wages and work conditions as determinants for physicians work decisions it is not uncommon that publicly employed physicians also have income from work outside the hospital sometimes termed moonlighting there is little empirical evidence of such activity in this article we investigate which factors that may influence physicians choice of work between the public hospital sector and elsewhere an exceptionally high wage increase in 1996 for one group of hospital physicians physician assistants serves as a natural experiment and we analyse whether wages in general and this reform in particular have affected physicians external earnings for physician assistants we find that higher wages at public hospitals affect negatively both the decisions to earn income externally and level of income once active for chief physicians on the other hand there was no such response to the wage increase several hospital specific factors representing job specific work characteristics also matter for physicians decisions to earn income externally

temptation and social security in a dynastic framework abstract we investigate welfare and aggregate implications of a pay as you go payg social security system in a dynastic framework in which individuals have self control problems the presence of self control problems induces individuals to save less because of their urge for temptation towards current consumption individuals efforts to balance between the short term urge for temptation and the long term commitment for consumption smoothing result in self control costs in this environment payg social security works as a self control cost reducing device in contrast the presence of altruism induces individuals to save more this in turn mitigates the adverse effects of self control problems and payg social security on savings but magnifies the self control costs we find that in our environment the adverse welfare effects of a payg system are further mitigated relative to the environments that incorporate altruism and self control issues separately however the level of mitigation is quite modest

taxes and labor supply of high income physicians abstract we use the 1983 1985 physicians practice costs and income survey supplemented with federal and state tax rates to estimate the effect of variation in marginal tax rates on work hours for high income physicians we find that self employed physicians are much more sensitive to the marginal tax rate than would be suggested by previous labor supply studies while those who are employees have no discernible sensitivity to marginal tax rates

the income effect and supplier induced demand evidence from primary physician services in norway a much debated issue within the health economic literature is whether physicians can induce demand for their services the relationship between physicians nonpractice income and supply of primary physician services in norway is examined it is argued that if inducement exists physicians with a low nonpractice income who work in municipalities where competition for patients is high compensate for lack of patients by inducing demand this model is adapted to the institutional setting of the norwegian primary physician services where there is a fixed fee schedule the analyses were performed on a large set of data encompassing all primary care physicians in norway who are remunerated per item of treatment data on output in practice were merged with information about nonpractice income from the tax forms of the physician and her his spouse in municipalities with high physician density nonpractice income had no effect on the number of consultations per physician or on the number of treatment items

the hyperbolic consumption model calibration simulation and empirical evaluation ur preferences for the long run tend to conflict with our short run behavior when planning for the long run we intend to meet our deadlines exercise regularly and eat healthfully but in the short run we have little interest in revising manuscripts jogging on the stairmaster and skipping the chocolate souffleala mode delay of gratification is a nice long term goal but instant gratification is disconcertingly tempting this gap between long run intentions and short run actions is apparent across a wide range of behaviors including saving choices a 1997 survey found that 76 percent of respondents believe they should be saving more for retirement looking only at respondents who believed they were at an age where you should be seriously saving already the survey found that 55 percent reported being behind in their savings and only 6 percent reported being ahead farkas and johnson 1997 the report on the survey concluded t he gaps between people s atti tudes intentions and behavior are troubling and threaten increased insecurity and dissatisfaction for people when they retire americans are simply not doing what logic and their own reasoning suggests they should be doing a 1993 luntz webber merrill lynch survey found similar answers when baby boomers were asked what percentage of your annual household income do you think you should save for retirement and what percentage of your annual

quasi stationary cardinal utility and present bias abstract this note gives an axiomatic foundation for utility exhibiting quasi geometric discounting in addition it introduces a wider class of utility functions satisfying weakened stationarity called quasi stationary utility both are established as von neumann morgenstern utility indices in a model of risk preference

