Termination restrictions and investment in general training

Conditional separation payments efficiently increase firms’ investment in general training if the latter is not directly contractible. Since training is vested in the worker on separation, a firm's return to training is zero when a match ends or, more generally, when the firm's outside return is binding. Large enough conditional separation penalties ensure that, independently from outside opportunities, the ex post situation is one of bilateral monopoly. This allows the firm to capture a positive share of the return to the general component of training in all states of nature. A fixed wage contract and large enough separation penalties ensure that the firm's investment decision is fully efficient if training is general in Becker's (1964) sense.     

BUFFER-STOCK SAVING AND HOUSEHOLDS' RESPONSE TO INCOME SHOCKS

We exploit information on the joint dynamics of household labor income, consumption, and wealth in the Italian Survey of Household Income and Wealth to structurally estimate a buffer-stock saving model. We compare the degree of consumption smoothing implied by the model to the corresponding empirical estimates based on the same data set. We estimate that Italian households smooth 12% of permanent income shocks in the data that is comparable to the model counterpart of 11% . This result contrasts with existing evidence, and our own findings in this article, of substantially more consumption smoothing in U.S. data.     

Cournot-Walras and Cournot equilibria in mixed markets: A comparison

Summary In this paper, we show that, in markets with a continuum of traders and atoms, the set of Cournot-Walras equilibria and the set of Cournot equilibria may be disjoint. We show also that, when the preferences of the traders are represented by Cobb-Douglas utility functions, the set of Cournot-Walras equilibria and the set of Cournot equilibria have a nonempty intersection.I would like to thank R. Amir, B. de Meyer, J. J. Gabszewicz, J.-F. Mertens, H. Polemarchakis and L. Ventura for some helpful discussions about the questions examined in the present work.     

Systemic risk measurement: Multivariate GARCH estimation of CoVaR

We modify Adrian and Brunnermeier’s (2011) CoVaR, the VaR of the financial system conditional on an institution being in financial distress. We change the definition of financial distress from an institution being exactly at its VaR to being at most at its VaR. This change allows us to consider more severe distress events, to backtest CoVaR, and to improve its consistency (monotonicity) with respect to the dependence parameter. We define the systemic risk contribution of an institution as the change from its CoVaR in its benchmark state (defined as a one-standard deviation event) to its CoVaR under financial distress. We estimate the systemic risk contributions of four financial industry groups consisting of a large number of institutions for the sample period June 2000 to February 2008 and the 12 months prior to the beginning of the crisis. We also investigate the link between institutions’ contributions to systemic risk and their characteristics.     

Nonlinear adjustment in US bond yields: An empirical model with conditional heteroskedasticity

Starting from the work by Campbell and Shiller (Campbell, J.Y. and Shiller, R.J. (1987). Cointegration and tests of present value models. Journal of Political Economy, 95(5):1062–1088.), empirical analysis of interest rates has been conducted in the framework of cointegration. However, parts of this approach have been questioned recently, as the adjustment mechanism may not follow a simple linear rule; another line of criticism points out that stationarity of the spreads is difficult to maintain empirically.     

Kalai and Muller’s possibility theorem: a simplified integer programming version

We provide a respecification of an integer programming characterization of Arrovian social welfare functions introduced by Sethuraman et al. (Math Oper Res 28:309–326, 2003). By exploiting this respecification, we give a new and simpler proof of Theorem 2 in Kalai and Muller (J Econ Theory 16:457–469, 1977).     

Economic Power and the Firm in New Institutional Economics: Two Conflicting Problems

The objective of this study has been to undertake an analysis of the economic and institutional determining factors of fiscal pressure in a group of European countries with different levels of economic development, recent history, or level of cooperation and integration among them. We have used a panel of data from 40 countries and a time period of eleven years. Apart from the variables generally used, we have introduced additional ones such as governing party ideology, rate of economic freedom of Euro-area countries, together with another set of institutional variables. Results obtained show that the purely economic model improves when institutional and geopolitical variables are included and, in this way, it is possible to see which countries governed by the left, belonging to the Euro-area or having been members of the Soviet block, and with economic freedom, are more liable to increase fiscal pressure.     

Does Local Co-operation Matter? Evidence from Industrial Clusters in South Asia and Latin America

Comparing the Korean labour productivity growth in the last two decades with the Japanese and US labour productivity growth, data confirm a process of catching up in several important manufacturing sectors. The paper investigates its determinants using a non-neoclassical model. Investments in skills and capabilities are found to be crucial in explaining this trend. Important policy implications for developing countries are then discussed. In the long run, a targeted education policy with government intervention and a strong emphasis on technical education can give high pay-offs. This conclusion holds in particular when the aim of the country is to compete in the international markets, not along the low road to competitiveness, based on squeezing wages and profit margins, but along the high road (i.e. improving productivity, wages and profits).     

A biased firm in a market with complementary products. A note on the welfare effects

We analyse a duopoly setting with complementary products, in which a firm has a bias about its absolute advantage. We show that the bias can internalize parts of the negative externality that the complementarity of goods creates implying a higher producer's surplus. Moreover, we analyse additional conditions, which lead to an increase in the consumer's surplus. Counterintuitively, we show that the presence of a bias can lead to a positive welfare effect.