rent seeking with asymmetric valuations this paper analyzes tullock s rent seeking game with asymmetric valuations for a variable range of the returns to scale parameter a necessary and sufficient condition for a unique pure strategy nash equilibrium is established equilibrium effort and expected profits are determined and subjected to comparative statics analysis increasing the underdog s valuation induces both players to increase their efforts increasing the favorite s valuation increases his effort but decreases the effort of the underdog expected profits increase with a player s valuation but decreases with the valuation of the competitor the impact of the returns to scale parameter is also analyzed

effort levels in contests with two asymmetric players a contest is a situation in which players compete with one another by expending effort to win a prize examples abound firms compete by spending rd 26 krueger 14 posner 20 rogerson 23 appelbaum and katz 1 hillman and riley 12 hirshleifer 13 ellingsen 8 nitzan 18 and baik 2 3 have studied rent seeking contests lazear and rosen 15 o keeffe viscusi and zeckhauser 19 and rosen 24 have examined performance incentives associated with reward schemes riley 22 has analyzed the war of attrition and auctions dixit 7 has considered strategic commitments in contests with different applications these are only a part of the literature on the theory of contests despite the vast literature however the effects of asymmetries between players have not been clarified except by harris and vickers 11 who analyze in a patent race model the strategic consequences of asymmetries the purpose of this paper is to examine the effects of asymmetries between two players on individual and total effort levels in a model with a logit form probability of winning function effort levels expended by the players deserve attention effort in a rent seeking contest is interpreted as social costs and thus total effort level is a measure of economic efficiency effort in an r d contest is interpreted as r d expenditures and thus effort levels determine the expected date of invention we focus on asymmetries between the players resulting from their different valuations of the prize their different abilities to convert effort into probability of winning or both such asymmetries are common in contests for example people in different locations may receive different

strategic restraint in contests abstract economic policy is modelled as the outcome of a political game between two interest groups the possible ex post realized outcomes in the game correspond to the proposed policies in the literature policy proposals are exogenous we extend such games by allowing the endogenous determination of the proposed policies in a first stage the groups decide which policy to lobby for and then in a second stage engage in a contest over the proposed policies our main result is that competition over endogenously determined policies induces strategic restraint that reduces polarization and in turn wasteful lobbying activities

political instability and savings in less developed countries evidence from sub saharan africa a four equation model is used to investigate the effects of political instability pi on the savings rate in sub saharan africa utilising a comprehensive measure of pi we find that political instability has a deleterious effect on the savings rate both directly and indirectly through a reduction in investment and economic growth the negative effects of pi on savings rate occurs contemporaneously as well as with a lag we also find that economic growth has a stabilising effect on the political system and that not accounting for these effects through a simultaneous equations model results in biased coefficient estimates these relationships are robust with respect to model specification the implication of our results is that economic factors alone cannot explain the development process in less developed countries

caps on political lobbying the cost of political campaigns in the u s has risen substantially in recent years for example real spending on congressional election campaigns doubled between 1976 and 1992 steven d levitt 1995 there are many reasons why increased campaign spending might be socially harmful first increased spending means increased fund raising which may keep politicians from their legislative duties 1 second a lobbyist who makes a large campaign contribution may have undue influence on electoral outcomes on the shaping of legislation or on the outcome of regulatory proceedings 2 that is the socially preferred candidate or legislation may not prevail likewise a lobbyist involved in a regulatory matter or a competition for a government contract may benefit unduly from a legislator s intervention 3 third a perception that campaign contributions purchase influence may lead to increased tolerance of corruption in the private sector a desire to control campaign spending has spawned many initiatives to limit both campaign contributions and spending beginning with the passage of the federal election campaign act feca political action committees pacs can contribute at most 5 000 per election to a candidate while individuals can contribute at most 1 000 restrictions have also been put on in kind contributions making it more difficult to circumvent these limits 4 while direct restrictions on campaign spending have proven difficult to implement recent initiatives aim to impose voluntary spending limits and stricter limits on contributions 5 despite the existing legislation and the proposals to limit contributions little is known about the impact of contribution limits on aggregate expenditures while it is intuitively appealing that aggregate expenditures would drop we challenge that intuition here we study a lobbying game and show that a cap on individual lobbyists expenditures may have the perverse effect of increasing aggregate expenditures and loweri this abstract was borrowed from another version of this item