labor supply and fertility of married women an analysis with grouped and individual data from the 1970 u s census 1970 us census data were used to examine how much studies with grouped data can be reconciled with models that apply to individual families in contrast to its 1960 predecessor the 1970 census public use sample pbus identifies households in standard metropolitan statistical areas smsa and offers the opportunity to estimate a model of labor supply and fertility using both individual and grouped data from a common sample 3 data sets from the 1970 census are available the 5 sample smsa averages published by the us bureau of the census which are similar to the data used in previous studies grouped by smsa observations from the 1 100 pbus which are superior to the published averages in several respects and which are detailed here and individual observations from the 1 1000 pbus if these 1970 estimates are found to be stable with regard to aggregation and similar to those found with non census data confidence in the grouped data results from the 3 previous censuses would be strengthened estimates derived from the individual pbus observations generally agreed with findings from alternative and arguably superior microdata sets the labor force participation and hours of white wives were sensitive to wage and income variations both wages and hours of work among workers appeared to be subject to selection bias economic factors had little impact on the hours of black workers but wage offers influenced the participation decision wage selectivity was particularly strong among black women the samples for both black and white women indicated that the wifes wage played a major role in determining the number of children ever born the published smsa data provided labor supply estimates similar to those found with individual observations wage elasticities for both black and white women and the white income elasticities were similar in sign and magnitude to the total marginal effects of these variables upon hours of work among individuals wages effects upon fertility persisted only among blacks grouping of the pbus data by smsa led to very different labor supply results labor force participation rates showed little association with mean hourly wages and income effects were weak fertility responses resembled those found with the published data realizing theoretical expectations only in the case of the black sample further analysis showed that a probable source of the dissimilar labor supply estimates was the positive bias induced by the unavoidable inclusion of unmarried women in the sample used to calculate mean weekly wages from the published data in sum it has been shown that estimates such as those made are highly sensitive to the level of aggregation and that grouped data results may be seriously misleading

the impact of medical malpractice insurance cost on physician behaviour the role of income and tort signal effects the paper examines the impact of medical malpractice insurance cost on physician behaviour changes in malpractice insurance premiums can potentially influence physician behaviour directly through income effects from changes in medical practice earnings and indirectly through tort signal effects that indicate exposure to malpractice risk a structural model of the physician firm is estimated to assess the significance magnitude and relative importance of income and tort signal effects of premium changes on physician time allocation and service supply using data on solo practice physicians evidence is found of both income and tort signal effects for primary care physicians and surgeons results also indicate that income effects have a relatively larger impact on measures of physician behaviour such as services provided and fees while tort signal effects which reflect defensive measures have a much smaller impact

dynamic legislative policy making abstract we prove existence of stationary markov perfect equilibria in an infinite horizon model of legislative policy making in which the policy outcome in one period determines the status quo for the next we allow for a multidimensional policy space and arbitrary smooth stage utilities and we assume preferences and the status quo are subject to arbitrarily small shocks we prove that equilibrium continuation values are differentiable and that proposal strategies are continuous almost everywhere we establish upper hemicontinuity of the equilibrium correspondence and we provide weak conditions under which each equilibrium of our model determines an aperiodic transition probability over policies we establish a convergence theorem giving conditions under which the invariant distributions generated by stationary equilibria must be close to the core in a canonical spatial model finally we extend the analysis to sequential move stochastic games and to a version of the model in which the proposer and voting rule are determined by play of a finite perfect information game

public private or both analyzing factors influencing the labour supply of medical specialists this paper investigates the factors influencing the allocation of time between public and private sectors by medical specialists a discrete choice structural labour supply model is estimated where specialists choose from a set of job packages that are characterized by the number of working hours in the public and private sectors the results show that medical specialists respond to changes in earnings by reallocating working hours to the sector with relatively increased earnings while leaving total working hours unchanged the magnitudes of the own sector and cross sector hours elasticities fall in the range of 0 16 0 51 the labour supply response varies by gender doctor s age and medical specialty family circumstances such as the presence of young dependent children reduce the hours worked by female specialists but not male specialists

on the faustian dynamics of policy and political power this paper examines the faustian dynamics of policy and power we posit a general class of dy namic games in which current policies affect the future distribution of political power resulting in the following faustian trade off if the current ruler chooses his preferred policy he then sacrifices future political power yet if he wants to preserve his future power he must sacrifice his present policy objec tives the trade off comes from the fact that the current political ruler pivotal voter cannot uncouple the direct effect of his policy from its indirect effect on future power a policy endogenous pe equilibrium describes this endogenous transfer of power and the resulting evolution of policy and political power over time we show that the faustian trade off in a pe equilibrium is decomposed into two basic rationales the political preservation effect induces more tempered policy choices than if one s policy choice did not affect one s political fortunes however the reformation effect induces more aggressive policies in order to exploit the productivity gains from policies chosen by even more aggressive successors we distinguish between political systems that give rise to monotone faustian dynamics political power that progressively evolves towards more fiscally liberal types of leaders and cyclical faustian dynamics political power that oscillates between liberal and conservative types of leaders in each case we show that the faustian trade off moderates the choices of each type of leader

