labor market institutions and inflation volatility in the euro area despite having had the same currency for many years emu countries still have quite different inflation dynamics in this paper we explore one possible reason country specific labor market institutions giving rise to different inflation volatilities when unemployment insurance schemes differ as they do in emu reservation wages react differently in each country to area wide shocks this implies that real marginal costs and inflation also react differently we report evidence for emu countries supporting the existence of a cross country link over the cycle between labor market structures on the one side and real wages and inflation on the other we then build a dsge model that replicates the data evidence the inflation volatility differentials produced by asymmetric labor markets generate welfare losses at the currency area level of approximately 0 3 of steady state consumption

experimental evidence on unemployment insurance work search policies this paper describes findings from an experimental evaluation of alternative work search policies in the unemployment insurance ui program we find that the no work search treatment significantly increased ui receipt relative to the standard work search approach by 3 3 weeks and 265 per claimant and that the treatment with the most intensive requirements reduced ui payments by one half of a week or 70 per claimant the results suggest that work search requirements reduce ui spells by increasing the nonmonetary costs of remaining on ui rather than enhancing job search abilities we also find little treatment effects for wages earnings or total income suggesting that an increase in the nonmonetary costs of continued ui receipt are associated with more intensive job search rather than a reduction in the reservation wage

tastes and technology in a two country model of the business cycle explaining international trade on international financial markets allows people to insure country specific risk and smooth consumption intertemporally equilibrium models of business cycles with trade on global financial markets typically yield international consumption correlations near one and excessive volatility of investment the authors incorporate nontraded goods in the model and find that the implications for aggregate consumption investment and the trade balance are consistent with business cycle properties of industrialized countries however the model driven by technology shocks alone yields counterfactual implications for comovements between consumption and prices at the sectoral level taste shocks produce price quantity relationships more consistent with the data copyright 1995 by american economic association

reemployment probabilities and returns to matching the assumption of constant returns in the matching function embodied in most bilateral search models is crucial to ensure the uniqueness of the unemployment rate along a steady state growth path this article explores the empirical viability of this assumption by estimating individual reemployment probabilities on a sample of unemployment entrants i apply hazard models to survey data on both completed and uncompleted unemployment durations the hypothesis of constant returns to matching is not rejected on the basis of the evidence that the job finding hazard depends only on local labor market tightness and is independent of its size

lessons from the u s unemployment insurance experiments recent social experiments have evaluated two reforms of the unemployment insurance ui system reemployment bonuses and job search programs the bonus experiments show that economic incentives affect the length of ui receipt and provide weak evidence that an earlier return to work does not decrease earnings the experiments do not show the favorability of a permanent bonus program as they ignore its effect on the number of the claimants the job search experiments test several more promising reforms nearly all of the combinations of services and increased enforcement reduce ui receipt and have favorable cost benefit analyses earnings often increase though the estimates are imprecise

international business cycles and financial frictions abstract in this study i build a two country dsge model to investigate the impact of financial integration on business cycle co movements with financial frictions in this model the investor can borrow but faces a collateral constraint that is tied to the value of her capital and real estate holdings i show quantitatively that the degree of financial integration and real exchange rate adjustment are important for understanding business cycle synchronization under different types of shocks with the technology shock greater financial integration leads to lower cross country correlations while with the financial shock greater financial integration leads to stronger cross country correlations these findings are consistent with the empirical evidence from the literature

job search requirements effort provision and labor market outcomes abstract how effective are effort targets this paper provides novel evidence on the effects of job search requirements on effort provision and labor market outcomes based on large scale register data we estimate the returns to required job search effort instrumenting individual requirements with caseworker stringency identification is ensured by the conditional random assignment of job seekers to caseworkers we find that the duration of un and non employment both decrease by 3 if the requirement increases by one monthly application when instrumenting actual applications with caseworker stringency an additionally provided monthly application decreases the length of spells by 4 in line with theory we further find that the effect of required effort decreases in the individual s voluntary effort finally the requirement level causes small negative effects on job stability reducing the duration of re employment spells by 0 3 per required application we find a zero effect on re employment wages

does the number of countries in international business cycle models matter until the 1980s standard models with two large open economies i e the united states and europe provided plausible representations of the world economy however with the emergence of many developing countries since the 1990s this approach no longer seems reasonable in line with this change to the global economic environment cross country output correlations between the united states and other countries have risen this paper extends the standard two country model to many countries to show that doing so produces closer cross country correlations to the data in particular based on analytical investigation with a simple model and quantitative analysis with a more general model i show that the cross country output correlation rises and the cross country consumption correlation falls as the number of countries in the two models increases jel f40 f41 f44