rent seeking and rent setting with asymmetric effectiveness of lobbying this paper provides a more general model of the determination of rent seeking costs by combining the following features endogenous rent determination asymmetric effectiveness of contending agents in their lobbying efforts and multiple periods in doing so the paper generalizes some aspects of the work of applelbaum and katz 1987 rogerson 1982 leininger 1992 and kohli 1992 some results obtained are i in the short run when the regulator s salary is higher than in an alternative occupation both the per unit cost of rent seeking and the total rent set by regulator are highest for the same value of the relative effectiveness parameter ii in the long run an increase in the effectiveness parameter leads to a reduction in the social costs of rent seeking iii in a repeated game the equilibrium rent is lower the higher is the regulator s discount factor

efforts in two sided contests the degree of rent dissipation is studied in extended two sided contests that in volve two types of efforts while usual contestants expend resources in trying to win the contested prize potential recipients of the rent seeking efforts also participate in the con test this is due to uncertainty regarding the source of power in the contest that induces the bureaucrats to expend resources to increase their share in the rent seeking efforts by try ing to appear as the party controlling the allocation of the prize we show that the existing theoretical and empirical studies are incomplete and may underestimate the extent of rent dissipation

the effects of changes of the job offer arrival rate on the duration of unemployment generally it is acknowledged that changing the job offer arrival rate has two opposite effects on unemployment duration for a basic job search model sufficient conditions on the wage offer distribution have been derived ensuring that one of the effects dominates however these are not satisfied for the popular families of wage offer distributions here i show that the conditions can be weakened at virtually no cost the set of distributions satisfying the new conditions is considerably larger than the set previously established in particular it includes all wage offer distribution families that are popular in structural empirical research

estimating reservation wages of employed workers using a stochastic frontier according to search theory workers form reservation wages such that employment offers paying wages less than the reservation wage are rejected the first job offer paying a wage higher than the reservation wage is accepted and search is terminated though the reservation wage is clearly a matter of individual taste and unobservable a number of empirical articles have nevertheless appeared on the subject the present paper adds to this literature its novel aspects are that it uses data on employed workers rather than unemployed workers as is usually the case and that it applies a comparatively new econometric technique stochastic frontier estimation to the problem of estimating reservation wages our interests in this paper are twofold first the paper provides estimates of worker reservation wages utilizing the stochastic frontier regression technique second we use these estimates to test various hypotheses regarding the response of reservation wages to factors that search theory suggests are important in the determination of reservation wages the remainder of the paper is organized as follows section ii discusses the previous empirical literature on the reservation wage section iii sketches the theory and estimation techniques we use section iv lays out a framework for assessing the validity of the approach used here finally section v presents the empirical results

reservation wages expected wages and unemployment we model unemployment duration reservation and expected wages simultaneously for individuals not in work where wage expectations are identified via an exogenous policy shock the policy shock increased expected wages which were found to be positively associated with reservation wages

the college to work transition during the 1990s evidence from sweden this article analyses the time it takes for swedish college graduates to start a full time job that lasts for 6 months or more the focus is on the transition over time during the period 1991 to 1999 this period covers both upturns and downturns of the business cycle providing a unique opportunity to consider the importance of the timing of graduation the results show that the risk of unemployment and the unemployment duration have varied considerably with the business cycle both within and between cohorts for example the field of education is of more importance for the outcomes during recessions further the relative risk of unemployment has decreased over time for individuals with the highest degree of education whereas the unemployment duration has increased indicating that the selection into unemployment for this group may have changed over time this is interesting not least in the light of the sharp expansion of the higher educational system during the study period

