A martingale characterization of equilibrium asset price processes

Summary. Bick (1987,1990) and He and Leland (1993) demonstrated that not every arbitrage-free Markovian diffusion price process is consistent with an equilibrium approach. We propose a unified framework for these results and we derive a new martingale characterization of equilibrium.     

Productivity at the post: its drivers and its distribution

We study the productivity, financial and distributional performance of the United States Postal Service subsequent to its 1971 reorganization. We investigate the magnitude and the economic drivers of productivity change (technical change, change in cost efficiency, and scale economies), and we investigate the distribution of the financial benefits of productivity change (among consumers of postal services, postal employees and other resource suppliers, and residual claimants). We find improvements in technology to have been the main driver of, and diseconomies of scale to have been the main drag on, productivity change. We find labor to have been the main beneficiary, and consumers of postal services the main losers, from postal reorganization.      

Valuing flood disasters using the life satisfaction approach

This paper argues that life satisfaction data can be used to value natural disasters. We discuss the strengths of this approach, compare it to traditional methods and apply it to estimate and monetize utility losses caused by floods in 16 European countries between 1973 and 1998. Using combined cross-section and time-series data, we find a negative impact of floods on life satisfaction that is sizeable, robust and significant. The estimates are comparable to price discounts found in housing markets. In an exploratory analysis, we find that risk transfer mechanisms such as mandatory insurance have large mitigating effects.