in our understanding of the influence of income uncertainty on consumption expenditures may help explain the onset of the great depression the theoretical work of leland 1968 sandmo 1970 dreze and modigliani 1972 and others has shown that an increase in uncertainty about future income measured as the variance of income results in a reduction in current consumption expenditures under standard assumptions regarding risk preferences recently flacco and parker 1990 included an estimate of the standard deviation of income in a conventional specification of the consumption function from blinder and deaton 1985 and found that this measure of income uncertainty is indeed negatively related to consumption this result estimated using post world war ii data holds up to a number of statistical significance and specification tests romer 1990 examined the relationship between consumer expenditure proxied by various disaggregate spending series and stock market volatility during the first year and a half of the great depression expanding on bernanke s 1983a analysis of investment under uncertainty romer estimates a model of consumer spending on durable goods in the face of temporary uncertainty empirical evidence reveals that inclusion of the volatility of the stock market as a proxy for income uncertainty dramatically reduces forecast errors for consumption of durable goods in 1929 and 1930

real wages over the business cycle evidence from panel data one topic on which keynes did not disagree with classical economists was the cyclical behavior of real wages keynes 1936 as well as various classical writers predicted that real wages should move countercyclically quoting the general theory p 17 in general an increase in employment can only occur through the accompaniment of a decline in real wages thus i am not disputing this vital fact which the classical economists have rightly asserted as indefeasible this prediction is based on the premise of competition and a given short run capital stock increases in employment then correspond to more intensive use of capital and through diminishing product lower real wages for this reason evidence by dunlop 1938 and tarshis 1939 that real wages move procyclically was viewed as paradoxical both dunlop and tarshis based their findings on an observed positive correlation between real and money wages which given the procyclical movement of money wages implies a positive correlation between

inequality leverage and crises theory and evidence revisited rajan points to rising income inequality as a root cause of the recent financial crisis through high household leverage the rajan hypothesis has ignited debate over the relationship between inequality leverage and crises kumhof ranciere and winant prove the validity of this hypothesis with a theoretical formulation but empirical studies provide mixed evidence using different samples and estimators to clarify this controversy we re examine the issue by using the same data as in the literature and provide additional evidence after taking into account the role of asset bubbles and policy interventions our regression is based on a new tractable theoretical model that is supported by key stylised facts and all our analyses confirm the existence of the inequality leverage crisis nexus

did the financial crisis in japan affect household welfare seriously we investigate whether and how the credit crunch during the financial crisis in japan affected household welfare we estimate the consumption euler equation with endogenous credit constraints using household panel data for 1993i 1999 generating several findings first a small but non negligible portion of the households faced credit constraints during the crisis rejecting the standard consumption euler equation second the credit crunch affected household welfare negatively albeit not seriously the estimated welfare loss ranges between two to ten percent increases in marginal utility depending on income level finally our results corroborate that the credit crunch in japan was supply driven

cumulative advantage and inequality in science the hypothesis of cumulative advantage is widely accepted in the sociology of science but empirical tests have been few and equivocal one approach originated by allison and stewart 1974 is to see whether inequality of productivity and recognition increases as a cohort of scientists ages this paper extends their work by examining true cohorts of biochemists and chemists rather than synthetic cohorts increasing inequality is observed for counts of publications but not for counts of citations to all previous publications it is also shown that a mathematical model of cumulative advantage does not imply increasing inequality when the model is modified to allow for heterogeneity in the rate of cumulative advantage however increasing inequality is implied

inequality leverage and crises the paper studies how high leverage and crises can arise as a result of changes in the income distribution empirically the periods 1920 1929 and 1983 2007 both exhibited a large increase in the income share of the rich a large increase in leverage for the remainder and an eventual financial and real crisis the paper presents a theoretical model where these features arise endogenously as a result of a shift in bargaining powers over incomes a financial crisis can reduce leverage if it is very large and not accompanied by a real contraction but restoration of the lower income group s bargaining power is more effective

publish or perish what the competition is really doing this study provides comprehensive publications performance data over a twenty five year period for finance doctorates these data indicate that publishing one article per year in any finance journal or finance accounting economics or business journal over any prolonged period of time is a truly remarkable feat met by only 5 percent of the graduates tenure screens combining various quantity and quality requirements are examined to assess their ability to predict future publication productivity faculty and administrators seeking defensible benchmarks for evaluating faculty research productivity in finance will find that these data and results are particularly useful copyright 1992 by american finance association

