Can Unemployment Insurance Spur Entrepreneurial Activity? Evidence from France

We evaluate the effect of downside insurance on self-employment. We exploit a large-scale reform of French unemployment benefits that insured unemployed workers starting businesses. The reform significantly increased firm creation without decreasing the quality of new entrants. Firms started postreform were initially smaller, but their employment growth, productivity, and survival rates are similar to those prereform. New entrepreneurs' characteristics and expectations are also similar. Finally, jobs created by new entrants crowd out employment in incumbent firms almost one-for-one, but have a higher productivity than incumbents. These results highlight the benefits of encouraging experimentation by lowering barriers to entry.     

The remarkable wealth of the Dutch Cape Colony: measurements from eighteenth‐century probate inventories1

How comfortable was the life of the average settler in the Dutch Cape Colony of the eighteenth century? The generally accepted view is of a poor, subsistence economy, with little progress being made in the 143 years of Dutch rule (1652–1795). This article shows that new evidence from probate inventory and auction roll records contradicts earlier historical accounts. These documents bear witness to a relatively affluent settler society, comparable to some of the most prosperous regions of eighteenth‐century England and Holland. This detailed picture of the material wealth of the Colony should inspire a revision of the standard accounts. The causes and consequences of this prosperity are also considered briefly.     

News Trading and Speed

We compare the optimal trading strategy of an informed speculator when he can trade ahead of incoming news (is “fast”), versus when he cannot (is “slow”). We find that speed matters: the fast speculator's trades account for a larger fraction of trading volume, and are more correlated with short‐run price changes. Nevertheless, he realizes a large fraction of his profits from trading on long‐term price changes. The fast speculator's behavior matches evidence about high‐frequency traders. We predict that stocks with more informative news are more liquid even though they attract more activity from informed high‐frequency traders.     

Nonuniform Staggered Prices and Output Persistence

Staggered prices are a fundamental building block of New Keynesian dynamic stochastic general equilibrium models. In the standard model, prices are uniformly staggered, but recent empirical evidence suggests that deviations from uniform staggering are common. This paper analyzes how synchronization of price changes affects the response to monetary policy shocks. I find that even large deviations from uniform staggering have small effects on the response of output. Aggregate dynamics in a model of uniform staggering may serve well as an approximation to a more complicated model with some degree of synchronization in price setting.     

Financial Flexibility,Bank Capital Flows,and Asset Prices

In our parsimonious general‐equilibrium model of banking and asset pricing, intermediaries have the expertise to monitor and reallocate capital. We study financial development, intraeconomy capital flows, the size of the banking sector, the value of intermediation, expected market returns, and the risk of bank crashes. Asset pricing implications include: a market's dividend yield is related to its financial flexibility, and capital flows should be important in explaining expected returns and the risk of bank crashes. Our predictions are broadly consistent with the aggregate behavior of U.S. capital markets since 1950.     

AN APPLICATION OF SEQUENTIAL REGRESSION MULTIPLE IMPUTATION ON PANEL DATA

The relatively new sequential regression multiple imputation (SRMI) method is introduced, with the process of SRMI laid out in detail. The Project for Statistics on Living Standards and Development and the follow‐up KwaZulu‐Natal Income Dynamics Study provide the real panel data on which the methods reviewed are applied. The SRMI process is used to create multiple datasets completed with values imputed for data originally missing, and using the error component model estimation procedures and Rubin's rules, inferences on the panel data are made. Conclusions are drawn as to the applicability of the SRMI process to these data and as to the results of the regression analyses completed.     

A CONSUMER PRICE INDEX FOR SWEDEN, 1290–2008

This paper presents a Consumer Price Index for Sweden 1290–2008. Constructing an index that covers more than seven centuries poses conceptual and empirical problems, and demands some methodological innovations. For example, during numerous occasions the currency unit was changed, and in some periods multiple currencies were used at floating exchange rates relative to each other. This paper also presents two different price indices, one that mainly serves the purposes of estimating real prices and real wages, and another that provides a measure of inflation. While the former follows the main currency unit, the latter also takes into account that debased coins were devalued during recoinage.