Rank Regressions, Wage Distributions and the Gender Gap.

In this paper, we model the interactions between the distribution of male and female wages under the assumption that any change in the wage distribution of women must be offset by an opposite change in the wage distribution of men.

Investment Under Demand Uncertainty: the Newsboy Problem Revisited.

In this article we study the effect of uncertainty on an entrepreneur who must choose the capacity of his business before knowing the demand for his product. The unit profit of operation is known with certainty but there is no flexibility in our one-period framework. We show how the introduction of global uncertainty reduces the investment of the risk neutral entrepreneur and, even more, that the risk averse one. We also show how marginal increases in risk reduce the optimal capacity of both the risk neutral and the risk averse entrepreneur, without any restriction on the concave utility function and with limited restrictions on the definition of a mean preserving spread. These general results are explained by the fact that the newsboy has a piecewise-linear, and concave, monetary payoff witha kink endogenously determined at the level of optimal capacity. Our results are compared with those in the two literatures on price uncertainty and demand uncertainty, and particularly, with the recent contributions of Eeckhoudt, Gollier and Schlesinger (1991, 1995).

The Transformation Problem : an Aleternative Solution with an Identical Aggregate Profit Rate in the Labor value and the Monetary Space.

The aim of this paper is to demonstrate that, even if Marx's solution to the transformation problem can be modified, his basic conclusions remain valid. the proposed alternative solution which is presented hare is based on the constraint of a common general profit rate in both spaces and a money wage level which will be determined simultaneously with prices.

The Wage Rate and the Profit Rate in the Price of Production Equation: a New Solution to an Old Problem

The aim of this paper is to demonstrate that, even if Marx's solution to the transformation problem can be modified, his basic concusions remain valid.

Reported Job Satisfaction : What Does It Mean?

By reporting his satisfaction with his job or any other experience, an individual does not communicate the number of utils that he feels. Instead, he expresses his posterior preference over available alternatives conditional on acquired knowledge of the past. This new interpretation of reported job satisfaction restores the power of microeconomic theory without denying the essential role of discrepancies between one’s situation and available opportunities. Posterior human wealth discrepancies are found to be the best predictor of reported job satisfaction. Static models of relative utility and other subjective well-being assumptions are all unambiguously rejected by the data, as well as an \"economic\" model in which job satisfaction is a measure of posterior human wealth. The \"posterior choice\" model readily explains why so many people usually report themselves as happy or satisfied, why both younger and older age groups are insensitive to current earning discrepancies, and why the past weighs more heavily than the present and the future.

Heterodox Inflation Stabilization in Argentina, Brazil, and Israel. A Historical Review and Some Stylized Facts

This article presents a review of the stabilization attempts in Argentina, Brazil, and Israel during the 1980’s. Earlier research is summarized and complemented with additional sources of contemporaneous information and a detailed analysis of institutional features. The examination of these episodes underscores the strong economic and empirical relationship between the governments’ fiscal policy and the rate of inflation.

Explaining the Persistence of Commodity Prices

This paper extends the Competitive Storage Model by incorporating prominent features of the production process and financial markets. A major limitation of this basic model is that it cannot successfully explain the degree of serial correlation observed in actual data. The proposed extensions build on the observation that in order to generate a high degree of price persistence, a model must incorporate features such that agents are willing to hold stocks more often than predicted by the basic model. We therefore allow unique characteristics of the production and trading mechanisms to provide the required incentives. Specifically, the proposed models introduce (i) gestation lags in production with heteroskedastic supply shocks, (ii) multiperiod forward contracts, and (iii) a convenience return to inventory holding. The rational expectations solutions for twelve commodities are numerically solved. Simulations are then employed to assess the effects of the above extensions on the time series properties of commodity prices. Results indicate that each of the features above partially account for the persistence and occasional spikes observed in actual data. Evidence is presented that the precautionary demand for stocks might play a substantial role in the dynamics of commodity prices.

Uncovering Financial Markets Beliefs About Inflation Targets

This paper exploits the term structure of interest rates to develop testable economic restrictions on the joint process of long-term interest rates and inflation when the latter is subject to a targeting policy by the Central Bank. Two competing models that econometrically describe agents’ inferences about inflation targets are developed and shown to generate distinct predictions on the behavior of interest rates. In an empirical application to the Canadian inflation target zone, results indicate that agents perceive the band to be substantially narrower than officially announced and asymmetric around the stated mid-point. The latter result (i) suggests that the monetary authority attaches different weights to positive and negative deviations from the central target, and (ii) challenges on empirical grounds the assumption, frequently made in the literature, that the policy maker’s loss function is symmetric (usually a quadratic function) around a desired inflation value.