did inequality cause the u s financial crisis in his widely discussed book fault lines 2010 raghuram rajan argues that many low and middle income consumers have reduced their saving and increased debt since income inequality started to soar in the united states in the early 1980s this has temporarily kept private consumption and employment high but it also contributed to the creation of a credit bubble this surge in household indebtedness turned out to be unsustainable in the financial crisis starting in 2007 although rajan and others emphasize the role of government in promoting credit to those households with declining relative permanent incomes other strands of the literature have focused more explicitly on the implications of rising inequality for aggregate demand and households demand for credit these differences in emphasis may explain why the literature on the inequality crisis nexus appears somewhat disparate even though the various strands are far from mutually exclusive but rather complement each other we therefore place the rajan hypothesis in the context of competing theories of consumption and survey the empirical literature on the effects of inequality on household behaviour we conclude that the empirical evidence calls for a renaissance of the relative income hypothesis of consumption

continuous time methods in finance a review and an assessment i survey and assess the development of continuous time methods in finance during the last 30 years the subperiod 1969 to 1980 saw a dizzying pace of development with seminal ideas in derivatives securities pricing term structure theory asset pricing and optimal consumption and portfolio choices during the period 1981 to 1999 the theory has been extended and modified to better explain empirical regularities in various subfields of finance this latter subperiod has seen significant progress in econometric theory computational and estimation methods to test and implement continuous time models capital market frictions and bargaining issues are being increasingly incorporated in continuous time theory the roots of modern continuous time methods in finance can be traced back to the seminal contributions of merton 1969 1971 1973b in the late 1960s and early 1970s merton 1969 pioneered the use of continuous time modeling in financial economics by formulating the intertemporal consumption and portfolio choice problem of an investor in a stochastic dynamic programming setting merton 1973b also showed how such a framework can be used to develop equilibrium asset pricing implications thereby significantly extending the asset pricing theory to richer dynamic settings and expanding the scope of applications of continuous time methods to study problems in financial economics 1 within a span of about 30 years from the publication of merton s inf luential papers continuous time methods have become an integral part of financial economics indeed in certain core areas in finance such as e g asset pricing derivatives valuation term structure theory and portfolio selection continuoustime methods have proved to be the most attractive way to conduct research and gain economic intuition the continuous time approach in these areas has produced models with a rich variety of testable implications the econometric theory for testing continuous time models has made rapid strides in the last decade and has thus kept pace with the impressive progress on the theoretical front one hopes that the actual empirical investigations and estimation using the new procedures will follow suit soon

the simple economics of research portfolios this article identifies biases in market portfolios of parallel research projects arising from the noncongruence of social goals and private aspirations occasioned by those circumstances where the market rewards only the winner and where the winner is awarded the entire social surplus it is shown that under risk neutrality this noncongruence implies that t he market encourages the development of too many discoveries too lar ge a spread in the distribution of the quality of discoveries and an excessive occurrence of multiple discoveries copyright 1987 by royal economic society

the missing transmission mechanism in the monetary explanation of the great depression for many friedman and schwartz s monetary history of the united states 1963 is synonymous with the notion that monetary contraction and errors by the federal reserve caused the great depression but this quick summary both sells the book short and oversells its findings about the 1930s it sells the book short because the contributions of the monetary history extend far beyond the depression friedman and schwartz use an extensive reading of the historical record over nearly a century to identify times when the money supply moved for reasons unrelated to current or prospective macroeconomic conditions that output moved in the same direction as money following these crucial experiments remains some of the strongest evidence we have that monetary shocks have real effects but saying the book proves that monetary shocks caused the depression is a stretch of the monetary shocks friedman and schwartz identify those early in the depression are arguably the most tenuous and crucially the book provides scant discussion of how monetary shocks affect the economy this weakness is most pressing in the analysis of the depression because nominal interest rates fell precipitously early in the depression and remained low throughout it is hard to appeal to the standard transmission mechanism operating through the nominal cost of credit this paper seeks to fill in the missing transmission mechanism in friedman and schwartz s explanation of the depression in section i we describe previous work showing that falling

collaboration incentives endogenous selection into single and coauthorships by surname initial in economics and management many prior studies suggest that default alphabetical ordering of coauthors in economicsconfers disproportionate professional advantages on those with an early surname initialbecause of the greater prominence it gives to the first author however these studies do notconsider that authors select into coauthorships according to the incentives identified wedevelop a model of endogenous selection into single and coauthorships around the principlethat no one wants to be second author when they expect to provide the larger contribution i e are of higher quality we test it with authorship data from economics with man agement which does not use default alphabetical ordering as a benchmark we predict foreconomics that lower quality authors with an early surname initial would be less desirablecoauthors whereas higher quality authors with a late initial would have a lower desire tocoauthor most desired are early initial authors of high quality who are therefore advan taged in forming high quality collaborations the combined effect predicts citation rankincreases with surname initial for single authored papers and decreases for coauthored we find both effects for economics when compared to management and absolutely ourfindings indicate that part of the advantage enjoyed by early surname initial authors in eco nomics could be due to the higher ability among them having more incentive compatiblecollaborators rather than merely to greater prominence

