Introducing Time‐to‐Educate in a Job‐Search Model

Transition patterns from school to work differ considerably across OECD countries. Some countries exhibit high youth unemployment rates, which can be considered an indicator of the difficulty facing young people trying to integrate into the labour market. At the same time, education is a time‐consuming process, and enrolment and dropout decisions depend on expected duration of studies as well as on job prospects with and without completed degrees. One way to model entry into the labour market is by means of job‐search models, where the job arrival hazard is a key parameter in capturing the ease or difficulty in finding a job. Standard models of job search and education assume that skills can be upgraded instantaneously (and mostly in the form of on‐the‐job training) at a fixed cost. This paper models education as a time‐consuming process, a concept which we call time‐to‐educate, during which an individual faces the trade‐off between continuing education and taking up a job.     

Partial Communication in a Voluntary‐Contribution‐Mechanism Experiment

This paper presents results of a voluntary‐contribution‐mechanism experiment with partial communication. It was found that the trend of mean investments depended on whether a communication network was connected and on how fast all subjects could share information. When each subject could communicate with two other subjects and the network was connected, the mean investment increased from 33 percent to 58 percent of the optimal investment. On the other hand, when each subject could communicate with only one other subject and the network was not connected, the mean investment decreased from 34 percent to 19 percent of the optimal investment.     

A Note on the Most‐Favoured‐Customer Pricing Policy

This paper extends the retroactive most-favoured-customer pricing policy examined by Cooper (1986). He showed that the policy enabled both firms in a duopoly to offer higher prices and to enjoy higher profits. This paper introduces a variable into the most-favoured-customer pricing policy. Then, it shows that there is an equilibrium in which the duopolists can further increase their profits.     

The adjustment of external tariffs in the Kemp‐Wan‐Grinols compensation scheme

Abstract.  This paper considers the adjustment of external tariffs when two countries integrate and implement the Kemp‐Wan‐Grinols compensation scheme. Attention is also paid to the restrictions set by Article XXIV of GATT. This paper shows how the external tariffs would change in a three‐good, three‐country model under the assumption of gross substitutability. The results are sensitive to the initial trade pattern. In particular, they depend on the number of goods initially traded between the member countries. The analysis can be extended to a multi‐commodity model if the preferences of the countries have identical CES representation. JEL classification: F11, F15     

A Simple Characterization of the Second‐best Two‐part and Block‐rate Tariffs Theory and Applications

The general necessary optimality conditions for second‐best discrete multipart tariffs are rather complex. In this paper, we derive a simplified characterization of these conditions for two‐part tariffs and for block‐rate tariffs for given thresholds of these tariffs. The simplified necessary optimality conditions are equivalent to the necessary conditions for a Ramsey‐optimum for goods with continuously variable individually demanded quantities. We demonstrate that this characterization of second‐best multipart tariffs can be helpful, when applying the usual regulatory mechanisms to these tariffs. In particular, we consider Vogelsang–Finsinger (1979) regulation as well as a particular form of price‐cap regulation which is related to the Laspeyres index of prices.     

Parallelism in the Lab and the Field: Testing Robustness of the Minimum‐Contributing‐Set Mechanism

Efforts to "test" public‐goods provision mechanisms in field settings encounter a fundamental obstacle: investigators cannot determine whether the aggregate valuation of the public good exceeds the cost. Experimental laboratory settings can fix the provision of the public good to be efficient. This allows investigation of the performance of the mechanism under potential field settings. This paper reports the results of a set of laboratory experiments designed to test the robustness of the minimum‐contributing‐set (MCS) mechanism to field conditions. The reported results support further use and investigation of the MCS mechanism for the provision of step‐level public goods.     