new directions in emissions trading the potential contribution of new institutional economics abstract once an arcane topic even among environmental economists emissions trading systems have substantially increased during this past decade in the usa moreover the implementation of these systems has necessitated increased involvement of professionals in many fields besides economics this paper reviews the practical experience of the six major types of emissions trading systems focusing on credit market development participation and results including transaction costs five more recent applications of emissions trading also are considered as well as the possibility of inter pollutant trading while inter pollutant trading has been successfully used for chlorofluorocarbons cfcs the applicability of this experience is probably very limited additionally it would be highly premature to attempt an evaluation of these newer emissions trading systems some of which have yet to be even partially implemented in order to improve these latter and future programs the paper considers the potential contribution of the new institutional economics nie to emissions trading the nie is used to develop theoretical insights and a series of predictions about the performance of a range of emissions trading systems

measuring sovereign risk spillovers and assessing the role of transmission channels a spatial econometrics approach abstract we contribute to the literature on international risk spillovers by developing a unified framework based on spatial econometrics that enables us to address the following questions i what are the effective transmission channels real linkages and informational channels of international risk spillovers across countries and or regions ii what are the most dominant ones and iii which countries are most at risk for their environment and which are suffering the most from international exposure our analysis based on 41 advanced and emerging economies from 2008q1 to 2012q4 shows that among the considered channels for explaining international spillovers of sovereign bond spreads the informational channel is of utmost importance our results challenge previous findings from the literature in which the empirical strategy did not accommodate altogether important features of country spillovers such as the co existence of multiple transmission channels in the presence of contemporaneous and time lagged interactions ultimately our stress testing analysis reveals important insights on countries prone either to international spillovers international exposure or both at the regional and the worldwide level

financial integration and international business cycle co movement international business cycle transmission through integrated financial markets occurs through wealth and balance sheet effects balance sheet effects lead to business cycle convergence but wealth effects lead to divergence this paper shows empirically that debt market integration has a positive effect on co movement implying that balance sheet effects are the main conduit for international transmission through integrated debt markets equity market integration has a negative effect implying that wealth effects are the main channel for international transmission through integrated equity markets distinguishing between wealth and balance sheet effects resolves some key discrepancies between empirical and theoretical findings in international macroeconomics

a note on tradeable permits this note offers a perspective on whether tradeable permits are a passing fad or an enduring trend it does so in noting how various types of tradeable permit systems relate to conventional environmental permits what are the unique requirements of tradeable permit systems and why they might be preferred to alternative instruments a final observation concerns the analogy between tradeable permits for environmental goods and private property in land

fishing in different pools job search strategies and job finding success in canada in the early 1980s this article examines the job search methods of jobless workers and emphasizes sample selectivity in choice of job search strategies especially use of public employment agencies longitudinal data from the labour force survey of canada for 1981 1983 and 1986 indicate that job search methods change with the business cycle and that many people find jobs without any reported search the determinants of job search success also vary substantially over the business cycle implying a substantial social return to public employment agencies at the 1983 trough of the recession but no noticeable benefits when aggregate unemployment is relatively low