research productivity over the life cycle evidence for academic scientists the relationship between age and the publishing productivity of ph d scientists is analyzed using data from the survey of doctorate recipients national research council and the science citation index the longitudinal nature of the data allows for the identification of pure aging effects in five of the six areas studied life cycle aging effects are present only in particle physics where scientists often speak of being on a religious quest is the indication that scientific productivity is not investment motivated vintage effects are also considered the expectation that the latest educated are the most productive is not generally supported by the data copyright 1991 by american economic association

optimal scientific production over the life cycle the paper develops an optimization model of the career of a scientist recognizing that research efforts and networking get more efficient if the scientist is more knowledgeable history dependent solutions are developed we give a theoretical underpinning of the four different research patterns detected in way et al 2017 proceedings of the national academy of sciences if the scientist does not bother about his reputation at the end of his career we show that a sufficient education level is needed for the scientist to develop a typical research pattern where productivity increases in the beginning of his career while it declines towards retirement if the education level is not sufficient a fading research pattern will result where productivity declines over time on the other hand when the scientist appreciates to have a good reputation at the end of his career sufficient education will result in increasing productivity over the career lifetime preventing a midlife slump

knowledge creates markets the influence of entrepreneurial support and patent rights on academic entrepreneurship we use an exogenous change in german federal law to examine how entrepreneurial support and the ownership of patent rights influence academic entrepreneurship in 2002 the german federal government enacted a major reform called knowledge creates markets that set up new infrastructure to facilitate university industry technology transfer and shifted the ownership of patent rights from university researchers to their universities based on a novel researcher level panel database that includes a control group not affected by the policy change we find no evidence that the new infrastructure resulted in an increase in start up companies by university researchers the shift in patent rights may have strengthened the relationship between patents on university discovered inventions and university start ups however it substantially decreased the volume of patents with the largest decrease taking place in faculty firm patenting relationships

scholarships citations and salaries economic rewards in economics while substantial attention has been paid to the determinants of academics earnings 5 7 8 14 15 this literature has by implication suggested that the mere fact of having spent more time in the profession and the publication of more scholarly articles and books are the major determinants of salary differences our purpose here is to introduce a new determinant the quality of one s scholarly research measured by the frequency of references to that work as an additional objective measure of productivity we expect that this proxy for the extent of a scholar s influence on the work of other researchers is rewarded by the market in addition to giving a more complete picture of the determination of salaries in academic labor markets our approach should be useful in establishing a better framework for the evaluation of issues of discrimination in such markets than has been presented before 2 9

industry or academia basic or applied career choices and earnings trajectories of scientists we extend life cycle models of human capital investments by incorporating matching theory to examine the sorting pattern of heterogeneous scientists into different career trajectories we link differences in physical capital investments and complementarities between basic and applied scientists across industry and academic settings to individual differences in scientist ability and preferences to predict an equilibrium matching of scientists to careers and to their earnings evolution our empirical analysis using the national science foundation s scientists and engineers statistical data system database is consistent with theoretical predictions of i sorting by ability into basic versus applied science among academic scientists but not among industry scientists and ii sorting by higher taste for nonmonetary returns into academia over industry the evolution of an earnings profile is consistent with these sorting patterns the earnings trajectories of basic and applied scientists are distinct from each other in academia but are similar in industry this paper was accepted by lee fleming entrepreneurship and innovation

why the far distant future should be discounted at its lowest possible rate abstract a critical feature of the distant future is currently unresolvable uncertainty about what will then be the appropriate rate of return on capital to use for discounting this paper shows that there is a well defined sense in which the lowest possible interest rate should be used for discounting the far distant future part of any investment project some implications are discussed for evaluating long term environmental projects or activities like measures to mitigate the possible effects of global climate change

inventor moral hazard in university licensing the role of contracts abstract we examine commonly observed forms of payment such as milestones royalties or consulting contracts as ways of engaging inventors in the development of licensed inventions our theoretical model shows that when milestones are feasible royalties are not optimal unless the licensing firm is risk averse the model also predicts the use of consulting contracts which improve the firm s ability to monitor inventor effort because these contracts increase the firm s expected profits the upfront fee that the university can charge is higher than otherwise these results therefore support the commonly observed university policy of allowing faculty to consult with licensing firms outside of their university contracts they also support firm policies of including milestones an empirical analysis based on a survey of 112 businesses that license in university inventions supports the complementarity of milestones and consulting suggested by the theory

debt and the response to household income shocks validation and application of linked financial account data the increasing availability of data derived from linked consumer financial accounts has the potential to dramatically expand the potential for research examining the most comprehensive existing se

