why you can t find a taxi in the rain and other labor supply lessons from cab drivers i replicate and extend the seminal work of camerer et al labor supply of new york city cabdrivers one day at a time quarterly journal of economics 112 1997 407 441 who find that the wage elasticity of daily hours of work for new york city taxi drivers is negative and conclude that their labor supply behavior is consistent with reference dependence in contrast my analysis of the complete record of all trips taken in nyc taxi cabs from 2009 to 2013 shows that drivers tend to respond positively to unanticipated as well as anticipated increases in earnings opportunities additionally using a discrete choice stopping model the probability of a shift ending is strongly positively related to hours worked but at best weakly related to income earned i find substantial heterogeneity across drivers in their elasticities but the estimated elasticities are generally positive and rarely substantially negative i find that new drivers with smaller elasticities are more likely to exit the industry whereas drivers who remain quickly learn to be better optimizers have positive labor supply elasticities that grow with experience these results are consistent with the neoclassical optimizing model of labor supply and suggest that consideration of gain loss utility and income reference dependence is not an important factor in the daily labor supply decisions of taxi drivers jel codes d01 d03 j22

is tiger woods loss averse persistent bias in the face of experience competition and high stakes although experimental studies have documented systematic decision errors many leading scholars believe that experience competition and large stakes will reliably extinguish biases we test for the presence of a fundamental bias loss aversion in a high stakes context professional golfers performance on the pga tour golf provides a natural setting to test for loss aversion because golfers are rewarded for the total number of strokes they take during a tournament yet each individual hole has a salient reference point par we analyze over 2 5 million putts using precise laser measurements and find evidence that even the best golfers including tiger woods show evidence of loss aversion jel d03 d81 l83

a shred of credible evidence on the long run elasticity of labor supply all public policies regarding taxation and the redistribution of income rely on assumptions about the long run effect of wages rates on labour supply the variation in existing estimates calls for a simple natural experiment in which men can change their hours of work and in which wages have been exogenously and permanently changed we use a panel dataset of taxi drivers who choose their own hours and who experienced two exogenous permanent fare increases and estimate an elasticity of labour supply of 0 2 implying that income effects dominate substitution effects in the long run labour supply of males

reference dependent preferences and labor supply the case of new york city taxi drivers i develop a model of daily labor supply where preferences are dependent on a reference daily income level and i apply this model to data on the labor supply of new york city taxi drivers i find that there may be a reference level of income on a given day that affects labor supply however there is substantial day to day variation in a given driver s reference level and most shifts end before reaching the reference income level this pattern is inconsistent with an important role for reference dependent preferences

exchange rate pass through in developing and emerging markets a survey of conceptual methodological and policy issues and selected empirical findings abstractglobal integration has increased the international linkages of financial markets for emerging market countries a key channel for the international transmission of inflation and economic cycles is from exchange rate movements to domestic prices known as exchange rate pass through erpt this article reviews the conceptual methodological and policy issues connected with erpt in emerging market and developing countries and critically surveys selected empirical studies a key contribution is to categorise and compare the heterogeneous methodologies used to extract erpt measures in the empirical literature single equation models and systems methods are contrasted frequent misspecifications that produce unreliable erpt estimates are highlighted the discerning policy maker needs to ascertain by which methods erpt measures were calculated the controls and restrictions applied and the time frame and stability of the estimates

commodity price pass through and inflation regimes abstract does an increase in the energy and commodity prices drive consumer prices the energy and commodity markets affect the inflation process through international trade this poses policy implications for monetary policy to forecast inflation and also smooth the impact of international relative price movements we investigate the pass through of a broad range of agricultural and energy commodity prices to inflation across different inflation regimes our distinctive regime varying methodology captures asymmetric response of inflation to the world commodity prices we establish the first evidence of the pass through of commodity prices to inflation across different periods of low and high inflation regimes and also stable and unstable inflation regimes the results show that the duration of staying in an unstable inflation regime is smaller in the commodity markets both short run and long run pass through of agricultural food and energy commodities are higher compared to other commodities the energy commodity particularly drives the inflation process for advanced economies emerging economies and also the european union countries overall the dynamics of inflation and commodity prices change in the inflation environment pointing to implications for conducting optimal monetary policy