consumption and risk with hyperbolic discounting abstract hyperbolic discounting is not observationally equivalent to exponential discounting it is always possible to calibrate an exponential model so that it predicts the same level of consumption as a hyperbolic model however the two models have radically different comparative statics

time consistent public expenditures in this paper we study the optimal choice of public expenditures when there is no way of committing to future policy and reputational mechanisms are not operative this amounts to conflning our attention to markov equilibria the environment is a neoclassical growth model where consumers derive utility from a public good this environment gives rise to a dynamic game between successive governments and the private sector and this game is made interesting by the presence of a state variable the capital stock we characterize equilibria in terms of an intertemporal flrst order condition a generalized euler equation gee for the government and we use this condition both to gain insight into the nature of the equilibrium and as a basis for computation the gee reveals how the government optimally trades ofi tax wedges over time it also allows us to discuss in what sense a current government may be strategically in uencing future governments in their taxation decisions for a calibrated economy we flnd that when the tax base available to the government is capital income an inelastic source of funds at any moment in time the government still refrains from taxing at high rates in order to smooth distortions over time as a result the economy is far from the mix of public and private goods that would be optimal in a static context in return the savings distortion is not very severe and the capital stock is quite high

economic growth with intergenerational altruism in this paper we study the properties of equilibria in an aggregative growth model with intergenerational altruism in this model each generation is active for a single period at the beginning of this period it receives an endowment of a single homogeneous good which is the output from a bequest investment made by the previous generation it divides the endowment between consumption and investment the return from this investment constitutes the endowment of the next generation each generation derives utility from its own consumption and that of its immediate successor however since altruism is limited in the sense that no generation cares about later successors the interests of distinct agents come into conflict models of this type have been used to analyze a number of issues concerning intergenerational altruism one line of research pursued by arrow 1973 and dasgupta 1974a elucidates the implications of rawls principle of just savings others beginning with phelps and pollak 1968 have addressed the question of how an altruistic growth economy might actually evolve over time topics of subsequent investigation have included the efficiency and optimality of equilibrium programs and the implications of intergenerational altruism for the distribution of wealth unfortunately the positive features of equilibrium programs have received little attention from previous authors aside from a few comments by kohlberg 1976 virtually nothing is known about the asymptotic behaviour of capital stocks in these models in particular will the long run capital stock which arises from intergenerational conflict be higher or lower than the turnpike associated with the solution to the optimal planning problem on a priori grounds the answer is not clear agents who take only a limited interest in the future will tend to bequeath less than those who are far sighted however since each generation views its children s bequest as pure waste it must bequeath a larger sum to obtain the same consumption value in this paper we obtain steady state results for equilibrium capital stocks completely analogous to the well known optimal planning results by comparing steady states we

physician labor supply do income effects matter this paper estimates a model of physician labor supply focusing on the impacts of wage and non wage income we find evidence of significant income effects for male physicians the income effect of a wage change on labor supply is negative with an elasticity of 0 26 the pure substitution effect of a wage change increases labor supply a 1 increase in wages leads to a 0 49 increase in labor supply controlling for income effects the results also suggest that the labor supply decisions of females are more responsive to variations in their earnings than are those of males

social security and unsecured debt abstract in this paper we use a calibrated life cycle model to explore quantitatively ways of reducing the burden of social security in a world populated by both optimizing and rule of thumb consumers social security contributions force young households with upward sloping income profiles to save a sizeable portion of their income for retirement when their optimal consumption plan would likely have them either saving little or borrowing we first use household data to document that young households have accumulated social security contributions that are large relative to debt holdings then using a calibrated life cycle model we show that both allowing households to use social security wealth to pay off their debt and exempting young households from social security contributions but in both cases requiring higher contributions later mitigate many of the inefficiencies of social security from the perspective of life cycle financial planning specifically in our preferred experiment which exempts households whose heads are under 30 from making social security contributions we find that certainty equivalent consumption increases by 3 4 for optimizing households and by 3 3 for rule of thumb households