equilibrium and optimal size of a research joint venture in an oligopoly with spillovers this paper analyzes a simple oligopoly model with information spillovers firms spend on r d to affect their costs of production the main finding is that depending on the magnitude of the spillover the market may not provide enough incentives for the optimum degree of cooperation to take place it is shown that the equilibrium size of a research joint venture is usually less than the optimum size which requires all firms to participate in the research joint venture the policy implications of this result are that there should be encouragement for firms competing in high technology industries to form industry wide cooperative agreements copyright 1995 by blackwell publishing ltd

time horizon and the discount rate abstract we consider an economy a la lucas 1978 econometrica46 1429 1446 with a risk averse representative agent the exogenous growth rate of the economy follows a random walk we characterize the set of utility functions for which it is efficient to discount more distant cash flows at a lower rate the benchmark result is that when the growth rate is almost surely nonnegative the yield curve is decreasing if and only if relative risk aversion is decreasing with wealth relaxing the assumption on the absence of recession requires more restrictions on preferences such as increasing relative prudence journal of economic literature classification numbers d81 d91 q25 q28

overconfidence ceo selection and corporate governance we develop a model that shows that an overconfident manager who sometimes makes value destroying investments has a higher likelihood than a rational manager of being deliberately promoted to ceo under value maximizing corporate governance moreover a risk averse ceo s overconfidence enhances firm value up to a point but the effect is nonmonotonic and differs from that of lower risk aversion overconfident ceos also underinvest in information production the board fires both excessively diffident and excessively overconfident ceos finally sarbanes oxley is predicted to improve the precision of information provided to investors but to reduce project investment

the great divide in scientific productivity why the average scientist does not exist we use a quantile regression approach to estimate the eects of age gender research funding teaching load and other observed characteristics of academic researchers on the full distribution of research performance both in its quantity publications and quality citations dimension exploiting the panel nature of our dataset we estimate a correlated random eects quantile regression model accounting for unobserved heterogeneity of researchers we employ recent advances in quantile regression that allow its application to count data estimation of the model for a panel of biomedical and exact scientists at the ku leuven in the period 1992 2001 shows strong support for our quantile regression approach revealing the dierential impact of almost all regressors along the distribution we also nd that variables like funding teaching load and cohort have a dierent impact on research quantity than on research quality jel classi cation c14 c23 l31 o31 o32

optimal incentives for income generation in universities the rule of thumb for the compton tax abstract in this paper we propose a novel framework to model one of the key links between universities and industry the undertaking of applied research we postulate that a basic objective of universities is to undertake fundamental research and that they receive public funding to do so nevertheless faced with tight budget constraints universities may have incentives to allow their staff to devote some of their time to income generating activities such as applied research or consultancy this opens up two channels by which universities can ease their budget constraint i by allowing academics to supplement their income universities may be able to hold down academic salaries ii universities can effectively tax the income that academics raise through applied research or consultancy for example through the imposition of overhead charges by easing their budget constraint universities may be able to take on sufficient extra staff to more than offset the time that existing staff are spending on non fundamental research and thus increase the amount of fundamental research that they can achieve with a given public budget we develop a model of this link between universities and firms and use it to determine the optimal tax that universities should impose on applied research income the compton tax used at mit in the 1930s is an early example of the use of this instrument

universities as engines of r d based economic growth they think they can two issues raised by increased participation of universities in equity arrangements designed to commercialize faculty research are addressed a the effects that an increased emphasis on patenting faculty research and on enhancing the commercial value of these patents has on the characteristics of academic research net revenue streams and existing channels through which academic research enters the market and b processes of institutional change and imitation whereby changes in the policies of elite research universities exert competitive and emulative pressures on other institutions increased efforts by universities to foster the commercialization of technological innovations erodes the singular position of institutions of higher learning in the united states based on past performance there is little reason to expect that a substantial reallocation of faculty effort towards commercially oriented r d will generate appreciable net revenues for other than a select number of universities these ventures also serve to shift academic researchers from the social roles in which they are most efficient as suppliers of a collective goodscientific and technological knowledge just as very few men are both capable business managers and ingenious inventors so few are at the same time ingenious inventors and exalted altruists some twenty years ago a university professor devised a method for measuring with accuracy the content of butterfat in milk the device if patented would doubtless have yielded him a very handsome income the inventor gave it freely to the public saying modestly that to do so was but part of his duty as a servant of the people and it has come into use the world over we call his conduct noble but our very recognition of its nobility is an admission of its rarity f w taussig inventors and money makers 1915 58

the changing rewards to science the case of biotechnology little is known about the form and or magnitude of compensation provided university based scientists working on firm r d this is unfortunate given the important role that university based scientists play in r d and the growing literature concerning compensation and innovation this paper sheds some light on these issues by examining the compensation of university based scientists involved with 52 biotech firms that made an initial public offering between march of 1990 and november of 1992 although the stock holdings of the university scientists are of particular interest additional forms of compensation received by the scientists are also examined