transactions costs and the term structure of interest rates in the otc bond market in japan this paper analyzes how the recent expansion of secondary bond trading reduced the transactions cost and discusses the imp lication of this reduced transactions cost for the term structure of interest rates in the over the counter otc bond market in japan it shows that the increased trading volume and competition reduced the bid ask price spreads of bonds and as a result the term structure o f interest rates in the otc market converged to the term structure in the euroyen market copyright 1987 by ohio state university press

exchange rate pass through to consumer prices in south africa evidence from micro data abstracta sizeable literature examines exchange rate pass through to disaggregated import prices but few micro studies focus on consumer prices this article explores exchange rate pass through to consumer prices in south africa for 2002 2007 using a unique data set of highly disaggregated data at the product and outlet level the empirical approach allows pass through to be calculated over various horizons for different goods and services the heterogeneity of pass through for food sub components is considerable switches between import and export parity pricing of maize are found significant for five out of ten food sub components using actual weights from the cpi basket overall pass through to the almost 63 per cent of the cpi covered is about 30 per cent after two years and higher for food

public capital and long run costs in u k manufacturing a model of u k manufacturing production that incorporates the inputs of public as well as private capital is specified and estimated the model is then used to measure the contribution of public capital to productivity growth over the period 1966 to 1990 it is found that before 1980 the public and private capital contributions were of comparable magnitude after 1980 the contribution of public capital declined significantly copyright 1993 by royal economic society

refining for export and the convergence of petroleum product prices abstract the petroleum refining industry has changed over the past decades from one in which capacity primarily served local and regional markets to one in which trade in refined petroleum products has become more widespread we investigate the hypothesis of increasing globalization by examining the convergence of prices for refined products across different markets using data on refined products from market centers in the us and europe we test for convergence of prices using standard time series techniques the data plainly show that markets for refined petroleum products have become more interrelated as europe exported its gasoline surplus and global demand for petroleum products approached refining capacity econometric evidence supports the hypothesis that the us and european markets for oil and refined products are integrated we find evidence that a structural break during the financial crisis of 2008 changed the long run equilibrium price relationships and the short run price dynamics refined product markets are likely to experience continued globalization given trends in the united states and europe and because of key export oriented refining capacity investments made to take advantage of access to specific crude oil sources

exchange rate pass through exchange rate volatility and exchange rate disconnect abstract this paper explores the hypothesis that high volatility of real and nominal exchange rates may be due to the fact that local currency pricing eliminates the pass through from changes in exchange rates to consumer prices exchange rates may be highly volatile because in a sense they have little effect on macroeconomic variables the paper shows the ingredients necessary to construct such an explanation for exchange rate volatility in addition to the presence of local currency pricing we need a incomplete international financial markets b a structure of international pricing and product distribution such that wealth effects of exchange rate changes are minimized and c stochastic deviations from uncovered interest rate parity together it is shown that these elements can produce exchange rate volatility that is much higher than shocks to economic fundamentals and disconnected from the rest of the economy in the sense that the volatility of all other macroeconomic aggregates are of the same order as that of fundamentals

wage elasticities in working and volunteering the role of reference points in a laboratory study we experimentally test how effort responds to wages randomly assigned to accrue to individuals or to a charity in the presence of expectations based reference points or targets when individuals earn money for themselves higher wages lead to higher effort with relatively muted targeting behavior when individuals earn money for a charity higher wages instead lead to lower effort with substantial targeting behavior a reference dependent theoretical framework suggests an explanation for this differential impact when individuals place less value on earnings such as when accruing earnings for a charity instead of themselves more targeting behavior and a more sluggish response to incentives should result results from an additional experiment add support to this explanation when individuals select into earning money for a charity and thus likely place a higher value on those earnings targeting behavior is muted and no longer generates a negative effort response to higher wages data and the online appe

