bluuebunny/crossref_metadata_2025_split huggingface dataset:
Auctions and Posted Prices in Directed Search Equilibrium
Authors: Julien Benoit , Kennes John , King Ian Paul 
Published: December 2005

Abstract
We compare equilibrium allocations in directed search models where prices are determined alternatively by posting and by competing auctions, with the following results. With finite numbers of players, sellers' expected payoffs are higher when all sellers auction than when all sellers post. This difference is largest in the 2-by-2 case, where payoffs to sellers are 1/3 higher if they auction. The difference in the payoffs decreases rapidly with market size and vanishes in the limit "large" economy. When sellers can choose whether to post prices or auction in the 2-by-2- case, all combinations (auction-auction, post-post, and auction-post) can occur in equilibrium if sellers choose mechanism and price simultaneously. However, if sellers choose mechanism before price then the dominant strategy equilibrium has both sellers auctioning.
The Relationship between Stock Prices, House Prices and Consumption in OECD Countries
Authors: Ludwig Alexander , Sløk Torsten 
Published: December 2005

Abstract
This paper analyzes the relationship between stock prices, house prices and consumption using data for 16 OECD countries. The panel data analysis suggests that the long-run responsiveness of consumption to permanent changes in stock prices is higher for countries with a market-based financial system than for countries with a bank-based financial system. Splitting the sample into the 1980s and 1990s further shows an increased sensitivity in the 1990's of consumption to permanent changes in stock prices for both countries with bank-based financial systems as well as countries with market-based financial systems. The relationship between changes in consumption and changes in house prices is positive for the second sample period across all specifications and financial systems.
A Simple Locally Interactive Model of Ergodic and Nonergodic Growth
Authors: Corradi Valentina , Ianni Antonella 
Published: December 2005

Abstract
In this paper we provide a simple locally interactive dynamic model of technology choice and output production. We assume a Cobb-Douglas type production function for two available technologies. The returns to technology 0 are not affected by local spillovers. Technology 1 is more costly, as there is an overhead cost, but it has a higher marginal productivity with respect to net capital. The superiority of technology 1 positively and monotonically depends on the fraction of neighbours using it. We study the aggregate process of technology choices in a model with countably many firms and repeated choices. The model explains: (i) persistent aggregate fluctuations in the presence of only idiosyncratic shocks, (ii) cross sectional heterogeneity along the dynamics and (iii) the possibility of multiple equilibria. The main contribution of the paper over the existing literature is that the model explains the endogeneous formation of large areas, homogeneous in terms of technology choice and output level, that look stationary along the dynamics.
Strictly Endogenous Growth with Non-renewable Resources Implies an Unbounded Growth Rate
Authors: Groth Christian 
Published: December 2005

Abstract
Conventional endogenous growth theory relies on the assumption of constant returns to "broad capital". As Solow pointed out, the strength of this assumption is revealed by recognizing that even the slightest touch of increasing returns creates explosive growth: infinite output in finite time! But Solow's observation ignored natural resources. What happens if non-renewable resources enter the "growth engine"? In this case (strictly) endogenous growth requires the technology to be such that there is no upper bound on the sustainable per capita growth rate. This corroborates Solow's skepticism.
The Output Gap, Expected Future Inflation and Inflation Dynamics: Another Look
Authors: Mehra Yash P 
Published: December 2005

Abstract
The empirical test of the New Keynesian Phillips curve is often implemented by estimating a hybrid specification that includes both lagged and future inflation and then by examining whether the estimated coefficient on future inflation is significantly larger than the one on lagged inflation. This article presents evidence that supply shocks matter. Results in previous research – the output gap is irrelevant and expected future inflation is the major determinant of inflation – arise if the hybrid specification is estimated omitting supply shocks and/or lagged inflation. With supply shocks included, the output gap is significant and the estimated coefficient on lagged inflation is significantly larger than the one on future inflation. The estimated coefficient on lagged inflation is unity if in the hybrid specification inflation responds also to a change in the output gap. Together these results suggest that expected future inflation is not the major determinant of current inflation.
Assessing Aggregate Tests of Efficiency for Dynamic Economies
Authors: Barbie Martin , Hagedorn Marcus , Kaul Ashok 
Published: December 2005

Abstract
In a seminal contribution Abel, Mankiw, Summers, and Zeckhauser (1989) show that from an aggregate dynamic perspective the US economy is Pareto efficient. We argue that, when applying their test, they implicitly make strong assumptions about the economy's future behavior. We show how time series evidence may easily lead to wrong conclusions about the welfare properties of real world economies.We present a test criterion based on Zilcha (1991) and robust evidence that the US economy does not overaccumulate capital. Our contribution highlights that the distinction between efficient capital accumulation and Pareto efficiency is empirically relevant. The latter efficiency benchmark - encompassing also risk sharing issues - cannot be rigorously tested based on available approaches in the literature.
The Scope of Monetary Policy Actions Authorized Under the Federal Reserve Act
Authors: Small David H. , Clouse James 
Published: December 2005

