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We consider an infinite-horizon inter-generational economy with identical agents differing only in their inherited wealth and with a constant-returns-to-scale technology using capital and labour (called "effort") and displaying a purely idiosyncratic risk. If effort is contractible, full...
Persistent link: https://www.econbiz.de/10010746576
This paper reveals the underlying market’s preferences over the on going Euro area sovereign debt crisis. It builds on a loss function with reference to the ‘basis’, the difference between the spread over swap and Credit Default Swap (CDS) for sovereign bonds. This loss function is general...
Persistent link: https://www.econbiz.de/10010686658
Jim Tobin, who died on March 11, 2002 at the age of 84, was one of giants of economics of the second half of the twentieth century and the greatest macroeconomist of his generation. Tobin’s influence on macroeconomic theory is so pervasive - so much part of our professional ‘acquis’ - that...
Persistent link: https://www.econbiz.de/10011071326
dynamics and model stability when the economy goes from a low volatility-low correlation state to a high volatility …
Persistent link: https://www.econbiz.de/10011126533
This paper models uctuations in regional disaggregates as a nonsta- tionary, dynamically evolving distribution. Doing so enables study of the dynamics of aggregate uctuations jointly with those of the rich cross-section of regional disaggregates. For the US, the leading state| regardless of...
Persistent link: https://www.econbiz.de/10010928698
The Beveridge curve depicts a negative relationship between unemployed workers and job vacancies, a robust finding across countries. The position of the economy on the curve gives an idea as to the state of the labour market. The modern underlying theory is the search and matching model, with...
Persistent link: https://www.econbiz.de/10010744873
I develop a New Keynesian model in which a type of government multiplier doubles when unemployment rises from 5 percent to 8 percent. This multiplier indicates the additional number of workers employed when one worker is hired in the public sector. Graphically, in equilibrium, an upward-sloping...
Persistent link: https://www.econbiz.de/10010745284
volatility into these four sources, quantify their contribution to aggregate volatility, and study how they relate to the stage …, and slowly increases at later stages of development. Third, the volatility of country-specific macroeconomic shocks falls … with the level of development. We argue that many theories linking volatility and development are not consistent with these …
Persistent link: https://www.econbiz.de/10010884605
We show, in an exchange economy with default, liquidity constraints and no aggregate uncertainty, that state prices in a complete markets general equilibrium are a function of the supply of liquidity by the Central Bank. Our model is derived along the lines of Dubey and Geanakoplos (1992). Two...
Persistent link: https://www.econbiz.de/10010745061
This paper analyses the ECB communication, focusing in particular on its transparency dimension. We posit that if the ECB is transparent about its future policy decisions, then we should be able to forecast fairly well its future interest rate setting behaviour. We find that the predicting...
Persistent link: https://www.econbiz.de/10010745720