Welfare Implications of Non‐scale R&D‐based Growth Models

Non‐scale R&D‐based growth models imply that the decentral and the socially optimal long‐run growth rate coincide. Nonetheless, the distortions inherent in a market economy bias both the R&D investment share and the saving rate. As a result, the level of the balanced growth path may differ substantially between the two types of solution, implying a dramatic loss in welfare. The present paper explores the sources and magnitude of this gap. In addition, the consequences of public policies are examined, distinguishing between isolated policy measures from an overall policy programme.     

Quasi‐geometric discounting: A closed‐form solution under the exponential utility function

This paper studies a discrete‐time utility maximization problem of an infinitely‐lived quasi‐geometric consumer whose labour income is subject to uninsurable idiosyncratic productivity shocks. We restrict attention to a first‐order Markov recursive solution. We show that under the assumption of the exponential utility function, the problem of the quasi‐geometric consumer admits a closed‐form solution.     

The Impact of the Rating Agencies' Through‐the‐cycle Methodology on Rating Dynamics

Surveys on the use of agency credit ratings reveal that some investors believe that credit‐rating agencies are relatively slow in adjusting their ratings. A well‐accepted explanation for this perception on rating timeliness is the through‐the‐cycle methodology that agencies use. Through‐the‐cycle ratings are intended to measure default risk over long investment horizons and to respond only to changes in the permanent component of credit quality. A second aspect of the through‐the‐cycle methodology is the prudent migration policy. In a benchmark study with a financial ratio‐based credit‐scoring models – an agency‐rating prediction model and default‐prediction models with various time horizons – we confirm the exclusive focus of agencies on the permanent component of credit quality and we model and quantify the agencies' prudent migration policy. A rating migration is triggered only when the rating predicted by the agency‐rating prediction model differs by at least a threshold level of 1.8 notch steps from the actual agency rating. If triggered, ratings are only partly adjusted by 70 per cent at the downside and 60 per cent at the upside. From a 1‐year point‐in‐time perspective, weighting temporary fluctuations in credit quality, the through‐the‐cycle methodology lowers the rating‐migration probability by a factor of 3.5. Both aspects of the through‐the‐cycle methodology contribute equally to this factor. The partial adjustment of ratings lowers the rating‐reversal probabilities on short term and introduces rating drift, the known serial correlation in agency‐rating migrations.     

Games in Dynamic‐Epistemic Logic

The author discusses games of both perfect and imperfect information at two levels of structural detail: players' local actions, and their global powers for determining outcomes of the game. Matching logical languages are proposed for both. In particular, at the 'action level', imperfect information games naturally model a combined 'dynamic‐epistemic language'– and correspondences are found between special axioms in this language and particular modes of playing games with their information dynamics. At the 'outcome level', the paper presents suitable notions of game equivalence, and some simple representation results.     

The CES‐‐Translog Production Function, Returns to Scale and AES

The translog functional form imposes no a priori restrictions on the substitution possibilities between the factor inputs, by relaxing the assumption of strong separability, and the CES–translog cost function specification allows for testing homothetic technology with Hicks‐neutral technical change. In this paper an n ‐factor CES–translog production function is presented which develops the parameters to directly assess scale effects from those due to technology in the production structure. In addition, by applying Shephard's lemma it was possible to derive the input demand functions, as well as the partial elasticities of substitution and the cross‐partial price elasticities of demand for a generalized CES–translog production structure.     

Consumer‐benefiting exclusive territories

Abstract.  I investigate the effect of exclusive territories, which are typical vertical controls imposed by upstream firms. Using shipping spatial models, I consider an industry that consists of many independent local markets. An upstream monopolist restricts competition between downstream firms using exclusive territories. I find that exclusive territories reduce the prices of final products in all local markets in quantity‐setting competition. In price‐setting competition, they raise prices in half the local markets, reduce them in other markets, and also reduce the total consumer surplus. JEL classification: L42, R32     

Church‐based Credit Cooperatives in Germany

Abstract The traditional business focus of credit co‐operatives is locally oriented and business success is explained by the efficient way to induce monitoring of borrowers. Church‐based credit co‐operatives in Germany are not that locally oriented but were extraordinary successful over the last decades. First, this analysis describes the special characteristics of church‐based institutions compared to other credit co‐operatives. This part is based on a historical backward glance, an analysis of annual reports and a survey on their business policy. Second, we discuss the special characteristics of church‐based credit co‐operatives to explain the business success in a broader context and to understand the perspectives of credit co‐operative banking beyond the local orientation.     