consumption and exchange rate uncertainty evidence from selected asian countries we set out to assess the effects of exchange rate uncertainty on real consumption in selected asian countries consumption influences business cycles which in turn shape short run monetary policy decisions hence understanding factors driving consumption is appealing to policymakers in the extant literature few studies have analysed the effects of uncertainty on consumption the available ones generally focus on the long run effects in spite of the fact that the short run persistence and adjustments to equilibrium are equally relevant our study takes this limitation seriously by distinguishing the short and long run effects of exchange rate uncertainty on consumption using a flexible dynamic panel data technique that allows long run effects to be homogeneous and the short run effects to be heterogeneous we find that uncertainty impedes consumption in the long run in the short run however the effects are immaterial this evidence remains robust to the measure of uncertainty asymmetric uncertainty the role of consumer prices and the global financial crisis of 2008 by decomposing uncertainty into its temporary and permanent components we find that the latter have a stronger effect on consumption in the long run than the former although both components demand policy attention the evidence suggests that policymakers should be more concerned with permanent uncertainty

uncertain preassigned non contestable and contestable rents abstract potential beneficiaries of government commitments often face the problem of guaranteeing that the commitments are carried out for example funds can be allocated via the budget but not disbursed the disbursement may be subject to the ambiguities of non specified timing or non specified appropriate conditions potential beneficiaries then have incentives to undertake activities that affect the timing of disbursement of the prespecified funds this paper studies the ensuing rent seeking game against the uncertain behavior or discredibility of the government we show that the resources expended by potential beneficiaries of government rents can be substantial but they cannot exceed 30 of the preassigned rents the extent of rent dissipation is incomplete and approaches unity for the critical value of government discredibility that still induces the individual to engage in rent seeking contestability of the allocated funds now referred to as contestable rents increases the extent of rent seeking outlays nevertheless delayed uncertain contestable rents cannot be overdissipated

rent dissipation and efficiency in a contest with asymmetric valuations this paper introduces contest efficiency as an alternative to rent dissipation when measuring efficiency in a contest with asymmetric valuations contest efficiency is defined as the expected proportion of the maximum obtainable benefit captured by the contest and differs from rent dissipation because it values the expected winner of the contest therefore rent dissipation and contest efficiency may suggest contradictory conclusions when agents have asymmetric valuations this result is illustrated when comparing alternative equilibria in contests with asymmetric reimbursement and when analyzing the comparative static effect of a change in the relative benefit of two agents in a cournot nash contest

unemployment duration unemployment benefits and labor market programs in sweden abstract standard search theory as well as some empirical evidence suggest that an unemployed individual s probability of entering employment increases as he approaches the time when unemployment benefits are due to expire this pattern may not carry over to a country like sweden where labor market programs are targeted at the long term unemployed at risk of benefit exhaustion the paper examines transitions out of unemployment using data on unemployed individuals in sweden a semi parametric competing risks model for transitions to employment labor market programs and non participation is estimated there is some evidence that the exit rate from unemployment to employment increases as benefit exhaustion is approached

an econometric analysis of reservation wages this paper describes an analysis of survey data on unemployed people who reported their asking wage and the wage they expected to earn we show that if agents behavior is described by the standard optimal job search model one can use these data to deduce structural parameters rather than estimate them and we report our deductions from two surveys 1 of british unemployed people

rent seeking contest when the prize increases with aggregate efforts the objective of this article is to investigate contests in which efforts are productive tullock s standard rent seeking model is extended by making the rent itself increase with the aggregate efforts a positive externality is thereby introduced into the contest because a contender s private effort in quest of the rent generates a benefit for other contenders coupled with a negative externality presented in the standard rent seeking model the net effect on the social efficiency of the contest is a priori ambiguous it is shown that the extended contest generates socially wasteful excessive aggregate efforts

asymmetric rent seeking with more than two contestants this article considers a rent seeking model with n asymmetriccontestants each contestant may have a different valuation ofthe rent or a different relative ability to win the rent oneof the n contestants is selected as the winner based ontullock s probabilistic contest rule with constant returns toscale a pure strategy nash equilibrium solution is obtainedand its consequences are investigated