a note on america s 1920 21 depression as an argument for austerity this note argues that recent interest in the 1920 21 depression in the usa as a historical precedent for austerity is inappropriate most of the austerity measures preceded the depression which had already begun receding by the time warren harding implemented the relatively modest spending and tax cuts that are cited by modern proponents of austerity the evidence suggests that the 1920 21 depression was the result of a variety of supply constraints rather than a deficiency of effective demand and is therefore a poor test of the efficacy of keynesian fiscal policy

investment and uncertainty precipitating the great depression in the united states a severe collapse of fixed capital formation distinguished the onset of the great depression from other investment downturns between the world wars using a model estimated for the years 1890 2000 we show that the expected profitability of capital measured by tobin s q and the uncertainty surrounding expected profits indicated by share price volatility were the chief influences on investment levels and that heightened share price volatility played the dominant role in the crucial investment collapse in 1930 investment did not simply follow the downward course of income at the onset of the depression rather its slump helped to propel the wider collapse

consumption commitments and habit formation we analyze the implications of household level adjustment costs for the dynamics of aggregate consumption we show that an economy in which agents have consumption commitments is approximately equivalent to a habit formation model in which the habit stock is a weighted average of past consumption if idiosyncratic risk is large relative to aggregate risk consumption commitments can thus explain the empirical regularity that consumption is excessively sensitive and excessively smooth findings that are typically attributed to habit formation unlike habit formation and other theories but consistent with empirical evidence the consumption commitments model also predicts that excess sensitivity and smoothness vanish for large shocks these results suggest that behavior previously attributed to habit formation may be better explained by adjustment costs we develop additional testable predictions to further distinguish the commitment and habit models and show that the two models have different welfare implications

real options and demographic decisions abstract the theory of real options is used to incorporate the influence of uncertainty on demographic decision making the decision to have children is formulated as an investment using portfolio theory the timing of the decision to have a child is modelled as a real options decision with uncertainty affecting a woman s ability to exercise the option to wait in order to delay or space births an increase and reduction in uncertainty on this option is explored compared to the widely used net present value npv framework the real options approach roa better explains the process of demographic decision making in poor countries

the impact of research grant funding on scientific productivity in this paper we estimate the impact of receiving an nih grant on subsequent publications and citations our sample consists of all applications unsuccessful as well as successful to the nih from 1980 to 2000 for standard research grants r01s both ols and iv estimates show that receipt of an nih research grant worth roughly 1 7 million leads to only one additional publication over the next five years which corresponds to a 7 percent increase the limited impact of nih grants is consistent with a model in which the market for research funding is competitive so that the loss of an nih grant simply causes researchers to shift to another source of funding

strategic differentiation and strategic emulation in games with uncertainty when players who choose a common strategy face a common shock while players who choose different strategies face independent or imperfectly correlated shocks equilibrium choices exhibit differentiation respectively emulation when the sign of the cross partial derivative of the firms profit functions with respect to the realizations of the uncertain variables is negative respectively positive i consider a variety of applications including technology choice brand investments and r d races many of which can be characterized as two stage games in such games i demonstrate that differentiation is more likely to occur when the second stage game is a game of strategic substitutes

credit card debt and consumption evidence from household level data this research investigates the relationship between credit card debt and consumption using household level data this is a departure from the previous studies which have used aggregate measures of consumption and general debt such as the debt service ratio or total revolving credit we use a detailed monthly survey of credit card use to impute credit card debt to respondents from the consumer expenditure survey sample in contrast to some earlier studies using aggregate data we find a negative relationship between debt and consumption growth our work shows that a 1000 increase in credit card debt results in a decrease in quarterly consumption growth of almost 2 investigations are also made into effects of debt within different age categories and into the impact of expected income growth on the debt consumption relationship

the great crash and the onset of the great depression this paper argues that the collapse of stock prices in october 1929 generated temporary uncertainty about future income which led consumers to forgo purchases of durable goods that the great crash generated uncertainty is evidenced by the decline in surety expressed by contemporary forecasters that this uncertainty affected consumer behavior is shown by the fact that spending on consumer durables declined drastically in late 1929 while spending on perishable goods rose slightly this effect is confirmed by the fact that there is a significant negative relationship between stock market variability and the production of consumer durables in the prewar era

portfolio choice in research and development we analyze the effects of a winner take all patent mechanism on the riskiness of the research strategies chosen by competingfirms as well as on thefirms incentives to duplicate research projects nash equilibrium choices are compared with the social optimum in a oneshot simultaneous move game in which competitors choose the riskiness or correlation of their research performances we show that neither society nor firms have any preference for correlation per se while the divergence between social and privately optimal levels of risk depends on skewness characteristics of the probability distribution over discovery dates and on levels of risk aversion

