bluuebunny/crossref_metadata_2025_split huggingface dataset:
Growing Old Together: Firm Survival and Employee Turnover
Authors: Quintin Erwan , Stevens John J. 
Published: December 2005

Abstract
Labor market outcomes such as turnover and earnings are correlated with employer characteristics, even after controlling for observable differences in worker characteristics. We argue that this systematic relationship constitutes strong evidence in favor of models where workers choose how much to invest in future productivity. Because employer characteristics are correlated with firm survival, returns to these investments vary across firm types. We describe a dynamic general equilibrium model where workers employed in firms more likely to survive choose to devote more time to productivity-enhancing activities, and therefore have a steeper earnings-tenure profile. Our model also predicts that quit rates should be lower in firms more likely to survive, and should tend to fall during slow times, while job destruction rates should rise. These predictions, we argue, are borne out by the existing empirical evidence.
Growth Implosions and Debt Explosions: Do Growth Slowdowns Cause Public Debt Crises?
Authors: Easterly William R. 
Published: December 2005

Abstract
The worldwide growth slowdown after 1975 was a major negative fiscal shock; lower growth lowers the present value of tax revenues and primary surpluses and thus makes a given level of debt more burdensome. Most countries failed to adjust to the negative fiscal consequences of the growth implosion and so public debt to GDP ratios exploded. The growth slowdown therefore played an important role in the debt crisis of the middle income countries in the 1980s, the crisis of the Highly Indebted Poor Countries (HIPCs) in the 1980s and 1990s, and the increased public debt burden of industrial countries in the 1980s and 1990s. Econometric tests and fiscal solvency accounting confirm the important role of growth in debt crises. In addition, the HIPCs’ debt problems were worse because they grew more slowly after 1975 than other low income countries due to worse policies.
Fiscal Policy and Human Capital Accumulation in a Home Production Economy
Authors: Einarsson Tor , Marquis Milton Harrison 
Published: December 2005

Abstract
The decision to invest in human capital is introduced into a home production economy with fiscal policy distortions where balanced growth is achieved through Harrod-neutral, labor-augmenting technology spillovers into home production. In comparison with home production economies that abstract from human capital accumulation, the welfare losses from distortionary taxes are quite large due to their adverse effect on growth. However, the transition costs associated with a move to a less distortionary tax system are proportionately much lower. This owes to the fact that growth enhances the adjustment process such that less radical and more empirically plausible swings in employment, investment, and output are required to reach the new balanced growth path.
Capital-Skill Complementarity and Rigid Relative Wages: Inference from the Business Cycle
Authors: Skaksen Jan R , Sorensen Anders 
Published: December 2005

Abstract
The relative demand for skills has increased considerably in many OECD countries during recent decades. This development is potentially explained by capital-skill complementarity and high growth rates of capital equipment. When production functions are characterized by capital-skill complementarity, relative wages and employment of skilled labor are countercyclical because capital equipment is a quasi-fixed factor in the short run. The exact behavior of the two variables depends on relative wage flexibility. Relative wages are rigid in Denmark, implying that the employment share of skills should be countercyclical. The labor market is competitive in the United States and therefore relative wages of skilled labor are expected to be countercyclical. We find that the business cycle development of the two economies is consistent with capital-skill complementarity.
Schumpeterian Growth, North-South Trade and Wage Rigidity
Authors: Grieben Wolf-Heimo 
Published: December 2005

Abstract
This paper presents a two-country non-scale Schumpeterian endogenous growth model with interindustry North-South trade and wage rigidity in the North. Its purpose is to analyze the effects of a compression of the wage structure and an increase in unemployment benefits on Northern unskilled unemployment and growth. Both innovation and skill acquisition rates are endogenously determined. We show how the two labor market policies differ with respect to education incentives in a general equilibrium with balanced trade. We further highlight the relevance of North-South trade and incomplete Northern specialization for the labor market effects that we obtain in our model. We demonstrate that the growth effects of a compression of the Northern wage structure depend decisively on the specific formulation of rising R&D difficulty.
Multiple Equilibria in Heterogeneous Expectations Models
Authors: Branch William , McGough Bruce 
Published: December 2005

Abstract
This paper fills an important gap in the literature on determinacy and existence of sunspot equilibria in stochastic linear self-referential models. The results in this paper demonstrate that heterogeneity in expectations may alter a model's regions of determinacy. We show how to associate with a heterogeneous expectations model (HE-model) a rational expectations model (ARE-model), the solutions to which are the equilibria of the HE-model. This association recasts the analysis of determinacy in the HE-model to analysis of determinacy in the ARE-model. We proceed to study a forward looking model and find that the stability properties of rational expectations models may not be robust. In particular, we present new results showing that in some models even a very small fraction of non-rational agents may preclude rational agents from coordinating on sunspots. Also, we present parameterizations of the model in which sunspots exist in the heterogeneous model when they do not exist in the rational expectations version of the model.
How Well Does the New Keynesian Sticky-Price Model Fit the Data?
Authors: Roberts John M. 
Published: December 2005