aggregate consumption interest rates and inflation in ldcs an error correction model this article explores the relationship between the real interest rate and the consumption saving decisions in ldcs following the error correction methodology the model also includes an income term the inflation rate and a term for inflation uncertainty the main conclusion drawn from this exercise is that for low inflation countries there is a positive and stronger interest rate effect on saving while this effect is less clear and not significant for most high inflation countries also the results show that for at least half of the countries in the sample an ec model with a unit elasticity restriction seems to be an adequate representation of the data

can africa s saving collapse be reversed private saving in sub saharan africa declined from more than 11 percent of disposable income in the 1970s to less than 8 percent in the 1980s and only partially recovered to less than 9 percent in the 1990s this article analyzes the determinants of private saving in sub saharan africa seeking to explain the region s dismal performance and identify policies that could help to reverse the region s decline in saving the analysis shows that in sub saharan africa causality runs from growth to investment and perhaps to private saving whereas a rise m the saving rate granger causes an increase in investment the empirical analysis of private saving in sub saharan africa and other regions over 1970 95 suggests that private saving in africa can be explained by standard behavioral models according to these models private saving in africa lags behind that in other regions most notably the high performing asian economies because of the region s lower per capita income high young age dependency ratio and high dependence on aid the combined effects of these factors substantially outweigh africa s advantage from its lower public saving and higher government consumption finally analysis of the experiences of kenya zimbabwe and botswana provides further insight into the saving process in sub saharan africa

rent seeking firms consumer groups and the social costs of monopoly i introduction when a positive monopoly rent is secured under government protection firms compete with one another to win the monopoly by expending resources the opportunity costs of such rent seeking activities the values of goods and services that could be produced with resources expended on such rent seeking activities are part of the social costs of monopoly many economists have examined the social costs of monopoly defining them as the sum of the deadweight loss and the firms rent seeking costs examples include tullock 1967 krueger 1974 posner 1975 rogerson 1982 and fisher 1985 1 recently several economists such as wenders 1987 ellingsen 1991 and schmidt 1992 have pointed out that consumers do not always allow government protection of a monopoly rather consumers often seek government protection of themselves they try to defend their consumer surplus against a monopoly by spending resources for example consumers often lobby politicians for government regulation that requires a natural monopolist to set its price below the unregulated profit maximizing level the opportunity costs of such consumer surplus defending henceforth cs defending activities are also part of the social costs of monopoly an interesting question then becomes whether consumers cs defending activities increase or decrease the social costs of monopoly as compared with those incurred in the case of inactive consumers wenders 1987 argues that consumers cs defending activities lead to higher social costs of monopoly on the other hand ellingsen 1991 and schmidt 1992 show that consumers participation to defend their consumer surplus lowers the social costs of monopoly this paper also addresses the question of whether consumers cs defending activities increase or decrease the social costs of monopoly but differs from previous research by analyzing a model in which the government decides first whether or not to regulate a monopoly and then decides which firm to be the monopolist 2 we compare the social costs of monopoly in the case of active consumers with those incurred in the case of inactive consumers we demonstrate that given just one rent seeking firm consumers cs defending activities generally increase the social costs of monopoly but given two or more rent seeking firms such activities generally reduce the social costs of monopoly section ii sets up the basic model we consider a rent seeking and cs defending henceforth rcs contest with one consumer group it has two stages in the first stage firms and the consumer group compete by expending outlays to win their prizes 3 the prize for each firm is an unregulated monopoly and that for the consumer group is a regulated monopoly each firm and the consumer group choose their outlays simultaneously and independently in the second stage after knowing the government s decision on the form of the monopoly the firms compete against each other to win the monopoly they expend their outlays simultaneously and independently at the end of the second stage the government chooses the winning firm ellingsen 1991 argues that his sequential move framework is more realistic than his simultaneous move framework since in most cases consumers compete against existing monopolists rather than potential ones over the forms of monopolies in his sequential move framework potential monopolists first compete to win the monopoly and then the winner and consumers compete over the form of the monopoly however consider a situation in which the government periodically reassigns a monopoly in this situation consumers compete against potential monopolists including the incumbent monopolist over the form of the monopoly and the firms periodically compete to be the monopolist the sequential move game in this paper is more appropriate for this situation than the sequential move game of ellingsen 1991