life cycle effects in small business finance this paper studies the life cycle profiles of small firms cost and use of credit using a panel of finnish firms the choice of method matters for the conclusions drawn about the relationship between firm age and financing costs the cross sectional age profiles of financing costs are hump shaped and consistent with hold up theories whereas methods that control for cohort fixed effects demonstrate that the financing costs decrease monotonically as the firms mature the life cycle profiles of the use of credit also indicate that firms are more dependent on financial intermediaries in the early periods of their lives furthermore the cohorts born during recessions pay higher financing costs and use smaller amounts of bank loans even after their creditworthiness is controlled for the recession cohort effect appears to be more related to the experience of starting up the firm in the recession than to the ceos growing up in a recession during their early adulthood

the evolution of the scientific productivity of highly productive economists this paper studies the evolution of research productivity of a sample of economists working in the best 81 departments in the world in 2007 the main novelty is that in so far as a productivity distribution can be identified with an income distribution we measure productivity mobility in a dynamic context using an indicator inspired in an income mobility index suggested by fields 2010 for a two period world productivity is measured in terms of publications weighted by the citation impact of the journals where each article is published in the periodical literature we study the evolution of average productivity productivity inequality the extent of rank reversals and productivity mobility for seven cohorts as well as the population as a whole we offer new evidence confirming previous results about the heterogeneity of the evolution of productivity for top and other researchers however the major result is that contrary to what was expected for our sample of very highly productive scholars the effect of rank reversals between the two periods on overall productivity mobility offsets the effect of an increase in productivity inequality from the first to the second period in the youngest five out of seven cohorts jel a11 a12 b41 d63 i32

rivals search for buried treasure competition and duplication in r d we model an r d race in which each fi rm decides in each period between two research projects only one of which has positive success probability and it is not known which there is symmetric information and hence scope for strategic search if the prize is shared when discovery is simultaneous there is too much duplication of projects if neither is rewarded in this event then equilibrium is efficient unless projects have asymmetric costs in which case there is a bias toward the high cost project or asymmetric success probabilities in which case too little duplication is possible if one firm is informed it may choose the wrong project to put the other off the scent

property rights and entrepreneurship in science this paper examines the evolving relationship in science between the reward structure and entrepreneurial activity we draw a distinction between two types of property rights basic science is fostered by a mechanism of reputational rights technological advances and the products and processes they produce are fostered by a mechanism of proprietary rights the two forms of property rights differ markedly in terms of the incentives they provide to share information in a timely fashion we argue that because of a host of factors university based scientists in certain fields are more likely to privatize knowledge today than in the past trading reputational rights for proprietary rights events in the life sciences serve as a case study a discussion of how privatization affects basic science follows although the evidence is far from complete we conclude that the movement towards privatization may be more beneficial to product development and the scientists engaged in the activity than to basic science

recruiting for ideas how firms exploit the prior inventions of new hires when firms recruit inventors they acquire not only the use of their skills but also enhanced access to their stock of ideas but do hiring firms actually increase their use of new recruits prior inventions our estimates suggest they do quite significantly in fact by approximately 219 on average however this does not necessarily reflect widespread learning by hiring in fact we estimate that a recruit s exploitation of her own prior ideas accounts for almost half of the above effect with much of the diffusion to others being limited to the recruit s immediate collaborative network furthermore although one might expect the recruit s role to diminish rapidly as her tacit knowledge diffuses across her new firm our estimates indicate that her importance is surprisingly persistent over time we base these findings on an empirical strategy that exploits the variation over time in hiring firms citations to the recruits premove patents specifically we employ a difference in differences approach to compare premove versus postmove citation rates for the recruits prior patents and corresponding matched pair control patents our methodology has three benefits compared to previous studies that also examine the link between labor mobility and knowledge flow 1 it does not suffer from the upward bias inherent in the conventional cross sectional comparison 2 it generates results that are robust to a more stringently matched control sample and 3 it enables a temporal examination of knowledge flow patterns this paper was accepted by kamalini ramdas entrepreneurship and innovation

the effects of publication lags on life cycle research productivity in economics we investigate how increases in publication delays have affected the life cycle of publications of recent ph d graduates in economics we construct a panel dataset of 14 271 individuals who were awarded ph d s between 1986 and 2000 in u s and canadian economics departments for this population of scholars we amass complete records of publications in peer reviewed journals listed in the jel a total of 368 672 observations we find evidence of significantly diminished productivity in recent relative to earlier cohorts when productivity of an individual is measured by the number of aer equivalent publications diminished productivity is less evident when the number of aer equivalent pages is used instead our findings are consistent with earlier empirical findings of increasing editorial delays decreasing acceptance rates at journals and a trend toward longer manuscripts this decline in productivity is evident in both graduates of top 30 and non top 30 ranked economics departments and may have important implications for what should constitute a tenurable record we also find that the research rankings of top economics departments are a surprisingly poor predictor of the subsequent research rankings of their ph d s graduates jel a11 j24 j29 j44

