Inflation and the Income Share of the Rich: Evidence for 14 OECD Countries

This paper examines the distributional implications of inflation on top income shares in 14 advanced economies using data over the period 1920–2016. We use local projections to analyze how top income shares respond to an inflation shock, and panel regressions in which all variables are defined as 5-year averages to examine the impact of inflation on the position of the top-one-percent in the long run. Our findings suggest that inflation reduces the share of national income held by the top 1 percent. Furthermore, we find that inflation shocks and long-run inflation have similar effects on top income shares.     

Peer pressure and social comparisons with heterogeneous ability

When workers' efforts are not contractible, we investigate whether the display of workers' efforts to coworkers influences wage and effort decisions. We find that employers mainly increase the wages offered to the more valuable workers when they are observed that increases the difference in wages in such setting. We find evidence of peer pressure and strategic complementarity in efforts. Additionally, low‐ability workers are more sensitive to peer pressure than their more productive coworkers, and these workers exert less effort with increases in the reciprocity of their coworkers. Finally, the display of workers' efforts to coworkers is detrimental to the employer's payoff but enhances efficiency.     

Use of real-world evidence in meta-analyses and cost-effectiveness models

Abstract

Real-world evidence (RWE) provides external validity, supplementing and enhancing the randomized controlled trial data with valuable information on patient behaviors and outcomes, turning efficacy and safety results into real-world effectiveness and risks, but the use of RWE is associated with challenges. The objectives of this communication were to (1) summarize all guidance on how to conduct an RWE meta-analysis (MA) and how to develop an RWE cost-effectiveness model, (2) to describe our experience, challenges faced and solutions identified, (3) to provide recommendations on how to conduct such analyses. No formal guidelines on how to conduct an RWE MA or to develop an RWE cost-effectiveness model were identified. Using the context of non-vitamin K antagonist oral anticoagulants in stroke prevention in atrial fibrillation, we conducted an RWE MA, after having identified sources of uncertainty. We then implemented the results in an RWE cost-effectiveness model, defined as a model where all inputs come from RWE, including all parameters related to treatment effect. Based on challenges faced, our first recommendation relates to the necessity of conducting sensitivity analyses, either based on clinical or methodological considerations. Our second recommendation is the need for extensive collaboration with a wide range of experts, during the development of the analyses protocols, the implementation of the analyses and the interpretation of the results. RWE may address a number of gaps related to the treatment effect, and RWE economic evaluations for the treatment effect can provide extremely valuable insights into real-world economic value of interventions. As the increased recognition of the value of RWE could influence health technology assessment decision, and current practices, this communication supports the urgent need of more formal guidelines.     

Evaluating the performance drivers of French ski resorts: A hierarchical approach

This paper aims to analyse the operational performance of French ski resorts by using data envelopment analysis models. The findings show that the hierarchical category data envelopment analysis is more appropriate than the standard one as it takes into account heterogeneity. The impact of the business environment (size, ownership, elevation, and location) on performance level is assessed with efficiency scores that are significantly higher for smaller ski resorts, those that are public managed, and those located at medium elevations. In addition, the results highlight a statistical relation between ski resort location and performance. Finally, the implications of the results and future research perspectives are discussed.     

Balanced‐budget rule,distortionary taxes and aggregate stability

It has been established under perfect competition and constant returns‐to‐scale that a one‐sector growth model may exhibit multiple stationary equilibria and local indeterminacy when income tax rates are endogenously determined by a balanced‐budget rule while government expenditures are fixed. The present paper shows that determinacy of the equilibrium trajectory is, however, generically preserved for a non‐empty range of initial values of the capital stock.     

Optimal execution strategies in limit order books with general shape functions

We consider optimal execution strategies for block market orders placed in a limit order book (LOB). We build on the resilience model proposed by Obizhaeva and Wang (2005 Obizhaeva, A and Wang, J. 2005. Optimal trading strategy and supply/demand dynamics, Preprint Available online at: http://www.rhsmith.umd.edu/faculty/obizhaeva/OW060408.pdf (accessed 16 February 2009)[Crossref] , [Google Scholar]) but allow for a general shape of the LOB defined via a given density function. Thus, we can allow for empirically observed LOB shapes and obtain a nonlinear price impact of market orders. We distinguish two possibilities for modelling the resilience of the LOB after a large market order: the exponential recovery of the number of limit orders, i.e. of the volume of the LOB, or the exponential recovery of the bid–ask spread. We consider both of these resilience modes and, in each case, derive explicit optimal execution strategies in discrete time. Applying our results to a block-shaped LOB, we obtain a new closed-form representation for the optimal strategy of a risk-neutral investor, which explicitly solves the recursive scheme given in Obizhaeva and Wang (2005 Obizhaeva, A and Wang, J. 2005. Optimal trading strategy and supply/demand dynamics, Preprint Available online at: http://www.rhsmith.umd.edu/faculty/obizhaeva/OW060408.pdf (accessed 16 February 2009)[Crossref] , [Google Scholar]). We also provide some evidence for the robustness of optimal strategies with respect to the choice of the shape function and the resilience-type.     

Regime-Dependent Fiscal Multipliers in the United States

This paper proposes a regime-dependent model to estimate fiscal multipliers in the US. Output, consumption and investment are assumed to respond to tax and spending changes in a nonlinear manner. Fiscal multipliers are time-varying because their size and sign depend upon the state of the economy (upturns and downturns). Keynesian effects appear essentially during downturns, while anti-Keynesian effects are observed during expansions. Transfer payments contributes to a higher private consumption when they are given to consumers in bad times. Reducing taxes boosts consumption in good times. Investment responds positively to lower taxes during downturns, but negatively in the upturn regime. Our results thus suggest that Keynesian effects have been associated to expansionary policies during recessions, while anti-Keynesian effects were observed during expansions illustrating situations of expansionary fiscal consolidation. The effectiveness of fiscal positive impulses increases in downturns relative to upturns. A corollary is therefore that austerity measures during recessions would have detrimental effects on the GDP and its components.     

Spatial competition with demand uncertainty: A laboratory experiment

Motivated by recent research on product differentiation, we conduct laboratory experiments to study how demand uncertainty influences firms' incentives to differentiate. We ground our experiment on a discrete version of the standard location-then-price game introduced by Hotelling (1929), and we consider different levels of demand uncertainty. We first derive the game equilibrium assuming risk-neutral firms, and obtain the standard prediction that a high level of demand uncertainty generates more differentiation. Second, we extend the analysis to consider non-risk neutral firms and markets with asymmetric risk profiles. We show that the game equilibrium can differ substantially according to the attitude to risk. Third, we compare our predictions with the experimental data and find that demand uncertainty acts as a differentiation force in the context of both symmetric markets composed of risk-neutral or risk-lover subjects and asymmetric markets. We find support also for the agglomeration effect arising from demand uncertainty for sufficiently risk-averse subjects. Overall, these results might explain the opposite product differentiation strategies frequently observed in markets with fast-evolving tastes (i.e., minimum or maximum differentiation). Finally, the data confirm that subjects differentiate to relax price competition and provide evidence of a strong positive relationship between differentiation and prices.