the effect of liquidity constraints on consumption a cross sectional analysis this paper examines the effect of liquidity constraints on consumption expenditures using a single year cross section data set a reduced form equation for consumption is estimated on high saving households by the tobit procedure to account for the selectivity bias since high saving households are not likely to be liquidity constrained the estimated equation is an appropriate description of how desired consumption that would be forthcoming without liquidity constraints is related to the variables available in the cross section data when the reduced form equation is used to predict desired consumption the gap between desired consumption and measured consumption is most evident for young households

search benefits and entitlement in a simultaneous analysis of unemployment duration and search intensity we estimate a non structural search model accounting explicitly for two features of the benefit system benefit level and time remaining until exhaustion of the entitlement period residual entitlement special attention is paid to the number of search contacts as an indicator for search intensity to assess the effect of the benefit level and residual entitlement on the number of search contacts we estimate a poisson model our results suggest that benefits work through a reduction of search efforts whereas residual entitlement is effective mainly through the reservation wage

rent seeking with uncertain opposition abstract it is observed that sometimes dispersed interests are passive to rent seeking by concentrated interests and that sometimes they provide rigorous opposition this paper assumes that opposing political activism is triggered when rents accruing to concentrated interests exceed a threshold level unknown to the latter in these conditions rents will increase asymptotically to a level less than the trigger level the threat of opposition means that social costs of rent seeking may be less than found by static analysis under certainty the model may be applicable to certain types of regulation such as taxi licensing or pollution control

information in conflicts abstract we consider two player contests for a prize of common but uncertain value for settings where one player knows the value of the prize while the other only knows its prior distribution we give conditions for when the uninformed agent is ex ante strictly more likely to win the prize than is the informed agent in the special case of a lottery contest equilibrium expenditures are lower under asymmetric information than if either both agents are informed or neither agent is informed

a search model applied to the transition from education to work this paper presents the specification and estimation of a search model applied to the transition from education to work the theoretical search model includes the possibility of variable search intensity the empirical model with a reservation wage relation is estimated using maximum likelihood methods a data set containing information on new law graduates is used for the estimation finally the model is estimated for two separate subperiods to investigate the effects of market changes

poverty as a constraint to citizen participation in urban redevelopment in developing countries a case study urban redevelopment and infrastructural rehabilitation have been suggested as the solutions to the rapidly declining urban centres in developing countries in order to qualify for external loans and aid for such redevelopment efforts and to ensure the replicability of such projects the principles of cost recovery and cost effectiveness have been advocated many world bank assissted urban development projects have been implemented based on these principles unfortunately these principles have become difficult or perhaps impossible to achieve in most of the past urban development ventures our hypothesis is that the abject poverty of the people and a wrong assessment of what the beneficiaries can afford may be the most important factors which make the principles unrealisable the case study from ibadan nigeria reported in this article confirms this hypothesis the paper explores the capacity and the willingness of people to pay for urban improvement programmes the study reveals that poverty is a majo

the sensitivity of consumption to transitory income estimates from panel data on households we investigate the stochastic relation between income and consumption specifically consumption of food within a panel of about 2 000 households our major findings are 1 consumption responds much more strongly to permanent than to transitory movements of income 2 the response to transitory income is nonetheless clearly positive 3 a simple test independent of our model of consumption rejects a central implication of the pure life cycle permanent income hypothesis the observed covariation of income and consumption is compatible with pure life cycle permanent income behavior on the part of80 percent of families and simple proportionality of consumption and income among the remaining 20 percent as a general matter our findings support the view that families respond differently to different sources of income variations in particular temporary income tax policies have smaller effects on consumption than do other more permanent changes in income of the same magnitude this abstract was borrowed from another version of this item

