Bidding for Labor

We present a competing-auction theory of the labor market, where job candidates auction their labor services to employers. An equilibrium matching function emerges which has many of the features commonly assumed, including constant returns to scale in large economies. The auction mechanism also generates equilibrium wage dispersion among homogeneous workers and constrained-efficient entry of vacancies in large economies. In a dynamic version of the model, we generate implied numerical values for equilibrium unemployment and wage dispersion. The theory makes the novel prediction that wage dispersion is a decreasing function of the discount factor and labor market tightness. Journal of Economic Literature Classification Numbers: E24, J31, J41, J64, D44.     

The natural rate of interest and the output gap in the euro area: a joint estimation

The notion of a natural real rate of interest, due to Wicksell (Interest and prices. Macmillan, London Translation of 1898 edition, 1936), is widely used in current central bank research. The idea is that there exists a level at which the real interest rate would be compatible with output at its potential level and stationary inflation. Such a concept is of primary concern for monetary policy because it provides a benchmark for the monetary policy stance. This paper applies the method suggested by Laubach and Williams (Rev Econ Stat 85(4):1063–1070, 2003) to jointly estimate the natural real interest rate and the output gap in the euro area using data from 1960 onwards. Our results suggest that the natural real rate of interest has declined gradually over the past 40 years. They also indicate that monetary policy in the euro area was on average stimulative during the 1960s and the 1970s, while it contributed to dampen the output gap and inflation in the 1980s and 1990s. The views expressed in this paper are those of the authors and do not necessarily reflect the opinions of the institutions to which they are affiliated. We are grateful to Siem Jan Koopman for very helpful suggestions and comments. We also thank P. Cour-Thimann, V. Curdia, F. Drudi, S. McCaw, D. Rodriguez-Palenzuela, R. Pilegaard, H. Pill, L. Stracca, T. Laubach, J. C. Williams and the participants of an ECB workshop on natural interest rates.     

A structural event study for M&As: an application in corporate governance

We apply structural event study methodology in the context of corporate governance to account for the interaction of two merger and acquisition (M&A) effects: synergy (total value) and dominance (bargaining power). The interaction of these effects simultaneously determines the parties’ abnormal returns. We posit that M&A synergy effects correspond to changes in agency costs between target’s management and target’s shareholders, while the dominance effects correspond to the balance of power between acquirer and target during negotiations. Our structural estimates suggest that more stable or entrenched directors generate higher value during normal operations but are softer negotiators when their firm becomes an acquisition target.     

Job market signaling and employer learning

We consider a signaling model where the sender?s continuation value after signaling depends on his type, for instance because the receiver is able to update his posterior belief. As a leading example, we introduce Bayesian learning in a variety of environments ranging from simple two-period to continuous-time models with stochastic production. Signaling equilibria present two major departures from those obtained in models without learning. First, new mixed-strategy equilibria involving multiple pooling are possible. Second, pooling equilibria can survive the Intuitive Criterion when learning is efficient enough.     

What Drove the Massive Hoarding of International Reserves in Emerging Economies? A Time‐varying Approach

Existing empirical models fail to explain the surge in the accumulation of foreign exchange reserves by emerging countries during the last decade. This paper provides an estimate of the demand for international reserves on a panel of emerging countries using a time‐varying panel smooth transition regression (TV‐PSTR) model to relax the assumption of coefficient stability in the relationship. Evidence is dound that the parameters are not constant. In addition, it is observed that the coefficients remained relatively stable until 2000 and then increased gradually and strongly thereafter. The specification provided here accounts for an acceleration that linear specifications fail to explain. Finally, it is found that mercantilist motives are the major driver of this acceleration.     

Capital mobility and international sharing of cyclical risk

This paper investigates whether the international globalization of financial markets allows for significant cross-country risk-sharing at the business cycle frequency. We find that cross-country risk-sharing is still limited and this is unlikely to be the result of financial frictions that limit state-contingent contracts. Part of the limited international risk sharing could be the consequence of frictions that de-facto reduce the short-term mobility of financial capital. But even with these frictions we find significant divergence between model predictions and the data.     

Firm diversification and equilibrium risk pooling: The Korean financial crisis as a natural experiment

We use the Korean Financial Crisis as a natural laboratory for examining interactions among firm diversification, equilibrium capital structure and tail probability events. When the crisis hit in 1997, several major firms, including a large number of highly leveraged conglomerates (Chaebols), experienced bankruptcies. We show how diversified Chaebols obtain higher equilibrium leverage than non-Chaebols (a “cosigner effect”). In the event of a low probability macro-economic shock, the model predicts a systematic change in relative bankruptcy risks of Chaebol firms. To examine this implication, we introduce an empirical methodology that decomposes equilibrium debt into demand, supply and Chaebol-specific factors, for use in a bankruptcy prediction model. We find that the primary cause of Chaebol firm bankruptcies was not idiosyncratic leverage, but leverage systematically related to greater equilibrium access to debt during normal times.     

《TBT协定》下的国民待遇:从欧盟——农产品与食品争端谈起

在技术法规的适用方面,国民待遇是一个极为敏感的问题。在欧盟——农产品与食品的商标和地理标志保护案中,欧盟规定的标签要求导致了一起涉及WTO《TBT协定》第2(1)条下有关国民待遇义务的争端。专家组最后裁定:申诉方澳大利亚没有充分的证据来支持其针对国民待遇提出的指控。无论如何,若技术法规(包括标签要求)得到WTO成员的相互认可,则在其具体适用中可避免产生有关国民待遇义务的争端。     

Flawed Economic Models Have Misled RPM Policy: Changes in Canada,Europe and the United States

Some of the influential literature that supports the resale price maintenance efficiency view is flawed when it relies on presale services that do not modify the value-in-use of a good. Crucially, we consider that value-in-use may differ from prepurchase perceived value. We apply the value-in-use standard, which exposes the loss in consumer surplus in Bork’s model and reveals that even Bork’s dissenters significantly underestimate their calculated losses to inframarginal consumers. When consumer surplus is the antitrust/competition policy standard, our results suggest that a rule-of-reason regime where authorities or agencies bear the burden of proof can be unfavourable to consumers.     

Impact of assertive and defensive impression management tactics on recruiter evaluation: The case of post-failure entrepreneurs in employment interviews

This study investigates how human-resource professionals examine, during a job interview, the application of post-bankruptcy entrepreneurs seeking to rebound as salaried workers. We assume that the way candidates talk about their failure (impression management tactics—IM) impacts the assessment of the recruiter. Thanks to an experimental methodology we compare the impact of three distinct IM tactics on the assessment of the hiring manager (a defensive IM tactic based on excuses, a defensive IM tactic based on justification, and an assertive IM tactic). We demonstrate that recruiters are more inclined to recruit the post-bankruptcy entrepreneur if the candidate has been able to turn the ordeal into an element of self-valorization.