Non-Commitment and Savings in Dynamic Risk-Sharing Contracts

We characterize the solution to a model of consumption smoothing using financing under non-commitment and savings. We show that, under certain conditions, these two different instruments complement each other perfectly. If the rate of time preference is equal to the interest rate on savings, perfect smoothing can be achieved in finite time. We also show that, when random revenues are generated by periodic investments in capital through a concave production function, the level of smoothing achieved through financial contracts can influence the productive investment efficiency. As long as financial contracts cannot achieve perfect smoothing, productive investment will be used as a complementary smoothing device.

Sector-Specific Training and Mobility in Germany

This article studies mobility patterns of German workers in light of a model of sector-specific human capital. Furthermore, I employ and describe little-used data on continuous on-the-job training occurring after apprenticeships. Results are presented describing the incidence and duration of continuous training. Continuous training is quite common, despite the high incidence of apprenticeships which precedes this part of a worker's career. Most previous studies have only distinguished between firm-specific and general human capital, usually concluding that training was general. Inconsistent with those conclusions, I show that German men are more likely to find a job within the same sector if they have received continuous training in that sector. These results are similar to those obtained for young U.S. workers, and suggest that sector-specific capital is an important feature of very different labor markets. In addition, they suggest that the observed effect of training on mobility is sensible to the state of the business cycle, indicating a more complex interaction between supply and demand that most theoretical models allow for.

Wage Flexibility and Contract Structure in Germany

In this paper, we look at how labor market conditions at different points during the tenure of individuals with firms are correlated with current earnings. Using data on individuals from the German Socioeconomic Panel for the 1985-1994 period, we find that both the contemporaneous unemployment rate and prior values of the unemployment rate are significantly correlated with current earnings, contrary to results for the American labor market. Estimated elasticities vary between 9 and 15 percent for the elasticity of earnings with respect to current unemployment rates, and between 6 and 10 percent with respect to unemployment rates at the start of current firm tenure. Moreover, whereas local unemployment rates determine levels of earnings, national rates influence contemporaneous variations in earnings. We interpret this result as evidence that German unions do, in fact, bargain over wages and employment, but that models of individualistic contracts, such as the implicit contract model, may explain some of the observed wage drift and longer-term wage movements reasonably well. Furthermore, we explore the heterogeneity of contracts over a variety of worker and job characteristics. In particular, we find evidence that contracts differ across firm size and worker type. Workers of large firms are remarkably more insulated from the job market than workers for any other type of firm, indicating the importance of internal job markets.

Les facteurs declencheurs des crises financieres internationales

Ce rapport s'inscrit dans la problematique soulevée par l'insistance des milieux financiers américains et du Trésor américain à libéraliser et à globaliser les mouvements internationaux de capitaux. Dans cette perspective, il tente de répondre à trois questions, à savoir 1) est-ce que la finance internationale en général et les institutions monétaires et financières nationales et internationales sont sources d'instabilité financière et économique pour les pays? 2) est-il possible d'éviter que les bénéfices découlant de l'accès accru aux marchés internationaux des capitaux soient diminués et même renversés par des crises monétaires et financières internationales et nationales et, comme corollaire, 3) est-ce que le systême actuel des monnaies nationales est dépassé ?

Distortionary Taxation and Labor Supply: Evidence from Canada.

This paper examines empirically the effects of distortionary taxation on labor supply using a general equilibrium framework. The long-term relations predicted by the model are derived and tested using Canadian data between 1966 and 1993. While the cointegrating predictions of the model without taxation are rejected, the ones of the model with labor taxation are not. Persistent labor tax rate increases appear to play an important role in the observed downward trend in hours worked.

The Inflation Bias When the Central Bank Targets, the Natural Rate of Unemployment

This paper studies the proposition that an inflation bias can arise in a setup where a central banker with asymmetric preferences targets the natural unemployment rate. Preferences are asymmetric in the sense that positive unemployment deviations from the natural rate are weighted more (or less) severely than negative deviations in the central banker's loss function. The bias is proportional to the conditional variance of unemployment. The time-series predictions of the model are evaluated using data from G7 countries. Econometric estimates support the prediction that the conditional variance of unemployment and the rate of inflation are positively related.

Environmental Risks : Should Banks Be Liable?

This paper studies the impact of banks' liability for environmental damages caused by their borrowers. Laws or court decisions that declare banks liable for environmental damages have two objectives : (1) finding someone to pay for the damages and (2) exerting a pressure on a firm's stakeholders to incite them to invest in environmental risk prevention. We study the effect that such legal decisions can have on financing relationships and especially on the incentives to reduce environmental risk in an environment where banks cannot commit to refinance the firm in all circumstances. Following an environmental accident, liable banks more readily agree to refinance the firm. We then show that bank liability effectively makes refinancing more attractive to banks, therefore improving the firm's risk-sharing possibilities. Consequently, the firm's incentives to invest in environmental risk reduction are weakened compared to the (bank) no-liability case. We also show that, when banks are liable, the firm invests at the full-commitment optimal level of risk reduction investment. If there are some externalities such that some damages cannot be accounted for, the socially efficient level of investment is greater than the privately optimal one. in that case, making banks non-liable can be socially desirable.