financial frictions and the choice of exchange rate regimes i introduction this article provides a quantitative assessment of the role of financial frictions for the choice of exchange rate regimes in a two country model the standard new open economy model neglects the role that financial frictions can play for the international transmission of shocks and for the optimal choice of exchange rate regimes however several historical episodes such as the global financial crises during the gold standard regime or the exchange rate crisis during the european monetary system ems have shown the dangers of a close association between financial instability and pegged exchange rates in general pegged exchange rates tend to reduce monetary policy flexibility and those constraints become even more stringent when the domestic economy faces credit frictions nowadays those issues have acquired policy relevance for the euro area as some accession countries entered a system of managed exchange rates with the euro zone known as the erm ii central bank agreement 1 the relinquishing of part of their monetary policy flexibility might be a concern as some of those countries are still characterized by unstable financial markets to analyze the above mentioned issues i use an artificial two country economy characterized by imperfect financial integration in the market for international securities and sticky prices in an imperfectly competitive framework the introduction of sticky prices is particularly helpful for comparing different monetary arrangements to this economy otherwise similar to those analyzed in some of the recent open economy macro literature 2 i add borrowing constraints on investment associated with balance sheet effects in both countries 3 doing so adds realism to the model and moves a step forward toward integrating the analysis of the domestic and the international transmission mechanisms i simulate the calibrated economy under monetary and productivity shocks and i compare three different exchange rate regimes that is hard pegs managed exchange rates and floating exchange rates to evaluate the relative performance of the different regimes i rely on the comparison of volatilities for the main macro variables and on a simple welfare metric i first consider shocks originated in the foreign country in the absence of financial frictions floating exchange rates deliver good stability properties under both productivity and monetary policy shocks this result confirms milton friedman s 1953 case for flexible exchange rate he argued that in presence of sticky prices floating exchange rates deliver better insulation properties from foreign shocks as they allow relative prices to adjust faster in presence of financial frictions such insulating property is strengthened further the intuition runs as follows under fixed or managed exchange rates an external shock with devaluation pressures forces the monetary authority to raise interest rates with a consequent increase in the cost of loans the presence of borrowing constraints on investment exacerbates the tightening effect to highlight the impact of borrowing constraints on investment i compare the dynamic properties of the economy with and without agency costs both the absolute value for the volatilities of the main macro variables output investment inflation consumption asset prices and return on capital and the difference in the same volatilities between the two regimes are higher when credit frictions are introduced into the model fixed and managed exchange rate regimes also appear to steepen the typical trade off between inflation and output volatility this effect is shown by illustrating the fact that the sacrifice ratio the output inflation volatility ratio raises when moving from floating to fixed exchange rate regimes and that such an increase is higher in presence of credit frictions i therefore test the robustness of the results by analyzing the model with financial frictions under domestic shocks and under symmetric and correlated shocks

international business cycles with endogenous incomplete markets backus kehoe and kydland 1992 baxter and crucini 1995 and stockman and tesar 1995 find two major discrepancies between standard international business cycle models with complete markets and the data in the models cross country correlations are much higher for consumption than for output while in the data the opposite is true and cross country correlations of employment and investment are negative while in the data they are positive this paper introduces a friction into a standard model that helps resolve these anomalies the friction is that international loans are imperfectly enforceable any country can renege on its debts and suffer the consequences for future borrowing to solve for equilibrium in this economy with endogenous incomplete markets the methods of marcet and marimon 1999 are extended incorporating the friction helps resolve the anomalies more than does exogenously restricting the assets that can be traded

public employment agencies and unemployment spells reconciling the experimental and nonexperimental evidence econometric evidence strongly suggests that unemployed job seekers who use the services of a public employment agency pea have longer unemployment spells than those choosing alternative search methods yet in some well designed u s experiments increased use of pea services has been associated with faster transitions intojobs the author argues that the nonexperimental studies may be biased toward finding a positive relationship between unemployment spell duration and pea use because they ignore the possibility that peas are chosen by manyjobseekers only after other search methods have been tried unsuccessfully and a period of unemployment has elapsed an analysis of u k survey data with information on the timing of pea use in 1987 88 supports that hypothesis

financial openness financial frictions and optimal monetary policy increasing financial integration challenges the optimality of inward looking strategies for optimal monetary policy those issues are analyzed in an open economy where foreign net lending and the current account are determined by a collateral constraint durables represent collateral the current account features persistent imbalances but can deliver a long run stationary equilibrium the comparison between floating and managed exchange rate regimes shows that the impossible trinity is reversed higher financial integration increases the persistence and volatility of the current account and calls for exchange rate stabilization in this context the ramsey plan too prescribes stabilization of the exchange rate alongside with domestic inflation

carbon prices were they an obstacle to the launching of emission abatement projects in spain in the kyoto protocol period abstract the future of the carbon market approach under the united nations framework convention on climate change unfccc is uncertain however further development of carbon markets is expected this paper estimates the average carbon price of the carbon emission permits cop approved units acquired by the spanish government and also a more realistic figure for the average carbon cost of the aforesaid emission permits this is very useful for evaluating and comparing different carbon prices and markets in addition the paper contributes to the existing literature by providing a deeper understanding of the flow of emission permits between the european union emission trading scheme eu ets and the emission trading scheme ets under the kyoto protocol the main conclusions are that the estimated carbon price and cost are both lower than other reported prices and costs this may go some way towards explaining why the government preferred to use the flexibility mechanisms and acquire an especially large number of cop approved units mainly assigned amount units aaus through bilateral transactions with other annex b countries instead of launching actual greenhouse gas ghg abatement projects in the country moreover more transparency is needed in regard to bilateral transactions of aaus between the spanish government and other annex b seller countries

