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This paper considers a dynamic matching model with imperfectly observable worker effort as in Shapiro and Stiglitz (1994). In our economy the no-shirking condition endogenously imposes real wage rigidity on the matching market. This generates "contractual fragility" and inefficient separations...
Persistent link: https://www.econbiz.de/10005706170
\\begin{abstract} Lucas (1976) pointed out, that when optimization is performed on a deterministic macro model, the resulting policy may not reflect the true optimal solution. Private agents may react to announced policies and consequently model parameters will start to drift. The aim of this...
Persistent link: https://www.econbiz.de/10005537760
Persistent link: https://www.econbiz.de/10005345404
This paper studies the impact of monetary policy transparency on economic stability, when economic agents are boundedly rational. I first consider a simple class of microfunded general equilibrium models with nominal rigidities and learning. Under a transparent monetary regime, market...
Persistent link: https://www.econbiz.de/10005706540
Persistent link: https://www.econbiz.de/10005706605
Empirical literature on investment and output dynamics is characterized by two robust stylized facts at the macro level. First, investment is considerably more volatile than output. Second, fluctuations of output and investment are highly synchronized. Furthermore, at the micro level, firm...
Persistent link: https://www.econbiz.de/10005132800
Our empirical investigation reveals that less democratic countries have higher volatility of GDP growth rates … commonly cited reasons in the literature, as the main determinant of volatility. To explain this observation we use a … policies are pro-cyclical in some countries, in addition to providing reasons for differences in volatility of growth rates …
Persistent link: https://www.econbiz.de/10005132614
There is a general argument saying that adding derivative securities (options) to a financial market makes the market more efficient, and has therefore a stabilising effect. We investigate this claim by adding Arrow securities on future states of the world in the asset pricing model with...
Persistent link: https://www.econbiz.de/10005132781
We provide sufficient conditions and necessary conditions for stability of an economy under structural mixed recursive least squares/stochastic gradient heterogeneous learning of agents with possibly different degrees of inertia. We have found a unifying condition which is sufficient for...
Persistent link: https://www.econbiz.de/10005342904
In our dynamic optimizing sticky price model, agents are heterogenous with regard to their assets and their income. Unanticipated inflation redistributes income and wealth. In order to model the wealth distribution, we study a 60-period OLG model with aggregate uncertainty. A positive technology...
Persistent link: https://www.econbiz.de/10005345083