determinants of consumption and savings behavior in developing countries the determinants of savings generally and the specific effects of government policies on savings and consumption are pivotal forces in investment and economic growth the hall hypothesis states that consumption is a function of lifetime permanent income rather than income in each period independently changes in interest and tax rates money supply or government expenditure will affect permanent income and hence consumption and savings only if they are unexpected and thus not already incorporated in the estimation of permanent income we are unable to reject the hall hypothesis in tests for developing countries when we allow for varying interest rates we do find evidence of a negative effect of inflation on consumption and a positive relationship between the real interest rate and consumption the evidence for the hall hypothesis also suggests that ricardian equivalence may be valid this is barro s hypothesis that the effect on savings is the same whether government deficits are financed through taxation or debt our preliminary testing however does not support ricardian equivalence savings is the part of one s current income that is not spent on current consumption and it constitutes a large part of a nation s aggregate savings and investment and thus is a major determinant of the growth of future income and consumption households balance the tradeoffs between current and future consumption possibilities when making their individual consumption decisions understanding the determinants of households consumption behavior has been central to macroeconomics the three main theoretical approaches to this issue are keynesian consumption theory the life cycle permanent income hypothesis under rational expectations and the theory of the infinitely lived agent or altruistically linked consumers the theories differ in the extent to which they explain the observed consumer behavior and in their predictions regarding the effects of government policies on individual savings behavior for instance increased taxes higher nominal interest rates or an increase in the money

surprises in the consumption function the life cycle hypothesis has been the dominant theoretical basis for empirical work on the aggregate consumption function for about a quarter of a century under it real consumption is proportional to real life cycle wealth where the factor of proportionality depends on real interest rate expectations and the demographic structure of the population life cycle wealth is the sum of financial and human wealth however because the latter is the present real value of the stream of labour and transfer income expected over the life cycle it is not directly observable this fact has led to a great variety of proxying devices in empirical applications and in consequence much looseness in the interpretation of very different models as being all consistent with life cycle theory indeed one can argue that this has protected the hypothesis from being seriously tested and perhaps rejected an insight associated with friedman 1957 is that the view taken by consumers of life cycle income does not alter by much from period to period since there is greater persistence in life cycle income than in current income this also explains the greater persistence of consumption than of current income intuitively this would suggest that lagged consumption being related to last period s perception of life cycle income which in turn is not much different from this period s perception should have a major role in predicting current consumption this intuition was formalised by hall 1978 using ideas familiar from the study of stock market prices and the term structure of interest rates hall showed that if the real rate of interest is constant and given a number of other assumptions including no transitory element in consumption then the life cycle hypothesis implies that

the relationship between unemployment spells and reservation wages as a test of search theory the theory of stationary job search predicts that controlling for other factors that affect the probability of leaving unemployment duration and reservation wages are likely to be positively associated the paper tests this prediction for british cross sectional data from 1982 using an estimating equation implied by search theory simultaneity is crucial in the evaluation of this prediction with single equation and instrumental variable estimates differing markedly perhaps surprisingly given the extreme paucity of both job interviews and offers in the sample the main finding is that reservation wages play a significant role in the determination of duration

rent seeking with non identical sharing rules the primary object of this paper is to examine the role of differential sharing rules within a collective rent seeking setting on the possible non existence of nash equilibrium focusing on groups that distribute part of the rent equally among their members and the residual according to relative effort we show that in rent seeking societies applying the two polar sharing rules equilibrium never exists in the general case where groups apply different but not necessarily the polar sharing rules we study the relationship between group variability in distributing rents and the problem of non existence of equilibrium in the rent seeking game

rent dissipation when rent seekers are budget constrained in the original tullock 1975 1980 game an individual bidder s probability of winning with a bid b is proportional to br where the exponent reflects economies of scale in rent seeking different interpretations can be given to these probabilities first one may view r as a reflection of the political culture alternatively one may view r as a choice variable for a politician intuition suggests that a society with a high tolerance for the selling of political favors and politicians who are receptive to rent seeking would both induce greater rent seeking expenditures than other societies all else equal this paper shows that a lower value of r can actually lead to more rent dissipation than a higher value this paper also reinforces two points concerning rent seeking first the analysis confirms the robustness of under dissipation of rents even in the face of entry second it points out the importance of distinguishing between rent seeking expenditures and rent dissipation when bidders must borrow for example total expenditure may understate rent dissipation