temptation and taxation we study optimal taxation when consumers have temptation and self control problems embedding the class of preferences developed by gul and pesendorfer into a standard macroeconomic setting we first prove in a two period model that the optimal policy is to subsidize savings when consumers are tempted by excessive impatience the savings subsidy improves welfare because it makes succumbing to temptation less attractive we then study an economy with a long but finite horizon which nests as a special case the phelps pollak laibson multiple selves model thereby providing guidance on how to evaluate welfare in this model we prove that when period utility is logarithmic the optimal savings subsidies increase over time for any finite horizon moreover as the horizon grows large the optimal policy prescribes a constant subsidy in contrast to the well known chamley judd result

the labour supply behaviour of self employed solo practice physicians this paper investigates the empirical labour supply behaviour of self employed solo practice physicians the specification of the empirical labour supply equation is based on a model of constrained utility maximizing behaviour that recognizes the physician makes work leisure choices based on an endogenous shadow wage and faces a nonlinear budget constraint the findings suggest that the typical self employed solo practice male physician operates on the upward sloping portion of the labour supply curve and is relatively unresponsive to changes in marginal hourly medical practice earnings and non practice income

social security and self control preferences abstract we analyze the welfare effects of an unfunded social security system we do so using an overlapping generations economy wherein agents have self control preferences face mortality risk individual income risk and borrowing constraints given our specification of preferences unfunded social security helps reduce the agents temptation to consume in every period consequently the welfare costs it otherwise entails are substantially mitigated while both social security and self control when considered separately reduce welfare their combination renders this effect considerably less severe moreover if the cost of resisting temptation is very high the introduction of social security might even improve welfare

the adjustment of expectations to a change in regime a study of the founding of the federal reserve the founding of the federal reserve system in 1914 led to a substantial change in the behavior of nominal interest rates the authors examine the timing of this change and the speed with which it was effected they then use data on the term structure of interest rates to determine how expectations responded their results indicate that the change in policy regime was rapid and that individuals quickly understood the new environment they were facing copyright 1987 by american economic association

a dual self model of impulse control we propose that a simple dual self model gives a unified explanation for several empirical regularities including the apparent time inconsistency that has motivated models of quasi hyperbolic discounting and rabin s paradox of risk aversion in the large and small the model also implies that self control costs imply excess delay as in the o donoghue and rabin models of quasi hyperbolic utility and it explains experimental evidence that increased cognitive load makes temptations harder to resist the base version of our model is consistent with the gul pesendorfer axioms but we argue that these axioms must be relaxed to account for the effect of cognitive load

self control and the rise and fall of factory discipline abstract we propose a dynamic general equilibrium model that accounts for the historical pattern of the rise and fall of factory discipline in the course of economic development firms have two alternative means to increase work effort discipline and control vs monetary incentives a key ingredient of our model lies in the fact that workers suffer from present bias we show that this lack of self control makes discipline relatively cheap when workers outside option is low even in the absence of moral hazard then as one economy develops it endogenously goes through three stages where firms successively use low powered monetary incentives factory discipline and then high powered monetary incentives when moral hazard is introduced multiple development paths may emerge

interest rate seasonals and the federal reserve it is widely believed that one of the federal reserve s first important monetary policy achievements was the deseasonalization of interest rates the federal reserve supposedly accomplished this by introducing appropriate seasonal movements into the supplies of currency and high powered money this view implicitly assumes that there was no interaction between american and foreign financial markets two findings are reported that challenge this conventional view first interest rate seasonals disappeared in the united states and other countries at approximately the same time second interest rate seasonal ended approximately 3 years before the seasonal movements of currency and high powered money changed

self control problems and the folk theorem abstract this paper generalizes the basic complete information pure action folk theorem such that it applies when discounting is present biased and the discount factor between two successive periods increases with the waiting time until the periods are reached we distinguish between time consistent decision makers who maximize their initial preferences and time inconsistent decision makers who maximize their current preferences and our folk theorem holds for both types since discount functions are not assumed to have any specific functional form decision makers are said to be patient if the sum of the discount factors for all periods is large

