Monotonic matching in search equilibrium

It is well-known from Becker’s [Becker, G., 1973. A theory of marriage, Part I. Journal of Political Economy 81, 813–846] analysis of the neoclassical marriage market that matching is positive assortative if agent-types are complements in household production. Shimer and Smith [Shimer, R., Smith, L., 2000. Assortative matching and search. Econometrica 68, 343–369] have shown that this result does not generally extend to markets with search frictions, and they provide additional conditions on the production function that guarantee assortative matching in these settings. Here, the relationship between the Shimer–Smith restrictions and equilibrium matching pattern is considered, and alternative proofs of their results on assortative matching are provided.     

On-the-job search equilibrium with endogenous unemployment benefits

This paper develops an on-the-job search model with wage posting where unemployment benefits are proportional to past wages. We emphasize that this contributes to increasing the reservation wages of unemployed workers and introduces a feedback effect of the distribution of wages on the distribution of unemployment benefits. We show that the model predictions are consistent with some stylized French facts and quantify the impact of inefficient rejections of low-wage offers by the unemployed. We find that, by reducing the indexing of unemployment benefits to previous earnings and increasing lump-sum transfers, it is possible to increase both employment and welfare.     

The threat of counterfeiting in competitive search equilibrium

This paper studies counterfeiting of bank notes in a monetary model under competitive search. The application of the refinement scheme proposed by Guerrieri et al. (2010) shows that there is no equilibrium with counterfeiting. However, due to the entry margin, counterfeiting poses a threat to the existence of a monetary equilibrium: there is no monetary equilibrium if the cost of producing counterfeits is low enough. Moreover, the threat of counterfeiting can generate an endogenous resalability constraint. An extension of the model is provided which allows the threat of counterfeiting to materialize, in that some buyers cannot observe the offers, and therefore search randomly. Counterfeit notes are produced by those buyers who randomly search.     

Urban general equilibrium models and simplicial search algorithms

This paper describes how simplicial search algorithms work, and discusses how they may be used to solve static theoretical urban models. If such algorithms are to be used, land must be treated as consisting of a number of discrete sections. It is argued that this is not a serious disadvantage, and that for many purposes such discrete models have significant advantages over models in which land is treated as continuous. In particular, it is possible to deal with several groups of people having different tastes and incomes. Several related models are described, and some interesting qualitative results are presented.     

A dynamic equilibrium model of search, production, and exchange

We study a general equilibrium model where agents search for production and trading opportunities, that generalizes the existing literature by considering a large number of differentiated commodities and agents with idiosyncratic tastes. Thus, agents must choose nontrivial exchange as well as production strategies. We consider decreasing, constant, and increasing returns to scale in the matching technology, and characterize the circumstances under which there exist multiple steady state equilibria, or multiple dynamic equilibria for given initial conditions. We also characterize the existence of dynamic equilibria that are limit cycles. Equilibria are not generally optimal, and when multiple equilibria coexist they may be ranked. We analyze comparative statics and find that certain intuitive results do not necessarily hold without restrictions on the stochastic structure.     

Commitment, advertising and efficiency of two-sided investment in competitive search equilibrium

Competitive search entails both commitment to and advertising of pay-off relevant aspects of market participants. This paper considers incrementally the implications of each in a labor market where both workers and firms invest prior to market entry. A wide range of institutional arrangements are addressed within the same general framework. When the characteristics of jobs or workers are advertised the efficient outcome pertains. Commitment without advertising typically leads to market unravelling: the Diamond paradox. But, whenever wages and human capital are advertised, firms become residual claimants; the private and social returns to investment coincide. Absent wage commitment, the Hosios condition implies efficiency when investments are advertised.     

Multifrequency jump-diffusions: An equilibrium approach

This paper proposes that equilibrium valuation is a powerful method to generate endogenous jumps in asset prices. We specify an economy with continuous consumption and dividend paths, in which endogenous price jumps originate from the market impact of regime-switches in the drifts and volatilities of fundamentals. We parsimoniously incorporate regimes of heterogeneous durations and verify that the persistence of a shock endogenously increases the magnitude of the induced price jump. As the number of frequencies driving fundamentals goes to infinity, the price process converges to a novel stochastic process, which we call a multifractal jump-diffusion.     

An equilibrium model of city size

This paper develops an equilibrium model of city size in which population distribution, real prices, and real wages are determined. Two possible modifications are considered, one involving externalities. The partial equilibrium changes resulting from these modifications are derived and seen to be quite different from the general equilibrium changes. Finally, the paper suggests that site-specific factors of production must be introduced into any consistent model of city size.     

Spatial mismatch: An equilibrium analysis

The spatial mismatch hypothesis, first stated by Kain (1968) argues that job decentralization in US cities has contributed to low incomes and high unemployment rates for black Americans. Decentralization relocates job sites to white suburban communities far from the CBD, and housing segregation prevents blacks from relocating their residences near the new workplaces. The purpose of the paper is to analyze an urban equilibrium with spatial mismatch. Despite the existence of a suburban employment center, blacks in the model are forced to live in the central zone they occupied in the original monocentric city, commuting across the white residential area to access suburban jobs. This ‘mismatch’ equilibrium is contrasted with an unrestricted equilibrium where blacks are free to locate wherever they choose.     