evaluating the econometric evaluations of training programs with experimental data this paper takes the results of an employment and training program thatwas run as a field experiment in which the participants were randomlyassigned into a treatment or a control group and compares these results to the estimates that might have been produced by an econometrician who evaluated the program using the same econometric procedures that have been used in the program evaluation literature this comparison shows that many of these econometric procedures fail toreplicate the experimentally determined results and suggests that researchers should be aware of the potential for specification errorsin other nonexperimental evaluations copyright 1986 by american economic association

recent trends in insured and uninsured unemployment is there an explanation this paper explores the recent decline in the fraction of unemployed workers who receive unemployment insurance benefits using march current population surveys we compare the fraction who are potentially eligible for benefits with the fraction who receive them the decline in insured unemployment is almost entirely due to a decline in the early 1980s in the takeup rate for benefits we analyze the determinants of the takeup rate using both aggregated state level data and micro data at least half the decline is due to an increasing share of unemployment in states with lower takeup rates

financial globalization and real regionalization over the period 1972 1986 the correlations of gdp employment and investment between the united states and an aggregate of europe canada and japan were respectively 0 76 0 66 and 0 63 for the period 1986 to 2000 the same correlations were much lower 0 26 0 03 and 0 07 real regionalization at the same time u s international asset trade has significantly increased for example between 1972 and 1999 united states gross fdi and equity assets in the same group of countries rose from 4 to 23 percent of the u s capital stock financial globalization we argue that these two trends are intimately related we document that the correlation of real shocks between the u s and the rest of the world has declined we then present a model in which international financial market integration occurs endogenously in response to less correlated shocks financial integration further reduces the international correlations in gdp and factor supplies we find that both less correlated shocks and endogenous financial market development are needed to account for all the changes in the international business cycle

informal job search and black youth unemployment in this paper i analyze how young black and white unemployed jobseekers use various methods of search and the employment outcomes which result from their use the focus is on distinguishing informal search methods i e friends and relatives or direct application without referral from more formal ones in analyzing racial differences the results show that the two informal methods of search account for about 90 of the difference in employment probabilities between white and black youth this also accounts for 57 71 of the difference in unemployment rates between the two furthermore most of these results reflect differences in the ability of these methods to generate job offers as opposed to differences in search effort or job acceptance rates however our ability to explain these differences through personal family and household characteristics was generally quite limited this abstract was borrowed from another version of this item

an empirical model of sectoral movements by unemployed workers using canadian data i investigate the relationships among sectoral mobility unemployment spells and total unemployment recent north american evidence suggests that incidence shifts toward high wage high tenure workers may increase equilibrium unemployment through decreasing sectoral mobility and increasing spells using a multiple spell transition model i find that while shifts toward such workers may have these effects composition changes that lead to higher mobility can also increase unemployment a further investigation into the relative roles of mobility and spell lengths in driving total unemployment indicates that the influence of the former is comparatively small

finance and international business cycles abstract business cycles are more correlated among countries that have similar financial structures we first document this empirical regularity using oecd data and then build a two country dsge model with financial frictions that replicates it alternative monetary policy regimes and parameter values are explored output co movements increase when the countries involved are linked by a credible exchange rate peg and when they open up to trade they decrease when their financial openness increases the model also accounts for a number of stylized facts of international business cycles such as the positive international correlation of output investment and employment

a model of carbon price interactions with macroeconomic and energy dynamics abstract this paper develops a model of carbon pricing by considering two fundamental drivers of european union allowances economic activity and energy prices on the one hand economic activity is proxied by aggregated industrial production in the eu 27 as it provides the best performance in a preliminary forecasting exercise vs other indicators on the other hand brent natural gas and coal prices are selected as being the main carbon price drivers as highlighted by previous literature the interactions between the macroeconomic and energy spheres are captured in a markov switching var model with two states that is able to reproduce the boom bust business cycle hamilton 1989 first industrial production is found to impact positively negatively the carbon market during periods of economic expansion recession thereby confirming the existence of a link between the macroeconomy and the price of carbon second the brent price is confirmed to be the leader in price formation among energy markets bachmeier and griffin 2006 as it impacts other variables through the structure of the markov switching model taken together these results uncover new interactions between the recently created eu emissions market and the pre existing macroeconomic energy environment