unions in a frictional labor market abstract a labor market with search and matching frictions where wage setting is controlled by a monopoly union that follows a norm of wage solidarity is found vulnerable to substantial distortions associated with holdup with full commitment to future wages the union achieves efficient hiring in the long run but hikes up wages in the short run to appropriate rents from firms without commitment in a markov perfect equilibrium hiring is too low both in the short and the long run the quantitative impact is demonstrated in an extended model with partial union coverage and multiperiod union contracting

optimal fiscal policy in the neoclassical growth model revisited this paper studies optimal taxation in a version of the neoclassical growth model in which investment becomes productive within the period thereby making the supply of capital elastic in the short run because taxing capital is distortionary in the short run the government s ability desire to raise revenues through capital income taxation in the initial period or when the economy is hit with a bad shock is greatly curtailed our timing assumption also leads to a tractable ramsey problem without state contingent debt which can give rise to debt financed budget deficits during recessions

the worldwide change in the behavior of interest rates and prices in 1914 abstract this paper evaluates the role of the destruction of the gold standard and the founding of the federal reserve both of which occured in 1914 in contributing to observed changes in the behavior of interest rates and prices after 1914 the paper presents a model of policy coordination in which the introduction of the fed stabilizes interest rates even it the gold standard remains intact and it offers empirical evidence that the dismantling of the gold standard did not play a crucial role in precipitating the changes in interest rate behavior

equilibrium welfare and government policy with quasi geometric discounting abstract we consider a representative agent equilibrium model where the consumer has quasi geometric discounting and cannot commit to future actions we restrict attention to a parametric class for preferences and technology and solve for time consistent competitive equilibria globally and explicitly we then characterize the welfare properties of competitive equilibria and compare them to that of a planning problem the planner is a consumer representative who without commitment but in a time consistent way maximizes his or her present value utility subject to resource constraints the competitive equilibrium results in strictly higher welfare than the planning problem whenever the discounting is not geometric journal of economic literature classification numbers e21 e61 e91

production subsidies and redistribution abstract who gains from stimulating output we explore a dynamic model with production subsidies where the population is heterogeneous in one dimension wealth there are two channels through which production subsidies redistribute resources across the population first poorer agents gain from a rise in wages since to the extent there is an operative wealth effect in labor supply they work harder second because a current output boost will raise consumption today relative to the future thus lowering real interest rates poor agents gain in relative terms since their income is based less on interest income we examine optimal redistribution from the perspective of an arbitrary consumer in the population we show that if this consumer has commitment at time zero to set all present and future subsidy rates and for a class of preferences that admits aggregation in wealth then output stimulation and hence redistribution will only occur at time zero after that subsidies are zero a byproduct of our analysis of this environment is a median voter theorem with direct voting over subsidy sequences at time zero the sequence preferred by the median wealth consumer is the unique outcome we also study lack of commitment since interest rate manipulation is associated with time inconsistency we analyze this case formally by looking at the markov perfect time consistent equilibrium in a game between successive identical decision makers e g the median agent here subsidies persist they are constant over time and are more distortionary than under commitment moreover whereas under commitment asset inequality changes initially in favor of the consumer who decides on policy it does not under lack of commitment

social security reform with self control preferences abstract this paper analyzes a fully funded social security system under the assumption that agents face temptation issues agents are required to save through individually managed personal security accounts without and with mandatory annuitization when the analysis is restricted to crra preferences our results are congruent with the literature in indicating that the complete elimination of social security is among the reform scenarios that maximize welfare however when self control preferences are introduced and as the intensity of self control becomes progressively more severe the social security elimination scenario loses ground very rapidly in fact in the case of relatively severe temptation the elimination of social security becomes the least desirable alternative under the light of the above findings any reform proposal regarding the social security system should consider departures from standard preferences to preference specifications suitable for dealing with preference reversals

income effects and physician labour supply evidence from the threshold system in ontario we examine a reform to the physician threshold system in ontario that provides a unique opportunity to assess the effect of fee changes on physician behaviour free from the biases that potentially affect simple time series or cross section inference we find that 1 the income effects of fee changes are small but significant 2 the income effect dominates the substitution effect only for a minority of services with relatively low prices and high volumes and 3 the cross effects of fee changes tend to be significant only for services with relatively high prices and low volumes une reforme du systeme des seuils de revenus au dela desquels les medecins sont penalises a fourni une occasion en or de mesurer l effet des changements de revenus sur le comportement du medecin en evitant les biais qui potentiellement vicient les resultats derives des series chronologiques ou des analyses transversales on decouvre que 1 les effets de revenus des changements de remuneration sont faibles mais significatifs 2 l effet de revenu domine l effet de substitution seulement pour un petit nombre de services a faible prix et fort volume et 3 les effets croises des changements de remuneration tendent aetre significatifs seulement pour les services dont le prix est relativement eleve et ou il y a faible volume