Abstract
The Federal Reserve Act authorizes the Federal Reserve to undertake various types of discount window loans and open market operations. While the Federal Reserve generally has not found it necessary to use all types of such authority, there could be circumstances in which the Federal Reserve might need to consider utilizing its statutory authority more broadly than it has in the past.We examine the limits imposed by the Federal Reserve Act along two dimensions: those types of counterparties and financial instruments with which the Federal Reserve may conduct monetary policy. In doing so, we develop a theme not commonly pursued in the literature -- the ways and extent to which the Federal Reserve Act limits the Federal Reserve from taking credit risk onto its balance sheet.We also provide some historical perspective on how the current powers of the Federal Reserve came to be authorized.
Non-Scale Models of R&D-based Growth: The Market Solution
Authors: Steger Thomas M. 
Published: December 2005

Abstract
The market solution of a general R&D-based endogenous growth model is developed. The model is general in two respects: First, general formulations are used and restrictions are only introduced provided that these become necessary. Second, each factor of production (labour, capital and technological knowledge) is allowed to be productive in each sector (final output, capital goods and R&D). Since the resulting R&D-based growth model encompasses a large number of specific models, it can be viewed as a summary of this strand of the literature. The complete dynamic system as well as the balanced growth rates are derived. By employing numeric techniques, the gap between the decentralised and the centralised balanced growth path as well as the transitional dynamics implications are investigated.
Hiccups for HIPCs? Implications of Debt Relief for Fiscal Sustainability and Monetary Policy
Authors: Burnside Craig , Fanizza Domenico 
Published: December 2005

Abstract
In this paper we discuss fiscal and monetary policy issues facing heavily-indebted poor countries (HIPCs) who receive debt reduction via the enhanced HIPC initiative. This debt relief program is distinguished from previous ones by its conditionality: freed resources must be used for poverty reduction. We argue that (i) this conditionality severely limits the extent to which the initiative provides significant debt relief; (ii) depending on the response of monetary policy to an increase in social spending there could be a short-run increase in inflation in HIPC countries and (iii) the keys to long-run fiscal sustainability in the HIPCs are significant fiscal reforms by their governments, and the effectiveness of their poverty reduction programs in raising growth.
Bailouts and Bank Runs in a Model of Crony Capitalism
Authors: Femminis Gianluca , Ruggerone Luigi 
Published: December 2005

Abstract
We present a simple multiple equilibria model that incorporates the functioning of crony capitalism. We find that a government which is keen to support the interests of the élite is ready to stand the risk of a bank run since this is part of an equilibrium where investments are heavily subsidized, which favors the élite. However, we find that the liaison between the government and the business community is not per se sufficient to induce vulnerability of financial institutions to panic: the willingness to favor the élite also provides an incentive to rescue the banking system in the event of a run. This stabilizing effect dominates when the élite is relatively large. We also study how a policy of banks recapitalization may contribute to the stability of the banking institution. In fact, such a policy can make credible an ex post recovery of the financial system, thus preventing the panic from generating a self-fulfilling bank crisis.
Explaining Speculative Expansions
Authors: Xiao Wei 
Published: December 2005

Abstract
In this paper we use a modified neoclassical business cycle model to test two competing explanations of the expansion of the 1990s. The model can have indeterminate, multiple equilibria that give rise to expectation-driven business cycles. We fit into the model series of estimated speculative and productivity shocks and compare its predictions with empirical data. Our results suggest that the speculation hypothesis has more explanatory power than the productivity hypothesis in terms of matching the data. Speculative behavior of investors, therefore, may have contributed to the investment boom, the prolonged expansion, and the subsequent recession of the period 1991-2001.
The Effects of Reducing Firing Costs in Spain: A Lost Opportunity?
Authors: Osuna Victoria 
Published: December 2005

Abstract
In the mid 80's, many European countries liberalized the use of fixed-term (temporary) contracts in order to lower firm's non-wage labor costs, instead of reducing firing costs associated with indefinite duration (permanent) contracts. This policy generated segmented labor markets. The Spanish case is the most striking, with a share of temporary employment of 33% by the mid 90's. Since then, several reforms have been suggested and in this paper I quantify some of their effects. First, I build a model of job creation and destruction of the search and matching type that is able to generate the main properties of a segmented labor market like the Spanish one. Then, I use his model to quantify the effects of removing procedural wages, and further reductions in firing costs associated with permanent contracts. The main results are: (i) a small increase in permanent job destruction, (ii) a significant reduction in temporary job destruction, mainly driven by the increase in job conversions from temporary contracts into permanent ones, and (iii) a significant reduction in labor market segmentation measured as the reduction in the wage gap of temporary versus permanent workers.
The Effects of Industrialization on Education and Youth Labor in Indonesia
Authors: Federman Maya , Levine David I. 
Published: December 2005