Governance in Democratic Member‐Based Organisations

Abstract This paper considers issues of governance in democratic member‐based organisations (DMOs), such as co‐operatives and mutual societies. It examines the processes whereby members' interests are mediated through the democratic process, and the board; and it explores some of the factors influencing the power of managers. It goes on to argue that the system of governance in DMOs in their institutional context runs the risks of managers becoming powerful and entrenched in poorly performing social economy organisations, unless countervailing measures are adopted.     

Liquidity Effects in Non‐Ricardian Economies

It has often been found difficult to generate a liquidity effect (i.e., a negative effect of monetary injections on the nominal interest rate) in the traditional “Ricardian” stochastic dynamic model with a single infinitely lived household. We show that moving to a non‐Ricardian environment where new agents enter the economy in each period allows such a liquidity effect to be generated.     

Testing for Temporal Asymmetry in the Price‐Volume Relationship

This paper presents some evidence for the presence of temporal asymmetry in the price-volume relationship in the crude oil futures market. By using threshold models we show that there is bidirectional causality between volume and prices, whereas the conventional model that assumes symmetry can only detect unidirectional causality. The results also show that the price-volume relationship is asymmetric, in the sense that negative price and volume changes have stronger effects (on each other) than positive changes. Some explanations for asymmetry in the price-volume relationship are suggested.     

Fiscal policy, long‐run growth, and welfare in a stock‐flow model of public goods

Abstract.  We introduce public capital and public services as inputs in an endogenous growth model. We show that the growth rate depends on the apportionment of tax revenues between the accumulation of public capital and the provision of public services. When public spending is financed by proportional income taxes, the growth rate, the level of public spending as a proportion of GDP, the level of investment in public capital as a proportion of total public spending, and the level of private investment as a proportion of total private spending all are lower in the equilibrium outcome than in the optimal outcome. JEL classification: E62, O40     

Governance and Management of Collective User‐Based Enterprises: Value‐Creation Strategies and Organizational Configurations

Abstract The evolution of the collective enterprise may be conceptualized in three phases throwing into relief five strategies for the creation of value. The first corresponds to the emergence of a collective enterprise, an innovation in itself. The second, the spread of the innovation by replication, is linked to federalization and to the beginning of standardization. The tension between innovation and standardization begin to make a difference as early as this replication phase, but later it becomes more critical. It forces the collective enterprise to avoid wholesale standardization, an outmoded option, and instead allows space for considering one of the two strategies for the creation of value in keeping both with its distinctive social economy identity and with the new strategic approaches centred on the competences of the enterprise and the creation of value for the user. Thus, the collective user enterprise may move forward by focusing, i.e., by even greater innovation in its provision for a target group of members. The collective enterprise may also progress by hybridization, i.e., through re‐combining in a better way the innovation and standardization required to respond, effectively and efficiently, to a group of owners that is not only very large, but also highly diversified. The authors identify the organizational configuration for each pattern of value‐creation by concentrating on governance structures and the role of managers .     

Monetary policy in a cash‐in‐advance economy: employment, capital accumulation, and the term structure of interest rates

Abstract.  In this paper we study the effects of monetary policies on employment, capital accumulation, consumption, and the term structure of interest rates in a cash‐in‐advance economy, where money is required for consumption expenditures. Monetary policy involves targeting the inflation rate. The detailed dynamics of the model are fully worked out. As no numerical analysis is involved, we are able to identify very clearly the different channels through which monetary policy will impinge on the important macroeconomic variables. The model is also used to discuss the 'Great Canadian Slump.' JEL Classification: E52 and E43