term premiums in bond returns abstract this paper examines expected returns on u s treasury bills and on u s government bond portfolios expected bill returns are estimated from forward rates and from sample average returns both estimation methods indicate that expected returns on bills tend to peak at eight or nine months and never increase monotonically out to twelve months reliable inferences are limited to treasury bills and thus to maturities up to a year the variability of longer term bond returns preempts precise conclusions about their expected returns

exchange rate pass through in south africa panel evidence from individual goods and services abstract this study estimates pass through for south africa using samples of final goods and services and homogenous imports estimated pass through to consumer goods prices is low roughly 16 per cent in the two years following an exchange rate change surprisingly it is somewhat higher for services deviations from long run ppp appear to disappear relatively quickly with a half life of about 16 months for imports pass through estimates are much higher averaging around 60 per cent but with wide source country variation finally there is virtually no support for a simple linear trend change in either pass through or in reversion to ppp during the sample

estimating shocks and impulse response functions this paper examines the issue of how to identify the shocks in a cointegrated var when the following assumptions are made the variables can be classified as endogenous or exogenous there are as many cointegrating relations as endogenous variables the cointegrating vectors are identified and they contain at least one exogenous variable it is shown that with these assumptions it is possible to identify the shocks without the use of further restrictions on the covariance matrix of the disturbances or the short run dynamics if the long run parameters are known the whole model can be estimated by ols the analysis is extended to allow the var to have both stationary and non stationary variables an illustration of the method is provided using the traditional benchmark var model involving us data on output prices interest rates and money a liquidity effect is not found using this var methodology

a new approach to decomposition of economic time series into permanent and transitory components with particular attention to measurement of the business cycle abstract this paper introduces a general procedure for decomposition of non stationary time series into a permanent and transitory component allowing both components to be stochastic the permanent component is shown to be a random walk with drift and the transitory or cyclical component is a stationary process with mean zero the decomposition methodology which depends only on past data and therefore is computable in real time is applied to the problem of measuring and dating business cycles in the portwar u s economy we find that measured expansions and contractions are of roughly equivalent duration and that our dating of cyclical episodes tends to lead the traditional nber dating and to a lesser extent the growth cycle chronology of zarnowitz and boschan 1977

the structuralist theory of imported inflation an application to south africa this study emphasizes the importance of identifying the origin of inflation in the present context of inflation targeting by many emerging market and transition economies the analysis shows based on south african data how structural supply and demand inflation can be distinguished the results indicate that south africa s inflation experience between 1973q1 and 1998q4 is characterized by two monetary regimes during the first regime 1973q1 1984q4 the long run cause of inflation is demand pull the second regime 1987q1 1998q4 represents major changes to structural imported and cost push inflation the two year period 1985 1986 signifies structural change from the first to the second regime moreover the results in the second regime remain robust when the inflation model is subjected to new out of sample data until 2001q2 evidence of structural imported inflation in the second regime suggests that inflation should not entirely be squeezed out of the system nor should it necessarily be k

low inflation pass through and the pricing power of firms abstract recently there has been a significant decline in the degree to which firms pass through changes in costs to prices a decline that is frequently characterized as a reduction in the pricing power of firms the decline appears to be associated with the decline in inflation in many countries the decline has important implications for monetary policy because it affects both forecasts of inflation and the effects of changes in monetary policy on inflation some have argued that the decline in pricing power helped to keep inflation low in the face of apparently strong demand pressures in the united states in the late 1990s this paper puts forth the view that the decline in pass through or pricing power is due to the low inflation environment that has recently been achieved in many countries first a microeconomic model of price setting is used to show that lower pass through is caused by lower perceived persistence of cost changes evidence is then presented showing that inflation is positively correlated with persistence of inflation suggesting that the low inflation itself has caused the low pass through an economy wide model consistent with the micromodel is then presented to illustrate how such changes in pricing power affect output and inflation dynamics in favorable ways but can disappear quickly if monetary policy and expectations change