does inequality lead to a financial crisis abstract the recent global crisis has sparked interest in the relationship between income inequality credit booms and financial crises rajan 2010 and kumhof and ranciere 2011 propose that rising inequality led to a credit boom and eventually to a financial crisis in the us in the first decade of the 21st century as it did in the 1920s data from 14 advanced countries between 1920 and 2000 suggest these are not general relationships credit booms heighten the probability of a banking crisis but we find no evidence that a rise in top income shares leads to credit booms instead low interest rates and economic expansions are the only two robust determinants of credit booms in our data set anecdotal evidence from us experience in the 1920s and in the years up to 2007 and from other countries does not support the inequality credit crisis nexus rather it points back to a familiar boom bust pattern of declines in interest rates strong growth rising credit asset price booms and crises

bombs brains and science the role of human and physical capital for the creation of scientific knowledge i examine the role of human and physical capital for the creation of scientific knowledge i address the endogeneity of human and physical capital with two exogenous shocks the dismissal of scientists in nazi germany and world war ii bombings a 10 shock to human capital reduced output by 0 2 sd in the short run and the reduction persisted in the long run a 10 shock to physical capital reduced output by 0 05 sd in the short run and the reduction did not persist the dismissal of star scientists caused much larger reductions in output because they are key for attracting other successful scientists

long term risk management of nuclear waste a real options approach in this paper we investigate the optimal timing for deep geological disposal of nuclear waste our model is based on the real options approach to investment under uncertainty in this context the problem is similar to the optimal exercise policy for a perpetual american spread option the potential usefulness of such a model for actual decision making on a sensitive issue is illustrated by some numerical simulations

life cycle productivity in academic research evidence from cumulative publication histories of academic economists casual observation suggests that the temporal pattern of productivity varies dramatically across individuals particularly in risky endeavors such as a research career in academia some individuals remain productive researchers throughout their career others who show early promise become deadwood before their time some authors produce papers like a well oiled machine while others publish at a highly erratic rate opposing this is a widely held view that there is a common life cycle component underlying individual productivity the aging process itself is thought to lead to the initial rise and eventual decline of creative productivity in addition human capital models typically imply that investment in skills will decline with age 7 both of these ideas suggest that output will be hump shaped over the life cycle econometric studies of life cycle productivity have addressed this with regressions which are quadratic functions of age or experience 1 5 the quadratic conveniently delivers the sought after hump shaped pattern in productivity there are conceptual problems with the quadratic however it implies a symmetric output path centered on its peak which is inappropriate if productivity peaks early in the career but remains significant thereafter in addition data on publishing productivity is heavily affected by the zeros problem the most common number of publications for an active professor in any given year is zero this requires an estimation procedure designed to accommodate a high probability mass at zero levin and stephan 5 address this problem with the tobit regression the tobit is a truncated regression model where in this context publications are distributed as a truncated normal random variable if a vector combination of attributes and coefficients exceeds a threshold level and are zero other

peer effects in science evidence from the dismissal of scientists in nazi germany this paper analyses peer effects among university scientists specifically it investigates whether the quality and the number of peers affect the productivity of researchers in physics chemistry and mathematics the usual endogeneity problems related to estimating peer effects are addressed by using the dismissal of scientists by the nazi government in 1933 as a source of exogenous variation in the peer group of scientists staying in germany to investigate localized peer effects i construct a new panel data set covering the universe of scientists at the german universities from 1925 to 1938 from historical sources i find no evidence for peer effects at the local level even very high quality scientists do not affect the productivity of their local peers

and the winner is acquired entrepreneurship as a contest yielding radical innovations new entrants to a market tend to be superior to incumbents in originating radical innovations we provide a new explanation for this phenomenon based on markets for technology it applies in industries where successful entrepreneurial firms or their technologies are acquired by incumbents that then commercialize the innovation to this end we analyze an innovation game between one incumbent and a large number of entrants in the first stage firms compete to develop innovations of high quality they do so by choosing at equal cost the success probability of their rd the bigger the number of entrants the more radical the most radical project generally entrants tend to choose more radical r d approaches and generate the highest value innovation in case of success we illustrate our theoretical findings by a qualitative empirical study of the electronic design automation industry and derive implications for research and management

tenure issues in higher education the system of tenure that dominates american higher education has long been a source of controversy the institution of tenure has been attacked for entrenching a lazy professoriate more interested in attending faraway conferences and producing unreadable research than in teaching or developing practical insights while on the other hand it has long been defended as an absolute necessity for the defense of open intellectual inquiry the tenure controversy has been sharpened in recent years by several events the end of mandatory retirement which was abolished by federal law effective january 1 1994 has heightened concerns about the productivity and commitment of professors who received tenure long ago and who no longer have the same incentives to invest in long term reputation there is also ongoing concern over the steadily rising cost of higher education which raises the question of what students as well as the taxpayers who support public institutions of higher education are getting for their money 1 the idea that tenure is a wasteful institution for universities runs up against the puzzling fact that the commitment to tenure is one that academic institutions impose on themselves although the american association of university professors aaup provides a powerful lobby in favor of tenure generally colleges and universities most notably private ones are under no legal requirement to observe tenure constraints although as administrators we certainly feel the weight of those constraints our view is that a tenure system in fact provides important benefits to society and to colleges and universities we argue here that the role of tenure is