Abstract
This study examines the relationship between growth in manufacturing employment and youth outcomes in Indonesia from 1985 to 1995, a time of rapid industrialization. In comparison with cross-national studies, this study has a larger sample size of regions, defines data more consistently, and conducts better checks for causality and specification. We also distinguish between the effects of manufacturing employment in the region and in the household and explore potential causal mechanisms underlying the observed correlations. Overall, manufacturing employment in the region modestly increases enrollment and decreases labor force participation for male and female young teens. At the household level, employment of adult females in manufacturing is associated with lower enrollment and higher labor force participation for young women relative to young men.
International Currency
Authors: Wright Randall , Trejos Alberto 
Published: December 2005

Abstract
We develop a two-country, two-currency, search-theoretic model of monetary exchange, extending previous such models by endogenizing prices using bargaining theory. We analyze features of the environment that make it more likely that a given money circulates internationally. We show the value of a given currency rises if it circulates abroad, and falls if foreign money circulates locally. Also, we show that international monies have more value at home than abroad. These results help to explain the otherwise anomalous observation that the US dollar is an outlier in the empirical relationship between income and PPP deflators.
Lobbying and Legislative Bargaining
Authors: Helpman Elhanan , Persson Torsten 
Published: December 2005

Abstract
We examine the effects of the interaction between lobbying and legislative bargaining on policy formation. Two systems are considered: a US-style congressional system and a European-style parliamentary system. First, we show that the policies generated are not intermediate between policies that would result from pure lobbying or from pure legislative bargaining. Second, we show that in congressional systems the resulting policies are strongly skewed in favor of the agenda-setter. In parliamentary systems they are skewed in favor of the coalition, but within the coalition there are many possible outcomes (there are multiple equilibria) with the agenda-setter having no particular advantage. Third, we show that equilibrium contributions are very small, despite the fact that lobbying has a marked effect on policies.
Does Federal Research Funding Increase University Research Output?
Authors: Payne A. Abigail , Siow Aloysius 
Published: December 2005

Abstract
This paper estimates the effects of federal research funding on research outcomes at 68 research universities. We provide a new interpretation of the instrumental variable estimate of the coefficient in a regression of the output of an institution on an input. Absent parameter heterogeneity, it captures the total change in output when an institution obtains an additional unit of the input that may be correlated with the other inputs that affect the output measure. Our instrument for research funding is alumni representation on U.S. Congressional appropriations committees. Our results suggest an increase of $1 million in federal research funding (1996$) to a university results in 10 more articles and 0.2 more patents. The change in citations per article is negative but very small and imprecisely measured. As a first approximation, increasing federal research funding on the margin results in more, but not necessarily higher quality, research output.
A Laboratory Study of Customer Markets
Authors: Cason Timothy N. , Friedman Daniel 
Published: December 2005

Abstract
In our laboratory customer markets, sellers post price and buyers incur cost (controlled at zero, low and high values) when they switch to a new seller. Sellers’ production costs follow various random walks in 28 sessions, each with 50-100 trading periods.
We find that prices are sticky, and sellers absorb almost half of their cost shocks. Transaction prices are about 10 percent higher when buyers face positive switch costs, and trading efficiency is slightly impaired. Experienced buyers switch about 10 percent of the time with either high or low switch costs. Buyers switch more often when they face a higher posted price, have a lower valuation for the good, face lower switch costs, have more time remaining, and have more favorable information on alternative prices. Sellers price higher when they have more attached buyers, when buyers have less information on rivals’ prices, when rivals post higher prices, and when less time remains.
The Value of Information in International Trade: Gains to Outsourcing through Hong Kong
Authors: Feenstra Robert C , Hanson Gordon H. , Lin Songhua 
Published: December 2005

Abstract
In this paper, we estimate the benefits to countries that purchase goods from China by having access to intermediary services provided in Hong Kong. Traders in Hong Kong supply information on markets and producers in China, which provides welfare gains to foreign firms using these services. During the 1990s, Hong Kong intermediated about one-half of the goods that China exported to the rest of the world. Using constant elasticity demand curves, we find that the gains to intermediary services provided by Hong Kong are roughly equal to the value of these Hong Kong re-exports, and four to five times larger than the markups earned in Hong Kong. Using a linear approximation to the demand curves instead, we find that the gains are one-quarter as much as the value of re-exports, or slightly larger than the markups.
Protection and the Business Cycle
Authors: Bagwell Kyle , Staiger Robert W. 
Published: December 2005