an asymmetric error correction model of uk consumer spending this paper augments the granger and lee journal of applied econometrics 4 1989 non symmetric error equilibrium correction model to assess the possibility that in the aggregate consumers respond differently to different types of disequilibrium error this idea is illustrated using an engle granger implementation of the davidson hendry srba and yeo dhsy economic journal 80 1978 model the disequilibrium error is endogenously determined by the long run empirical model and a binary dummy variable captures two alternative states above and below equilibrium spending interaction of the dummy variable with key variables in a short run dynamic model of uk consumer spending augments the dynamics of the dhsy model income elasticities inflation elasticities and speeds of adjustment are all seen to change significantly depending on whether the disequilibrium error is positive or negative and is suggestive of asymmetric behaviour on the part of consumers moreover the asymmetrically augmented mode

liquidity maturity and the yields on u s treasury securities the efrect8 of aaaet liquidity on expected retuma for ts with infinite maturities toc ka are eumined for bonda treuury notes and bills with matched maturities of lellll than 6 months the yield to maturity ill higher on notes which have lower liquidity the yield di1ferential between notes and billa is a decreuing and convex function of the time to maturity the results provide a robult confirmation of the liquidity effect in auet pricing this paper studies empirically the effects of the liquidity of capital assets on their prices amihud and mendelson 1986 1989 proposed that liquidity affects asset prices because investors require a compensation for bearing transaction costs transaction costs paid whenever the asset is traded form a sequence of cash outflows the discounted value of this cost stream proxies for the value 1088 due to illiquidity which lowers the asset s value for any given cash flow that the asset generates 1 as a result the return on assets should be an increasing function of their illiquidity other things equal for stocks the illiquidity effect is expected to be strong because their transaction cost sequence is infinite amihud and mendelson 1986 1989 demonstrated that common stocks with lower liquidity yielded significantly higher average returns after controlling for risk and for other factors these results on the importance of liquidity in the pricing of stocks raise additional questions i does the liquidity effect depend on the specific controls used by amihud and mendelson 1986 1989 1 ii does illiquidity have a similarly strong effect on the pricing of bonds whose maturities are finite and iii if liquidity affects bond yields how is this effect related to the bond s time to maturity

have north south growth linkages changed abstract this paper provides econometric evidence suggesting that the traditional tradebased business cycle linkages between the north and the south have changed many countries in the south particularly in asia appear to have become more resilient to cyclical movements in the north and play a more significant role in sustaining global activity a number of factors may have contributed to these changes improved domestic policies and more open trade and exchange regimes closer financial linkages with the north and a substantial increase in capital flows a marked rise in intraregional trade and greater diversification of the exports of the south

japan s financial deregulation and linkage of the gensaki and euroyen deposit markets summary this paper examines whether japan s financial deregulation weakened the linkage between the euroyen and gensaki markets it defines and analyses the linkage of the two markets in terms of the persistence and predictability of yield spreads as well as cross market causality by using johansen tests and an error correction model this paper shows first cross market causality before and after deregulation and second one common trend in interest rates substantial gensaki euroyen yield spreads and a slower response of the one month gensaki euroyen yield spread to a shock after deregulation

measuring market power for some industrial sectors in austria this paper applies an oligopoly model which parameterizes the degree of market power for two industrial sectors glass industry non electrical machinery in austria in contrast all other paper in the new empirical indsutrial organization literature we account for the non stationarity characteristics of the data series a dynamic specification procedure which assumes structural long run equilibrium relationships is therefore applied since a simultaneous system with non linear cross equation restrictions is implied by the economic model a full information maximum likelihood method is used the data reveal a higher degree of market power for the glass industry than for non electrical machinery this hierarchy is in line with the position of these industries for concentration rates and herfindahl indices

staying ahead and getting even risk attitudes of experienced poker players abstract frequent online poker players with extensive experience calculating probabilities and expected values might be expected to behave as expected utility maximizers in that small shocks to their wealth would not affect risk preferences rabin 2000 by contrast reference dependent loss aversion as in prospect theory koszegi and rabin 2006 kahneman and tversky 1979 predicts that risk aversion decreases as wealth moves away from the reference point in either direction in terms of continuing to play as well as a more aggressive playing style we find strong evidence for the break even effect the increased pursuit of risk as a player is losing within a session players behavior also appears consistent with existing evidence on reference dependent labor supply in their tendency to reduce effort and risk taking in response to being ahead our findings provide evidence for reference dependent behavior in a flexible high skilled setting under conditions of well understood monetary risk