consumption savings decisions with quasi geometric discounting we study the consumption savings problem of an infinitely lived rational consumer who has time inconsistent preferences in the form of quasi geometric discounting the consumer operates a weakly concave production function and must simply divide current resources into current consumption and savings there is no uncertainty a solution to the consumer s problem is a subgame perfect equilibrium of a dynamic game between the consumer s successive selves we show that this game has a continuum of equilibria in stationary markov strategies not only is the stationary point of the consumer s asset holdings indeterminate but each stationary point has a continuum of dynamic paths converging to it the savings policy rules underlying these dynamic paths are step functions

are malpractice insurance premiums a tort signal that influence physician hours worked abstract this study reports some new evidence on the impact of malpractice insurance costs on physician labor supply behavior a strategy is proposed to test for the existence of malpractice premium tort signal effects on physician hours worked

the existence of perfect equilibria in a model of growth with altruism between generations an intertemporal model of consumption and bequest behaviour is specified and analysed as a game between generations the main feature of this game is that no a priori restrictions like linearity are placed on the strategy choice of generations the paper gives an existence proof for perfect nash equilibria in finite and infinite horizon versions of the model and determines characteristic properties of equilibrium strategies the main result is to demonstrate existence of stationary perfect equilibrium if the time horizon is infinite

credible communication in dynastic government abstract this paper studies information disclosure in a model of dynastic government when information about past policy choices comes exclusively from the reports of previous administrations each administration has an incentive to choose its suboptimal one shot expenditure policy and then misrepresent its choice to its successor consequently it has been suggested that horizontal accountability i e a system of governance where auditing functions lie outside the executive branch can ensure credible disclosure of a government s activities this paper suggests a cautious approach to that view the baseline model examines the reporting incentives of an external auditor who can independently verify the information each period even with auditing credible disclosure is shown to be problematic various extensions to this baseline model are examined in one extension liberal i e those prefering larger government expenditures and conservative those prefering smaller expenditures regimes and auditors evolve over time it is shown that conservative liberal auditors are not credible when the current regime is also conservative liberal moreover because information transmission stops when the auditor s and the regime s biases coincide effective deterrents even in the good periods when the auditor s and the administration s biases differ are difficult to construct in all periods the equilibrium requirement of auditor neutrality constrains the dynamic incentives for efficient policy choices these constraints are shown to bind away from optimal policies in standard constructions of equilibrium various ways in which auditing protocols can overcome these problems are discussed

fee for service payment and consultation length in general practice a work leisure trade off model for french gps this article presents an adaptation of the labour supply model applied to the independent medical sector first we model simultaneous general practitioner gp decisions on both the leisure time and the consultation length for two payment schemes fixed fees and unregulated fees the objective of this econometric study is to validate the theoretical prediction that doctors under unregulated fees may make choices about the length of patient consultations independent of their personal leisure decision indeed according to our empirical results the bidirectional link between leisure choice and consultation length verified with fixed fees does not hold any longer under unregulated fees our findings can be seen as a necessary but not a sufficient condition to legitimize unregulated fees in general practice

median voter equilibria in the neoclassical growth model under aggregation we study a dynamic version of meltzer and richard s median voter model where agents differ in wealth taxes are proportional to income and are redistributed as equal lump sum transfers voting occurs every period and each consumer votes for the tax that maximizes his welfare we characterize time consistent markov perfect equilibria twofold first restricting utility classes we show that the economy s aggregate state is mean and median wealth second we derive the median voter s first order condition interpreting it as a tradeoff between distortions and net wealth transfers our method for solving the steady state relies on a polynomial expansion around the steady state

testing for structural breaks trade off between power and spurious effects abstract i argue that in order to test for the effect of the foundation of the federal reserve on the behavior of short term interest rates extending the sample size on either side of the interval 1908 1918 will generate spurious results mankiw miron and weil 1987 1994 do not address data problems pointed out by other authors nor do they take into account some historical events and institutional changes in the new york money market that had an impact on the behavior of short term interest rates given these reasons for restricting the sample size i argue that their monte carlo evidence is largely irrelevant to the issue and that lack of power confirms my claim that no regime change can be detected astride the foundation of the fed