the role of knowledge in r d efficiency past research has recognized that both demand and capability influence the allocation of r d resources scholars have had an easier time getting a grip on demand than on capability while it has been recognized that knowledge is an important part of capability to date formalization of knowledge and its role in r d activity has been unsatisfactory this paper models the role of knowledge in r d various sources of such knowledge are considered the model throws a different light on analyses that employ a knowledge capital stock and also illuminates the dual private and public nature of technological knowledge

a dynamic game of r and d patent protection and competitive behavior a theory of dynamic optimal resource allocation to r and d in an n firm industry is developed using differential games this technique represents a synthesis of the analytic methods previously applied to the problem static game theory and optimal control the use of particular functional forms allows the computation and detailed discussion of the nash equilibrium in investment rules this paper addresses the problem of resource allocation to research and development among the important issues that a firm engaging in r and d must evaluate are uncertainty regarding the feasibility and profitability of a particular innovation the possibility of a protracted development period the possibility that a rival firm may innovate first capturing either a patent or a significant share of the new market the possibility that a rival firm may imitate the innovation and appropriate some of the profits in the new market in what follows we will develop a theory of optimal resource allocation to research and development which incorporates the aspects of r and d enumerated above we will use a dynamic game theoretic analysis determining the nash equilibrium strategies for n identical firms the availability of perfect patent protection is shown to accelerate development of the innovation and the effect of increasing rivalry is addressed the impact of increasing rivalry on nash equilibrium investment in r and d depends upon the degree of appropriability of rewards if patent protection is perfect then increasing the number of nash rivals results in increased r and d effort however when imitation is rewarded the opposite may be true finally some notions of competitive and perfectly competitive equilibrium are examined in the context of the model developed below

uncertainty irreversibility durable consumption and the great depression what was the role of uncertainty in the great depression this paper uses a calibrated general equilibrium model to show that in response to an increase in uncertainty agents increase expenditure on irreversible durable goods and reduce investment in irreversible physical capital these relative movements occur because durable goods provide a store of utility and are less irreversible than physical capital these substitutions are unclear at the start of the great depression but are clearly visible at the deep end of it in 1932 when the volatility of stock returns is consistently high coefficients on the variance which is consistent with the uncertainty hypothesis both the theoretical hypothesis and its empirical tests are of a partial equilibrium nature yet the great depression was a general equilibrium event this paper puts the uncertainty argument explicitly in a general equilibrium model with consumer durables and capital goods both subject to irreversibility constraints i associate income uncertainty with the stochastic process driving output fluctuations and an increase in uncertainty is modelled as a mean preserving spread on the distribution of this shock the general equilibrium setup also incorporates a specific notion of irreversibility namely that goods are irreversible if there are no buyers when one wants to sell the test of the uncertainty hypothesis in general equilibrium is a simulation of a calibrated version of the model what makes the reaction to a mean preserving spread nontrivial is the clash of the theoretical predictions of precautionary savings and irreversible investment in a general equilibrium context savings should increase and investment should fall to complicate matters durable goods have components of both consumption and investment so what was the role of uncertainty in the great depression in this setup a calibrated model provides a simple answer higher uncertainty makes agents cut capital investment and increase expenditure on durables there are two reasons for this the first is that durables are the least irreversible of the two assets in the model and the second is that durable goods act as a store of utility and thus as insurance the view of the uncertainty hypothesis that a cut in expenditure on durable goods is a key response to high uncertainty is not supported by a standard general equilibrium model there may however be some truth in itfbut for the wrong reasons and at the wrong time it is not a fall in durable expenditure per se but rather an increase relative to

if star scientists do not patent the effect of productivity basicness and impact on the decision to patent in the academic world abstract we run an event history analysis on a sample of italian researchers in the field of materials science aiming at understanding how the characteristics of the research trajectories followed by scientists in academia affect their opportunities to do development of industrial applications results of our estimates suggest that all measures of academic performances have a dual effect although different in magnitude scientists that are moving along applied research trajectories find it easier to produce industrial applications than their colleagues engaged in the quest for very fundamental understanding we interpret our results by suggesting that for the former more academic research results in more exploitable results hence in more chances to patent for the latter more academic research makes it just more unlikely that they will find the time to produce industrial applications similar results apply for the low versus high research impact