Abstract
A number of hypotheses have been proposed to account for the role of lagged inflation in the New Keynesian price-adjustment model: (1) In the aftermath of abrupt structural change, rational learning may appear adaptive. (2) The model may have a serially correlated error term. (3) Estimating the model conditional on labor costs may remove or reduce the need for lagged inflation. I address the empirical support for these hypotheses and find that none eliminates the need for lagged inflation. In particular, lagged inflation enters with a coefficient in the range of 0.4 to 0.5, regardless of whether labor's share or detrended output is the measure of real marginal cost, or whether a serially correlated error term is allowed. Also, eliminating the period 1980-83 from the sample does not reduce the coefficient on lagged inflation.
Indeterminacy and the Stability Puzzle in Non-Convex Economies
Authors: Evans George W , McGough Bruce 
Published: December 2005

Abstract
We examine stability under learning of sunspot equilibria in Real Business Cycle type models with indeterminacies. Our analysis emphasizes the importance of examining alternative representations of sunspot solutions. A general bivariate reduced form contains parameter regions in which sunspots are stable under learning. However, for parameters restricted to those generated by standard models of indeterminacy, we find, under one information assumption, that no stable sunspots exist, and under another information assumption, that they exist only for a very small part of the indeterminacy region. This leads to the following puzzle: why does indeterminacy almost always imply instability in RBC-type models?
A Closed Form Ramsey Saddle Path
Authors: Mehlum Halvor 
Published: December 2005

Abstract
I show that in a Ramsey growth model, where the production function is of fixed proportions type and the utility function is CRRA, the saddle path is a closed form expression. The closed form expression greatly simplifies the analysis of how the labor productivity growth, the intertemporal rate of substitution, and the discount factor affect investments and growth.
The Underestimated Virtues of the Two-sector AK Model
Authors: Felbermayr Gabriel J , Licandro Omar 
Published: December 2005

Abstract
This paper analyzes some unnoticed predictions of the two-sector AK model in line with the recent literature on embodied technical change. Firstly, by confining constant returns to capital to the investment sector, the AK model generates endogenously the secular downward trend of the relative price of equipment investment and the rising real investment rate observed in US NIPA data. Secondly, Jones' (1995) claim that the AK model fails to reconcile the empirical facts of trending real investment rates and stationary output growth vanishes in the two-sector version. Thirdly, consistent with the evidence from cross-country studies, the model predicts a negative relation between GDP per capita and the relative price of equipment. Hence, in spite of its overly simplistic structure, the two-sector AK model provides important intuition on the implications of a trending relative price of equipment investment in endogenous growth environments.
Another Example in which Lump-sum Money Creation is Beneficial
Authors: Deviatov Alexei , Wallace Neil 
Published: December 2005

Abstract
A probabilistic version of lump-sum money creation is studied in a random matching model with indivisible money and individual holdings bounded at 2 units. Sufficient conditions are obtained for an ex ante optimum from among implementable steady states to involve lump-sum creation of money. The role of that creation is to change the distribution of money holdings to permit more trade to occur. Beneficial money creation is impossible in a version with a 1 unit upper bound on individual holdings, but can almost certainly happen for all higher bounds.
Matching, Search, and Heterogeneity
Authors: Shimer Robert , Smith Lones 
Published: December 2005

Abstract
This paper explores the efficiency of decentralized search behavior and matching patterns in a model with ex ante heterogeneity and a constant returns to scale search technology. We show that a linear tax or subsidy on search intensity decentralizes the social optimum. In the absence of the tax, high productivity agents are too willing to match, yet they search too little. Low productivity agents have the opposite behavior. As a result, the equilibrium is always inefficient in the absence of taxes, in contrast to known results on the efficiency of decentralized search models with homogeneous agents. We relate the inefficiencies to thick-market and congestion externalities.
Price Stability and Monetary Policy Effectiveness when Nominal Interest Rates are Bounded at Zero
Authors: Coenen Günter , Orphanides Athanasios , Wieland Volker 
Published: December 2005