impulse response analysis of cointegrated systems abstract impulse response or dynamic multiplier analysis of vector autoregressive systems with cointegrated variables is considered the asymptotic distribution of the responses estimated with johansen s 1988 maximum likelihood procedure is derived the results are illustrated with an analysis of a west german money demand system the investigation shows that a direct interpretation of the cointegration relations may be difficult or misleading thereby the virtue of impulse response analysis for applied work is illustrated

new york city cab drivers labor supply revisited reference dependent preferences with rational expectations targets for hours and income this paper reconsiders whether cabdrivers labor supply decisions reflect reference dependent preferences following botond koszegi and matthew rabin 2006 we construct a model with targets for hours as well as income both determined by rational expectations estimating using henry s farber s 2005 2008 data we show that the reference dependent model can reconcile his 2005 finding that drivers stopping probabilities are significantly related to hours but not income with the negative wage elasticity of hours found by colin camerer et al 1997 and farber 2005 2008 the model yields sensible estimates that avoid farber s 2008 criticism that drivers income targets are too unstable to allow a useful reference dependent model of labor supply

exchange rate pass through to import prices and monetary policy in south africa abstractunderstanding how import prices adjust to exchange rates helps anticipate inflation effects and monetary policy responses this article examines exchange rate pass through to the monthly import price index in south africa during 1980 2009 short horizon pass through estimates are calculated using both single equation equilibrium correction models and systems johansen models controlling for both domestic and foreign costs average pass through is incomplete at about 50 per cent within a year and 30 per cent in six months and in the long run from the johansen analysis including feedback effects is about 55 per cent there is evidence of slower pass through under inflation targeting pass through is found to decline with recent exchange rate volatility and there is evidence for asymmetry with greater pass through occurring for small appreciations

are long term wage elasticities of labor supply more negative than short term ones standard models imply that the wage elasticity of labor supply is more negative the longer a wage change lasts i observe decreasing daily hours during short term wage increases but not during a long term one daily income goals adjusted in the long term

declining discount rates and the fisher effect inflated past discounted future uncertain and persistent real interest rates underpin one argument for using a declining term structure of social discount rates in the expected net present value enpv framework despite being controversial this approach has influenced both the inter agency working group on cost benefit analysis and the uk government s guidelines on discounting we first clarify the theoretical basis of the enpv approach then rather than following previous work which used a single series of u s treasury bond returns we treat nominal interest rates and inflation as co integrated series and estimate the empirical term structure of discount rates via the fisher effect this nests previous empirical models and is more flexible it also addresses an irregularity in previous work which used data on nominal interest rates until 1950 and real interest rates thereafter as we show the real and nominal data have very different time series properties this paper therefore provides a robustness check on previous discounting advice and updated methodological guidance at a time when governments around the world are reviewing their guidelines on social discounting the policy implications are discussed in the context of the social cost of carbon nuclear decommissioning and public health

intraday volatility in the stock index and stock index futures markets we examine the intraday relationship between returns and returns volatility in the stock index and stock index futures markets our results indicate a strong intermarket dependence in the volatility of the cash and futures returns price innovations that originate in either the stock or futures markets can predict the future volatility in the other market we show that this relationship persists even during periods in which the dependence in the returns themselves appears to weaken the findings are robust to controlling for potential market frictions such as asynchronous trading in the stock index our results have implications for understanding the pattern of information flows between the two markets article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

drivers of disruption estimating the uber effect abstract a frequent belief is that the rise of so called gig work has led to the displacement of workers in a wide range of traditional jobs this paper examines the impacts of the flagship of the gig economy uber on workers employed in conventional taxi services our analysis exploits newly collected data on the staggered rollout of uber across metropolitan areas in the united states and a difference in differences design to document that incumbent taxi drivers experienced a relative earnings decline of about 10 percent subsequent to uber s entry into a new market while there are no significant effects on their labor supply additional evidence from a battery of placebo tests event study estimates and specifications using google trends data to capture differences in treatment intensity underlines these findings a triple differences design that compares changes among taxi drivers relative to bus tractor and truck drivers that were unaffected by the arrival of uber provides further supporting evidence that the diffusion of uber has reduced the earnings potential of incumbent drivers in conventional taxi services in the united states