global implications of national unconventional policies abstract financial integration in the markets for banks assets and liabilities makes balance sheet constraints highly correlated across countries resulting in a high degree of financial and macroeconomic interdependence likewise under financial integration unconventional policies aimed at stabilizing domestic financial and credit conditions could entail large international spillovers therefore stabilization by one country will also benefit other countries reducing incentives to implement credit policies in a classic free riding problem especially when these policies entail domestic costs we show that this outcome can emerge in an open economy model featuring financial intermediaries that face endogenously determined balance sheet constraints

choosing a monetary value of greenhouse gases in assessment tools a comprehensive review there is a societal need for using monetary estimates of social impacts of co2 and other greenhouse gases in different assessment tools such as cost benefit analysis and life cycle assessment a number of estimates are available in the literature since these differ by several orders of magnitude there is ambiguity and confusion about which to use this review aims to give some guidance on this issue the variation in carbon value estimates depends on several uncertain aspects which will remain uncertain including climate sensitivity assumptions about future emissions and decision makers ethical standpoints hence there is no single correct monetary value for co2 it will depend on the ethical standpoint of the user due to this estimates of social costs of co2 emissions cannot be used for calculating an optimal emission level although they can inform such assessments it is suggested that marginal abatement cost values are used for emissions capped by binding targets in short term assessments and that social cost of carbon values should be used for all other emissions benchmark principles for choosing a monetary carbon value are suggested along with associated estimates depending on the choices made with regard to ethical standpoints and assumptions about future emissions and climate sensitivity estimates can be significantly higher than the ones typically used in assessment tools today the estimates need continuous updating and there is need for better understanding and communication around the limitations and uncertainties involved

estimation of dsge models when the data are persistent dynamic stochastic general equilibrium dsge models are often solved and estimated under specific assumptions as to whether the exogenous variables are difference or trend stationary however even mild departures of the data generating process from these assumptions can severely bias the estimates of the model parameters this paper proposes new estimators that do not require researchers to take a stand on whether shocks have permanent or transitory effects these procedures have two key features first the same filter is applied to both the data and the model variables second the filtered variables are stationary when evaluated at the true parameter vector the estimators are approximately normally distributed not only when the shocks are mildly persistent but also when they have near or exact unit roots simulations show that these robust estimators perform well especially when the shocks are highly persistent yet stationary in such cases linear detrending and first differencing are shown to yield biased or imprecise estimates

the craft of labormetrics using a wide array of examples from the literature and from original estimates the author examines the pitfalls that make good empirical research in labor economics at least as much craft as statistical technique among the subjects discussed are the appropriateness and cleanliness of data problems of extreme observations the validity of attempts to produce exogeneity using instrumental variables natural experiments and structural models and the treatment of selectivity and unobservable individual effects the author stresses the importance of testing empirical results to ensure that they make sense and of presenting them clearly and economically

the concept of employability the concept of employability plays a crucial role in informing labour market policy in the uk the eu and beyond this paper analyses current and previous applications of the term and discusses its value as an exploratory concept and a framework for policy analysis it then traces the development of the concept discusses its role in current labour market and training strategies with particular reference to the uk and seeks to identify an approach to defining employability that can better inform labour market policy by transcending explanations of employment and unemployment that focus solely on either supply side or demand side factors although the literature offers a range of definitions of employability many policy makers have recently used the term as shorthand for the individual s employability skills and attributes it is argued that this narrow usage can lead to a hollowing out of the concept of employability the paper concludes by presenting a broad framework for analysing employability built around individual factors personal circumstances and external factors which acknowledges the importance of both supply and demand side factors

comparing shocks and frictions in us and euro area business cycles a bayesian dsge approach this paper estimates a dsge model with many types of shocks and frictions for both the us and the euro area economy over a common sample period 1974 2002 the structural estimation methodology allows us to investigate whether differences in business cycle behaviour are due to differences in the type of shocks that affect the two economies differences in the propagation mechanism of those shocks or differences in the way the central bank responds to those economic developments our main conclusion is that each of these characteristics is remarkably similar across both currency areas copyright 2005 john wiley sons ltd

search method use by unemployed youth this article presents a search model which shows that search method choices should be related to their costs and expected productivities as well as to nonwage income and wage offer distributions the empirical evidence then shows that the most frequently used search methods i e friends and relatives and direct applications without referral are also the most productive in generating offers and acceptances the number of methods used is affected by factors that presumably reflect opportunities as well as income sources and needs specific methods are chosen in a manner that generates positive average effects on outcomes for those using them