Abstract
Empirical studies have repeatedly documented the countercyclical nature of trade barriers. In this paper, we propose a simple theoretical framework that is consistent with this and other empirical regularities in the relationship between protection and the business cycle. Focusing on self-enforcing trade agreements, we find theoretical support for countercyclical movements in protection levels. The fast growth in trade volume that is associated with a boom phase facilitates the maintenance of more liberal trade policies than can be sustained during a recession phase in which growth is slow. We also find that acyclic increases in the level of trade volume give rise to protection, implying that whether rising imports are met with greater liberalization or increased protection depends on whether they are part of a cyclic upward trend in trade volume or an acyclic increase in import levels.
Threats Without Binding Commitment
Authors: Shavell Steven , Spier Kathryn E. 
Published: December 2005

Abstract
This paper explores the power of threats in the absence of binding commitment. The threatener cannot commit to carry out the threat if the victim refuses payment, and cannot commit not to carry out the threat if payment is made. An important assumption of the model is that once the threat is carried out it cannot be repeated. If exercising the threat is costly to the threatener, then the threat cannot succeed in extracting money from the victim. If exercising the threat would benefit the threatener, however, then the threat's success depends upon whether the threat may be repeated after a payment is made. In the equilibrium of a finite-period game, the threat is carried out and the victim makes no payments. In an infinite-horizon game, however, it is an equilibrium for the victim to make a stream of payments over time. The expectation of future payments keeps the threatener from exercising the threat.
Is More for the Poor Less for the Poor? The Politics of Means-Tested Targeting
Authors: Gelbach Jonah B. , Pritchett Lant 
Published: December 2005

Abstract
Standard economic analysis suggests that when the budget for redistribution is fixed, income transfers should be targeted to (i.e. means-tested for) those most in need. However, both political scientists and economists long have recognized the possibility that targeting might undermine political support for redistribution. We formalize this recognition, developing a simple economy in which both non-targeted (universally received) and targeted transfers are available for use by the policymaker. When the budget can be taken as fixed, full use of the targeted transfer is optimal. However, when we allow the budget to be determined through majority voting (with the policymaker choosing the share of the budget to be spent on each type of transfer), the optimal degree of targeting is zero. More strikingly, we show that if the policymaker naively ignores political considerations, the resulting equilibrium actually minimizes not only social welfare, but also the welfare of poor and middle income agents. Thus political considerations cannot generally be regarded as simply another “small" extension of standard models. As a result, future models and actual policies advocating the use of targeting through means-testing should account explicitly for the role of political considerations.
The Uncertain Wage - Effort Hypothesis and Wage Secrecy
Authors: Gan Li 
Published: December 2005

Abstract
In this paper, we introduce uncertainty into Akerlof and Yellen (1990)'s fair wage effort hypothesis. In this uncertain fair wage hypothesis, employers do not have perfect information concerning an employee's perception of a fair wage, but assume the perceived fair wage is distributed as a random variable with a known distribution. Our wage model, built on this hypothesis, is applied to analyze the widely adopted policy of wage secrecy, suggesting a wage secrecy policy is more likely to produce higher satisfaction for employees and higher profit for employers.
System Components, Network Effects, and Bundling
Authors: Clements Matthew T. 
Published: December 2005

Abstract
I investigate the competition between suppliers of components of a system for which there are network effects among users. Bundling one of these components with an outside good reduces the cost to consumers of using the system. This cost reduction is not necessarily welfare-enhancing, and bundling can also reduce welfare by decreasing innovation incentives. The model is used to evaluate Microsoft's bundling of Windows with Internet Explorer and its effect on competition with Netscape.
How Should Unemployment Benefits Respond to the Business Cycle?
Authors: Kiley Michael T. 
Published: December 2005

Abstract
Unemployment insurance programs balance the benefits of consumption smoothing against the disincentive effects of unemployment benefits. This balance is likely sensitive to the cyclical state of the economy, and hence the generosity of benefits should also respond to the business cycle. The nature of such responses in an optimal unemployment insurance (UI) program is analyzed in a simple model. The results suggest that an optimal UI program would increase the initial level of benefits and probably extend higher benefits over time in response to a recessionary shock. In the simple model, an extension of benefits, such as exists automatically in the system in the United States, provides poorer insurance and poorer incentives than the optimal program, and does so at a higher cost. Moreover, the UI system in the U.S. provides a substantially higher level of welfare to workers who lose jobs during tight labor markets.