This paper proposes a stochastic model of investment with embodied technological progress, in which firms invest not only to expand the capacity as in Pindyck (1988) but also to replace old machines. The scrapping decision or the age of the oldest machine is then endogenous and evolves...

This paper considers measures of uncertainty used in economic estimation. Our first contribution is to address the theoretical relationship between cross-section and time series measures, highlighting the reasons why these might diverge. In a subsequent empirical section, we compare measures of...

This paper investigates (i) what has determined the land investment behavior of Japanese firms since the latter half of the 1980s; and (ii) how the current market prices of their land assets diverge from their shadow prices (marginal values of land investment). To do so, we estimate nonlinear...

Since a big proportion of the labor force in developing countries belongs to the self-employment sector, it is desirable to build models to study these dynamics. Previous works study the occupational choices of agents. The most recent ones build general equilibrium economies with three types of...

This paper seeks to shed light on how manufacturing job flows and productivity in Argentina were affected during the 1990s by economic reforms in general and particularly by: a) financial shocks, b) labor reforms that change non-wage labor costs, c) trade reforms that alter tariff dispersion, d)...

Researchers have incorporated labor or credit market frictions in isolation within simple neoclassical models to open up a role for institutions, inject realism into their models and examine the impact of these distortions on output and employment. We present an overlapping generations model...

In a closed economy general equilibrium model, Hopenhayn and Rogerson (1993) find large welfare gains to removing firing restrictions. We explore the extent to which international trade alters this result. When economies trade, labor market policies in one country spill over to other countries...

I construct a model of equilibrium unemployment where workers and firms enter into dynamic labor contracts. The model is in the spirit of the models of efficiency wages (e.g. Shapiro and Stiglitz (1984) in that I rely on moral hazard to give rise to involuntary unemployment. Compared the...

Inflation can “grease†the wheels of the labor market by relaxing downward wage rigidity but it can also increase uncertainty and have a negative “sand†effect. This paper studies the grease effect of inflation by looking at whether the interaction between inflation and labor...