reservation wages and their labor market effects for black and white male youth this paper presents an empirical analysis of self reported reservation wages for unemployed young black and white males the results show that young blacks seek wages which are comparable to those of young whites in absolute terms but which are higher relative to what is available on the demand side of the market these relatively higher reservation wages of young blacks contribute to their unemployment durations and somewhat to their subsequently received wages changes in reservation wages may thus help to explain the trends in wages and employment of young blacks in recent years

comparative statics in dynamic programming models with an application to job search abstract this paper presents a technique for qualitative comparative statics analysis in dynamic programming models let the value function be the fixed point of a contraction mapping which depends differentiably on some exogenous parameter ten the derivative of with respect to exists and is also the fixed point of a contraction mapping since this derivative is the fixed point of a contraction mapping its qualitative properties can be investigated using mathematical induction this comparative statics methodology is illustrated with an application to a model of job search

should unemployment insurance vary with the unemployment rate theory and evidence we study how the marginal welfare gain from increasing the unemployment insurance ui bene t level varies over the business cycle we do this by estimating how the moral hazard cost and the consumption smoothing bene t of ui vary with labor market conditions which we identify using variation in the interaction of ui bene t levels with the unemployment rate within u s states over time we nd that the moral hazard cost is procyclical greater when the unemployment rate is relatively low by contrast we do not nd evidence that the consumption smoothing bene t varies with the unemployment rate we use these empirical results to estimate the marginal welfare gain and we nd that it is modest on average but varies positively with the unemployment rate jel h5 j64 j65

are consumers ricardian evidence for the united states this paper derives three empirical implications of a well specified model of consumer behavior a model that nests both ricardian equivalence and an alternative non ricardian theory ricardian equivalence is then tested against this alternative the tests reveal that ricardian equivalence cannot be rejected

risk aversion in rent seeking and rent augmenting games the effects of risk aversion are examined for two types of expenditures in rent seeking contests a rent seeking expenditures which improve the probability that the rent is obtained and b rent augmenting expenditures which increase the size of the rent to be awarded risk aversion is shown to reduce expenditures of type b unambiguously while having an indeterminate effect on those of type a these two contrasting results are shown to derive from the very different effects rent seeking and rent augmenting expenditures have on the riskiness of a player s position

testing ricardian neutrality with an intertemporal stochastic model this paper s purpose is to develop and estimate a stochastic intertemporal model of consumption be havior and to use it for testing a version of the ricardian equivalen ce proposition with time series data two channels that may give rise to deviations from this proposition are specified finite horizons a nd liquidity constraints in addition the model incorporates explici tly the roles of taxes substitution between public and private consu mption and different degrees of consumer goods durability the evid ence based on data for israel in the first half of the 1980s suppor ts the ricardian neutrality specification yielding plausible estimat es for the behavioral parameters of the aggregate consumption functio n copyright 1988 by ohio state university press

rent seeking with non identical sharing rules an equilibrium rescued nitzan s 1991 analysis of differential sharing rules in a collective rent seeking setting is reconsidered two groups each with more than one member are presumed to use different linear combinations of two sharing rules one based on an equal division of the prize and the other on each member s relative effort we show that an equilibrium always exists for this type of game and then characterize the equilibrium our result is contrary to nitzan s claims that a in the general case an equilibrium often does not exist and b an equilibrium never exists when the groups use the polar extreme rules

returning to work regional determinants of re employment after major redundancies abstractusing matched employer employee data on roughly 429 000 workers made redundant from large plant closures or major downsizing in sweden between 1990 and 2005 this paper analyses the role of the regional industry mix specialization related and unrelated variety in the likelihood of returning to work the results show that a high presence of same or related industries speeds up the re employment process while high concentrations of unrelated activities do not the role of related activities is particularly evident in the short run and in regions with high unemployment consequently the prospect of successful diversification is enhanced in regions with related industries