Abstract
This paper employs stochastic simulations of a small structural rational expectations model to investigate the consequences of the zero bound on nominal interest rates. We find that if the economy is subject to stochastic shocks similar in magnitude to those experienced in the United States over the 1980s and 1990s, the consequences of the zero bound are negligible for target inflation rates as low as 2 percent. However, the effects of the constraint are non-linear with respect to the inflation target and produce a quantitatively significant deterioration of the performance of the economy with targets between 0 and 1 percent. The variability of output increases significantly and that of inflation also rises somewhat. Also, we show that the asymmetry of the policy ineffectiveness induced by the zero bound generates a non-vertical long-run Phillips curve. Average output falls increasingly short of potential with lower inflation targets.
Explaining Incomplete Contracts as the Result of Contract-Reading Costs
Authors: Rasmusen Eric Bennett 
Published: December 2005

Abstract
Much real-world contracting involves finding new clauses to add to a basic agreement, clauses which may or may not increase the welfare of both parties. The parties must decide which complications to propose, how closely to examine the other side's proposals, and whether to accept them. This suggests a reason why contracts are incomplete in the sense of lacking Pareto-improving clauses: contract-reading costs matter as much as contract-writing costs. Fine print that is cheap to write can be expensive to read carefully enough to understand the value to the reader, and especially to verify the absence of clauses artfully written to benefit the writer at the reader's expense. As a result, complicated clauses may be rejected outright even if they really do benefit both parties, and this will deter proposing such clauses in the first place.
Subsidized Housing, Emergency Shelters, and Homelessness: An Empirical Investigation Using Data from the 1990 Census
Authors: Early Dirk W. , Olsen Edgar O. 
Published: December 2005

Abstract
This paper uses data on the only systematic count of the homeless throughout the United States to estimate the effect on the rate of homelessness of a wide variety of potentially important determinants, including several major policy responses to homelessness that have not been included in previous studies. It improves upon estimates of the effect of previously studied determinants by using measures that correspond more closely to underlying theoretical constructs, especially by accounting for geographical price differences. It also conducts numerous sensitivity analyses and analyzes the consequences of the undercount of the homeless for point estimates and hypothesis tests. The paper's most important finding from a policy perspective is that targeting the current budget authority for housing assistance on the poorest eligible households will essentially eliminate homelessness among those who apply for assistance. Achieving this goal promptly without concentrating the poorest households in housing projects and without spending more money requires vouchering out project-based assistance. The primary methodological finding of the paper is that the 1990 Decennial Census did not produce sufficiently accurate counts, especially of the street homeless, to permit very precise estimates of the effects of many factors which surely affect the rate of homelessness. The main exception is the price of housing. Other things equal, higher housing prices lead to more homelessness.
Merger Simulation with Brand-Level Margin Data: Extending PCAIDS with Nests
Authors: Epstein Roy J. , Rubinfeld Daniel L. 
Published: December 2005

Abstract
We present a method to calibrate empirically the demand parameters in a merger simulation model by using brand-level profit margin data. While the approach can be generalized, we develop these ideas within a particular framework - the PCAIDS (proportionality-calibrated AIDS) model. We show that the brand-level margins effectively define product "nests" (products that are especially close substitutes) and substantially increase the flexibility of PCAIDS for modeling critical own- and cross-price elasticities. The model is particularly valuable for transactions at the wholesale level (where scanner data do not exist) and for geographic markets that span national borders (where comparable data may not be available), since other methods to derive elasticities, particularly those based on econometric estimation, may not be possible or may not be reliable.
Spillovers from Local Market Human Capital and the Spatial Distribution of Productivity in Malaysia
Authors: Conley Timothy G. , Flyer Fredrick , Tsiang Grace R 
Published: December 2005

Abstract
This paper examines whether spillovers from local market human capital are important in explaining the distribution of productivity across Malaysia. We develop an empirical method for describing local human capital distributions based on the idea that spillovers are limited in scope by costs of interaction or economic distance between agents. We use estimates of the economic distance between agents to construct measures of local market human capital based on schooling rates of the population within a given radius. These measures are then used in estimating equations obtained from a simple local public goods model. Our regressions are estimated using spatial GMM, allowing for general spatial correlation across observations as a function of economic distance. We find positive wage and rent differentials associated with local human capital, evidence consistent with productive human capital spillovers. Our results for rent differentials obtain with two distinct human capital measures; however, those for wage differentials depend on the human capital measure used.
Adverse Selection, Short-Term Contracting, and the Underprovision of On-the-Job Training
Authors: Hermalin Benjamin E. 
Published: December 2005

Abstract
This article argues that the existence of adverse selection (worker heterogeneity) can explain the underprovision of general training by employers. High-ability workers value the option to entertain outside wage offers once their abilty becomes known to the market. Offering short-term contracts is, therefore, a way to screen high-ability types from low-ability types. A firm is not willing to train workers under short-term contracts. Hence, despite the positive returns to training, training may be underprovided in equilibrium. More generally, this article contributes to the literature that seeks to explain the puzzling phenomenon of short-term contracts governing long-term buyer-seller relationships.
Testing the Economic Model of Crime:The National Hockey League's Two-Referee Experiment
Authors: Levitt Steven D. 
Published: December 2005