brics how important is the exchange rate pass through this paper analyses the exchange rate pass through erpt into domestic consumer prices in brics brazil russia india china and south africa countries from mid 1990s onwards by using three different econometric approaches i e the single equation approach the var approach and the time varying parameter approach it is also studied the role of macroeconomic determinants in erpt our results suggest that a erpt is higher for the emerging markets with mostly floating exchange rates brazil russia and south africa than for the other brics countries b exchange rate explains on average around the 40 of the price variance for brazil russia and south africa and c inflation volatility exchange rate volatility and openness seem to be the key macroeconomic determinants in brics countries

exchange rate pass through when market share matters the authors investigate the pass through from exchange rates to import prices when firms future demands depend on their current market shares they show that profit maximizing foreign firms may either raise or lower their dollar export prices when the dollar appreciates temporarily i e the pass through may be perverse and that current import prices may be more sensitive to expected future exchange rates than to current exchange rates they present evidence that suggests the behavior of expected future exchange rates may provide a clue to the puzzling recent behavior of u s import prices copyright 1989 by american economic association

is tomorrow another day the labor supply of new york city cabdrivers the labor supply of taxi drivers is consistent with the existence of intertemporal substitution my analysis of the stopping behavior of new york city cabdrivers shows that daily income effects are small and that the decision to stop work at a particular point on a given day is primarily related to cumulative daily hours to that point this is in contrast to the analysis of camerer et al who find that the daily wage elasticity of labor supply of new york city cabdrivers is substantially negative implying large daily income effects this difference in findings is due to important differences in empirical methods and to problems with the conception and measurement of the daily wage rate used by camerer et al

meteor showers or heat waves heteroskedastic intra daily volatility in the foreign exchange market this paper seeks to explain the causes of volatility clustering in exchange rates careful examination of intra daily exchange rates provides a test of two hypotheses heat waves and meteor showers the heat wave hypothesis is that the volatility has only country specific autocorrelation alternatively the meteor shower is a phenomenon of intra daily volatility spillovers from one market to the next using the garch model to specify the heteroskedasticity across intra daily market segments we find that the empirical evidence is generally against the null hypothesis of the heat wave using a volatility type of vector autoregression we examine the impact of news in one market on the time path of per hour volatility in other markets

ricardian equivalence and the public and private saving nexus in india abstractthis study tests the ricardian equivalence theorem ret and examines the responsiveness of private saving to public saving in india most estimators do not provide support for the empirical validity of ret and long run cointegration between public and private saving the increases in household saving hhs seem to have been engendered by the provision of saving incentives institution of saving schemes self driven motivation to save and the precautionary accumulations induced by uncovered uncertainties in incomes rather than by ricardian behaviour of households the self imposed aversion to debt and debt bequest borrowing and liquidity constraints and the intertemporal smoothing of consumption have been the added catalysts that contributed to the increases in hhs the households with binding borrowing constraints inadequate or no insurance and uncovered uncertainties in incomes seem to have been saving more to pay for higher inflation tax the fiscal consolidation and generation of public s

income targeting and farm labor supply there is considerable anecdotal evidence that farm workers who are paid by piece rate tend to income target or work only until they achieve a certain amount of daily income and then stop work we estimate reduced form and structural models derived from the reference dependent preference model of koszegi and rabin 2006 to test the income targeting hypothesis using data from the national agricultural workers survey naws we find evidence that supports the income targeting hypothesis in both the reduced form and structural econometric models our findings suggest that even higher piece rates may not help the widely reported shortage of agricultural labor on the intensive margin as labor supply curves can be backward bending