an empirical investigation of returns to search using data on search and choice behavior from a local automobile market we estimate monetary returns to search in terms of lower prices resulting from additional time invested in price search for our analytical framework we adapt a model developed in the job search literature to the problem of consumer search this framework is especially useful for illuminating the relationship between time spent searching the outcome of search and demand and supply side variables our results indicate that for this particular sample of buyers marginal returns to search are broadly consistent with what one might expect if consumers balance costs and benefits of search and that potential gains from additional search for lower car prices do not appear to be large for most consumers our study highlights many of the methodological difficulties involved in estimating returns to search including isolating returns to different outcomes of search and sensitivity of results to model specification and sampling error we deal with these problems by trying to isolate time spent searching for price from other uses of search time by deriving our model used in estimation from a specific conceptual framework and by extensive specification testing

ambiguous political power and contest efforts when there is incomplete information on the source of power in a contest the contestants may divide their lobbying efforts between the potential centers of power only one of which determines the contests winning probabilities our analysis focuses on the effect of ambiguity regarding the source of power on the contestants aggregate effort in a symmetric simple lottery contest with two potential centers of power specifically we examine the effects of varying the informativeness of the contestants private signals i e the probability that a signal is correct and the degree of correlation between them our benchmark case is the standard tullock s model in which the source of power is known i e the contestants signals are perfectly informative we show that the level of aggregate effort in this case is reached also when the signals are perfectly uninformative however in any intermediate case the contestants aggregate effort is lower provided that the signals are not perfectly correlated in other words there is a u shape relationship between the informativeness of the signals and the aggregate effort in the contest the lowest level of effort is spent when the signals are independent and the probability that a signal is true is about 0 85 in this case efforts are reduced by about one fifth in comparison with the benchmark case from a rent dissipation of 50 to slightly over 40

effort levels in a cournot nash contest with asymmetric information abstract many contests exist where one player does not know his opponent s value of a fixed prize e g unobservable non market preferences for preservation this paper explores how changes in the nature of a one sided information asymmetry affect effort levels in a cournot nash contest the results indicate that the uninformed player s effort is an uncertain input such that his effort is inversely related to risk this reduces his average odds of success comparative static results are driven by the perceived odds of success and risk for the uninformed player and the actual odds of success for the informed player

unemployment dynamics and labour market tightness an empirical evaluation of matching function models the implications of matching function models for the relationship between labour market tightness and the transition probability into employment are summarized these implications are then tested using monthly data for three canadian provinces british columbia ontario and quebec testing methods use flexible regression techniques so as to reduce the effect of any extraneous restrictions the results show rough concordance between theoretical assumptions and empirical facts evidence of non linearity in the estimated relationships favours a search theoretic model of labour markets over one based on queues and some quantitative results offer guidance to those using calibrated search models in theoretical analysis

the lot of the unemployed a time use perspective this paper provides new evidence on time use and subjective well being of employed and unemployed individuals in 14 countries we devote particular attention to characterizing and modeling job search intensity measured by the amount of time devoted to searching for a new job job search intensity varies considerably across countries and is higher in countries that have higher wage dispersion we also examine the relationship between unemployment benefits and job search

comparative statics of contests and rent seeking games this paper develops the comparative statics properties of a contest encountered in patent races and rent seeking games the author shows that symmetric equilibrium expenditure and profit per player decrease with the number of competitors and the discount rate but increase with the value of the prize a fundamental lemma established in the paper shows that a stability condition usually imposed on the model is automatically satisfied the author identifies a class of likelihood or hazard rate functions for which aggregate expenditure increases with the number of competitors and total profits converge to zero copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

private saving interest rates and liquidity constraints in ldcs recent evidence there is still considerable controversy about the interest rate responsiveness of private saving in developing countries this paper provides recent evidence based on individual country estimations for a sample of 16 countries the model used here follows the uler equation approach and includes rational and forward looking permanent income consumers together with liquidity constrained consumers overall for this sample of countries the results obtained in this paper offer new evidence of a low responsiveness of saving to changes in the interest rate my results also support a strong role of liquidity constraints in these countries