internet job search and unemployment durations after decades of stability the technologies used by workers to locate new jobs began to change rapidly with the diffusion of internet access in the late 1990 s which types of persons incorporated the internet into their job search strategy and did searching for work on line help these workers find new jobs faster we address these questions using measures of internet job search derived from the december 1998 and august 2000 cps computer and internet supplements matched with job search outcomes from subsequent cps files we find that internet searchers are positively selected on observables but negatively selected on unobservables a beneficial unemployment duration reducing causal effect of internet job search is consistent with our estimates only if negative selection on unobservables is especially strong in other words only if the population of on line resumes is strongly adversely selected

international transmission of the business cycle in a multi sector model abstract standard multi country models do not replicate important features of the international transmission of business cycles predicting cross country correlations of output and consumption which are respectively too low and too high in this paper we modify the supply side of a two country model by adding multiple sectors and trade in intermediate goods the model generates a higher cross country correlation of output than standard one sector models it also predicts cross country correlations of employment and investment that are closer to the data we analyze the relative impact of multiple sectors trade in intermediate goods imperfect substitution between domestic and foreign goods home preference capital adjustment costs and capital depreciation in order to pinpoint the features which move the model s predictions closer to the data

the determinants of individual unemployment durations in an era of high unemployment this paper presents the results of an econometric analysis of the conditional probability of leaving unemployment for two male inflow cohorts entering unemployment at very different points in time 1978 and 1987 the effect of income while unemployed is found to be much weaker for the i987 cohort an elasticity of o i compared with 0 4 and is only found to be significant for teenagers and in the first three months of a spell demand constraints measured by the local unemployment rate are found to have a stronger negative effect on the exit probability for the i987 cohort than in 1978 the i 980s witnessed continual high levels of unemployment in britain and the movement of unemployment up the economic and political agenda unemployment results in major output and income losses and is the cause of much misery to those involved the nation is poorer because of it for both reasons it is therefore important to understand the process that generates a given level of unemployment this process can be considered in terms of two key probabilities the probability of an individual entering unemployment and the probability of an unemployed individual leaving unemployment to take up a job or for other reasons these probabilities will vary with the characteristics of the individual concerned and over time changes in the aggregate unemployment rate can under certain assumptions be decomposed into changes in the inflow rate into unemployment and changes in the steady

the role of selective job search in uk unemployment selective search where unemployed job losers confine their job seeking efforts to matches in the pre separation sector has attracted consid erable attention as a possible source of high and persistent unemployment however this idea is questionable those opting for selection may do so because this strategy is more effective at gener ating an acceptable offer using uk microdata i find evidence in support of the latter view selective searchers cannot account for the persistence of high unemployment since the early 1980s

some contacts are more equal than others informal networks job tenure and wages the explanation typically given for longer tenure among workers who use informal contacts to find jobs is that relatives and friends reduce uncertainty about the quality of the match between worker and employer an alternative explanation is that workers rely on informal information sources as a last resort such workers remain at their current jobs mainly because they have few alternative choices rather than because of better match quality this article shows that the two different explanations are simultaneously valid for different types of contacts and can account for differences in the wage effects of job contacts

structural empirical evaluation of job search monitoring to evaluate search effort monitoring of unemployed workers it is important to take account of post unemployment wages and job to job mobility we structurally estimate a model with search channels using a controlled trial in which monitoring is randomized the data include registers and survey data on search behavior we find that the opportunity to move to better paid jobs in employment reduces the extent to which monitoring induces substitution toward formal search channels in unemployment job mobility compensates for adverse long run effects of monitoring on wages we examine counterfactual policies against moral hazard like reemployment bonuses and changes of the benefits path

international real business cycles we ask whether a two country real business cycle model can account simultaneously for domestic and international aspects of business cycles with this question in mind we document a number of discrepancies between theory and data the most striking discrepancy concerns the correlations of consumption and output across countries in the data outputs are generally more highly correlated across countries than consumptions in the model we see the opposite

coevolution of policy market and technical price risks in the eu ets within the eu there have been calls for governments to provide greater certainty over carbon prices even though it is evident that their price risk is not entirely due to policy uncertainty we develop a stochastic simulation model of price formation in the eu ets to analyse the coevolution of policy market and technology risks under different initiatives the current situation of a weak 20 overall abatement target motivates various technology support interventions elevating policy uncertainty as the major source of carbon price risk in contrast taking a firm decision to move to a more stringent 30 cap would leave the eu ets price formation driven much more by market forces than by policy risks this leads to considerations of how much risk mitigation by governments would be appropriate and how much should be taken as business risk by the market participants