Abstract
During the 1998-99 season, the National Hockey League randomly varied the number of referees used across games, seemingly providing a rare opportunity to test directly the deterrence model. Combining experimental parameter estimates with an economic model, there is little evidence that the rate of offending changed substantially with the addition of a second referee. The reason, however, appears to be that the second referee had little impact on the probability of punishment. As a consequence, the experiment ultimately turns out to be of limited use for testing deterrence.
Road Warrior Booty: Prize Structures in Motorcycle Racing
Authors: Maloney Michael T. , Terkun Kristina 
Published: December 2005

Abstract
This research reports the results of an analysis of prize structures among competing firms paying tournament wages. In motorcycle racing, sponsors compete in an auction for riders using tournament prizes as bids. Since racers can only ride one bike and wear one helmet, they are forced to choose among sponsors of similar products. We find that in the face of competition, sponsors are forced to lower the incentive intensity of their prize differentials as rival sponsors post larger purses. Our test offers new corroboration of the Lazear-Rosen tournament model. Other researchers have found that workers respond to bigger prize differentials by working harder. We find that firms recognize this and also recognize that in the competitive labor-market equilibrium this extra work must be compensated by offering higher expected wages through bigger purses. Our results complete the theoretical circle: workers respond to the incentive effects of tournament wages and firms anticipate this behavior when making tournament wage offers.
Optimal Environmental Regulation in the Presence of Other Taxes: The Role of Non-separable Preferences and Technology
Authors: Kim Seung-Rae 
Published: December 2005

Abstract
Recent studies find that environmental taxes typically exacerbate pre-existing tax distortions and, therefore, the optimal pollution tax should lie below the Pigouvian level (social marginal damages). This paper analyzes a general equilibrium model with non-separable preferences and technology, relatively rare assumptions in this literature, and finds that the second-best optimal pollution tax can be above or below the first-best Pigouvian level. Surprisingly, the ordering of the two does not depend on the degree of pre-existing tax distortion. Moreover, it depends not just on the difference between the two goods' cross-price elasticities with leisure, but on that difference compared to the elasticity of demand for the polluting intermediate input. Finally, the paper shows that under plausible parameter conditions, a greater pre-existing tax distortion can increase the optimal level of environmental regulation.
Patent Theory versus Patent Law
Authors: Tabarrok Alexander 
Published: December 2005

Abstract
According to the economic theory of patents, patents are needed so that pioneer firm have time to recoup their sunk costs of research and development. The key element in the economic theory is that pioneer firms have large, hard to recoup, sunk costs. Yet patents are not awarded on the basis of a firm's sunk costs. Patent law, in fact, ignores costs. The disconnect between patent law and patent theory suggests either that modifying patent law so that it better fits with patent theory would reduce the costs and inefficiencies associated with current patent practice or that the standard economic theory of patents is wrong.
An Assessment of the Proposals of the President's Commission to Strengthen Social Security
Authors: Diamond Peter , Orszag Peter R. 
Published: December 2005

Abstract
The President's Commission to Strengthen Social Security proposed three plans for reforming Social Security. All of them would create individual accounts financed by diverting funds from the Social Security Trust Fund. One of the three Commission proposals (Model 1) would not restore long-term balance to Social Security. This paper focuses on the other two proposals - Models 2 and 3 - which would restore long-term balance. Models 2 and 3 contain a number of elements and are quite complicated. To understand the plans, we describe their proposed changes to Social Security benefits (which we refer to as "traditional benefits"), the individual accounts that the plans would establish, the combined effect on retirement income from the changes in traditional Social Security benefits and the individual accounts, and the impact on Social Security financing and the rest of the budget.
Pollution Abatement Expenditure by U.S. Manufacturing Plants: Do Community Characteristics Matter?
Authors: Becker Randy A 
Published: December 2005

Abstract
This paper examines whether community characteristics impact the air pollution abatement (APA) activity at nearby manufacturing plants, using establishment-level data from the U.S. Census Bureaus Pollution Abatement Costs and Expenditures (PACE) survey. Controlling for facility characteristics and various forms of formal environmental regulation, certain community characteristics are found to have additional effects on local APA expenditures. In particular, for the most pollution-intensive industries, larger per capita income is found to increase plant-level APA activity, as is a higher degree of homeownership, a greater concentration of Democratic voters, and being located in a metropolitan area. Meanwhile, a greater presence of manufacturing employees is found to decrease APA expenditures, suggesting a constituency that is more resistant to additional regulation. If local populations can indeed affect pollution abatement activity, they can impact the spatial distribution of pollution, thereby creating pollution haven effects.