more on the behavior of interest rates and the founding of the fed abstract the paper addresses the issue of the impact of the foundation of the federal reserve system in 1914 on the behavior of short term interest rates empirical evidence is presented showing that no change of regime can be detected in the process governing short term rates in the years straddling the foundation of the fed since the behavior of this process did change in the decade 1910 1920 the paper discusses some historical events and institutional changes in the new york money market that had an impact on the behavior of short term interest rates between 1908 and 1920

commitment savings in informal banking markets abstract i study the provision of commitment savings by informal banks to sophisticated hyperbolic discounters since a consumer is subject to temptation in the period that he signs a contract banks might exploit his desire for instant gratification even as they help him to commit for the future without banking savings decisions and welfare are not monotonic in the degree of time inconsistency consequently commitment savings will lower welfare for moderately time inconsistent agents if loan contracts are enforceable pure commitment savings will disappear this will further lower welfare if the lender is a profit maximizing bank but raise welfare if the lender is a welfare maximizing ngo finally i consider the coexistence of a bank and ngo there will be zero takeup of ngo provided commitment savings if there is competition from a moneylender but the ngo s offer will raise the agent s reservation utility thus reducing the surplus that can be extracted by the moneylender

physician opportunity costs in physician practice cost functions abstract estimation of cost functions for physician firms is problematic because many physicians are self employed and the marginal opportunity cost of physician labor is not observed in this paper we show how to recover marginal costs and conventional measures of economies of scale from cost functions that condition on the amount of physician labor input in addition we introduce the new concepts of marginal nonphysician input costs and behavioral economies of scale which reflect the structure of costs when physician labor input moves along a utility maximizing expansion path our results could be useful in the design of resource based physician fee schedules

a note on the expectations hypothesis at the founding of the fed abstract one of the most influential tests of the expectations hypothesis is mankiw and miron q j econ 101 1986 211 who found that the spread between the long term and short term rates provided predictive power for the short term rate before the fed s founding but not after they suggested that the failure of the expectations hypothesis after the fed s founding was due to the fed s practice of smoothing short term interest rates we show that their finding that the expectations hypothesis fares better prior to the fed s founding is due to the fact that the test they employ tends to generate results that are more favorable to the expectations hypothesis during periods when there is extreme volatility in the short term rate

efficiency and equilibrium when preferences are time inconsistent abstract we consider an exchange economy with time inconsistent consumers whose preferences are additively separable if consumers have identical discount factors then allocations that are pareto efficient at the initial date are also renegotiation proof in an economy with a sequence of markets competitive equilibria are pareto efficient in this sense and for generic endowments only if preferences are locally homothetic

heterogeneous borrowers in quantitative models of sovereign default we extend the model used in recent quantitative studies of sovereign default allowing policymakers of different types to stochastically alternate in power we show that a default episode may be triggered by a change in the type of policymaker in office and that such a default is likely to occur only if there is enough political stability and if policymakers encounter poor economic conditions under high political stability political turnover enables the model to generate a weaker correlation between economic conditions and default decisions a higher and more volatile spread and lower borrowing levels after a default episode

physician response to fee changes with multiple payers this paper develops a general model of physician behavior with demand inducement encompassing the two benchmark cases of profit maximization and target income behavior it is shown that when income effects are absent physicians maximize profits and when income effects are very strong physicians seek a target income the model is used to derive own and cross price expressions for the response of physicians to fee changes in the realistic context of more than one payer under the alternative behavior assumptions of profit maximization and target income behavior the implications for public and private fee policy and empirical research on physician response to fees are discussed

sovereign default interest rates and political uncertainty in emerging markets abstract a large body of the empirical literature shows that high turnover rates length of tenure of policymakers and the degree of conflict within a country affects sovereign spreads debt and default rates we help to rationalize such claims by including these political features in a dynamic stochastic small open economy model of sovereign debt and default in this way we offer a complementary approach to the econometric analyses in the literature consistent with the data the quantitative analysis shows that politically unstable and more polarized economies experience higher default rates and larger level and volatility of sovereign interest rate spreads