services sector and economic growth in india this study examines the long run equilibrium and short run dynamic relationship between services sector and gross domestic product gdp and between services and nonservices sectors in india the model is estimated using the optimal single equation and the maximum likelihood system estimators all the estimators consistently suggest the cointegrating relationship between services sector and gdp as well as between services and nonservices sectors the estimates of long run elasticity parameters are statistically significant and dimensionally consistent across the estimators the conventional cumulative sum cusum and the new cusum and moving sum mosum tests suggest the stability of the equilibrium residuals and reinforce the cointegrating relationship between the model series the error correction model provides some support for unidirectional granger causality from services sector to gdp the impulse response and variance decomposition analyses instead suggest the bidirectional causality between servic

are japanese interest rates too stable abstract we examine the effects of japanese financial market liberalization using daily data on eurocurrency and two japanese onshore interest rates the gensaki and cd rates our evidence suggests that japanese money markets are now fully integrated with world markets but that the degree of integration depends heavily on the japanese asset examined in particular we find that the gensaki market is not completely integrated with the euroyen market the cd rate however is cointegrated with the euroyen rate since june 1984 and the euroyen cd rate variance ratio is similar to that of dollar denominated assets after november 1988 jel e43

labor supply of new york city cabdrivers one day at a time life cycle models of labor supply predict a positive relationship between hours supplied and transitory changes in wages because such changes have virtually no effect on life cycle wealth previous attempts to test this hypothesis empirically with time series data have not been supportive estimated elasticities are typically negative or nonsignificant such analyses however are vulnerable to measurement error and other estimation problems we use data on daily observations of wages and hours for new york city cab drivers to estimate the supply response to transitory fluctuations in wages cab drivers decide daily how many hours to supply and face wages that are positively correlated within days but largely uncorrelated between days using these data our central finding is that wage elasticities are persistently negative from 5 to 1 in three different samples even after correcting for measurement error using instrumental variables these negative wage elasticities challenge the notion that cab drivers trade off labor and leisure at different points in time and question the empirical adequacy of life cycle formulations of labor supply

frequency of price adjustment and pass through we empirically document using u s import prices that on average goods with a high frequency of price adjustment have a long run pass through that is at least twice as high as that of low frequency adjusters we show theoretically that this relationship should follow because variable mark ups that reduce long run pass through also reduces the curvature of the proflt function when expressed as a function of the cost shocks making the flrm less willing to adjust its price lastly we quantitatively evaluate a dynamic menu cost model and show that the variable mark up channel can generate signiflcant variation in frequency equivalent to 37 of the observed variation in the data on the other hand the standard workhorse model with constant elasticity of demand and calvo or state dependent pricing has di culty matching the facts

estimating long run economic equilibria with stochastic trends an asymptotic theory is provided to analyze a menu of currently existing estimators of cointegrated systems we study in detail the single equation ecm seecm approach of hendry our theoretical results lead to prescriptions for empirical work such as specifying seecm s nonlinearly and including lagged equilibrium relationships rather than lagged differences of the dependent variable as covariates simulations support these prescriptions and point to problems of overfitting not encountered in the semiparametric approach of phillips and hansen 1990

reference points and effort provision a key open question for theories of reference dependent preferences is what determines the reference point one candidate is expectations what people expect could affect how they feel about what actually occurs in a real effort experiment we manipulate the rational expectations of subjects and check whether this manipulation influences their effort provision we find that effort provision is significantly different between treatments in the way predicted by models of expectation based reference dependent preferences if expectations are high subjects work longer and earn more money than if expectations are low

globalization macroeconomic performance and monetary policy the paper argues that many of the exaggerated claims that globalization has been an important factor in lowering inflation in recent years just do not hold up globalization does however have the potential to be stabilizing for individual economies and has been a key factor in promoting economic growth the paper then examines four questions about the impact of globalization on the monetary transmission mechanism and arrives at the following answers i has globalization led to a decline in the sensitivity of inflation to domestic output gaps and thus to domestic monetary policy no ii are foreign output gaps playing a more prominent role in the domestic inflation process so that domestic monetary policy has more difficulty stabilizing inflation no iii can domestic monetary policy still control domestic interest rates and so stabilize both inflation and output yes iv are there other ways besides possible influences on inflation and interest rates in which globalization may have affected the transmission mechanism of monetary policy yes