An integration of equilibrium theory and turnpike theory

A turnpike theorem is proved for a general equilibrium model with finitely many immortal consumers.     

Labor market policy evaluation in equilibrium: Some lessons of the job search and matching model

We analyze the consequences of counseling provided to job seekers in a standard job search and matching model. It turns out that neglecting equilibrium effects induced by counseling can lead to wrong conclusions. In particular, counseling can increase steady state unemployment although counseled job seekers exit unemployment at a higher rate than the non-counseled. Dynamic analysis shows that permanent and transitory policies can have effects of opposite sign on unemployment.     

An equilibrium existence theorem without complete or transitive preferences

The Walrasian equilibrium existence theorem is reproved without the assumptions of complete of transitive preferences.     

An equilibrium model of insider trading in continuous time

We study a Bayesian–Nash equilibrium model of insider trading in continuous time. The supply of the risky asset is assumed to be stochastic. This supply can be interpreted as noise from nonrational traders (noise traders). A rational informed investor (the insider) has private information on the growth rate of the dividend flow rewarded by the risky asset. She is risk averse and maximizes her inter-temporal utility rate over an infinite time-horizon. The market is cleared by a risk neutral market maker who sets the price of the risky asset competitively as the conditional present value of future dividends, given the information supplied by the dividend history and the cumulative order flow. Due to the presence of noise traders, the market demand does not fully reveal the insider’s private information, which slowly becomes incorporated in prices. An interesting result of the paper is that a nonstandard linear filtering procedure gives an a priori form for the equilibrium strategy to be postulated. We show the existence of a stationary linear equilibrium where the insider acts strategically by taking advantage of the camouflage provided by the noise which affects the market maker’s estimates on private information. In this equilibrium, we find that the insider’s returns on the stock are uncorrelated over long periods of time. Finally, we show that the instantaneous variance of the price under asymmetric information lies between the instantaneous variance of the price under complete and incomplete information. The converse inequalities hold true for the unconditional variance of the price.     

An equilibrium existence result for an economy with land

This research uses a different set of assumptions for land than those used in the standard general equilibrium framework. In particular, land is modelled explicitly as a subset of the plane with anything immobile, from flowers and trees to houses, embedded in it. There is a finite number of consumers with preference orderings over land parcels satisfying certain axioms along with endowments of land that partition this subset of the plane. Allowing for recombinations of parcels, the main result demonstrates the existence of prices in L¹ and a partition of land among consumers so that the land market clears.     

Inflation tax in the lab: a theoretical and experimental study of competitive search equilibrium with inflation

In this paper we measure the effect of the inflation tax on economic activity and welfare within a controlled setting. To do so, we develop a model of price posting and monetary exchange with inflation and finite populations. The model, which provides a game–theoretic foundation to Rocheteau and Wright (2005)׳s competitive search monetary equilibrium, is used to derive theoretical propositions regarding the effects of inflation in this environment, which we test with a laboratory experiment that closely implements the theoretical framework. We find that the inflation tax is harmful – with cash holdings, production and welfare all falling as inflation rises – and that its effect is relatively larger at low inflation rates than at higher rates. For instance, for inflation rates between 0% and 5%, welfare in the two markets we consider (2[seller]×2[buyer] and 3×2) falls by roughly 1 percent for each percentage–point rise in inflation, compared with 0.4 percent over the range from 5% to 30%. Our findings lead us to conclude that the impact of the inflation tax should not be underestimated, even under low inflation.     

An enhanced dynamic hash TRIE algorithm for lexicon search

Information retrieval (IR) is essential to enterprise systems along with growing orders, customers and materials. In this article, an enhanced dynamic hash TRIE (eDH-TRIE) algorithm is proposed that can be used in a lexicon search in Chinese, Japanese and Korean (CJK) segmentation and in URL identification. In particular, the eDH-TRIE algorithm is suitable for Unicode retrieval. The Auto-Array algorithm and Hash-Array algorithm are proposed to handle the auxiliary memory allocation; the former changes its size on demand without redundant restructuring, and the latter replaces linked lists with arrays, saving the overhead of memory. Comparative experiments show that the Auto-Array algorithm and Hash-Array algorithm have better spatial performance; they can be used in a multitude of situations. The eDH-TRIE is evaluated for both speed and storage and compared with the naïve DH-TRIE algorithms. The experiments show that the eDH-TRIE algorithm performs better. These algorithms reduce memory overheads and speed up IR.     

An algorithm for the single commodity spatial price equilibrium problem

This paper presents a serial decomposition algorithm for the solution of the static single commodity spatial price equilibrium problem. The computational performance of this algorithm on randomly generated examples suggests that this method is more efficient and requires no more computer storage than other algorithms previously suggested for this problem.