Minimally altruistic wages and unemployment in a matching model with monopsony

A monopsony model with a symmetric equilibrium is developed where posting higher wages reduces employee departures. This monopsony implies that wage changes have small effects on profits so that employer altruism affects wages as well. Even selfish firms act altruistically if workers punish firms that fail to do so. If the marginal utility of income falls sharply with income, the model can explain modest responses of wages to shifts in labor demand. If there are fluctuations in the altruism required by workers, the low correlation of wages and employment and the sizes of the cyclical fluctuations in these two series can be rationalized.     

Ensemble Predictions of Recovery Rates

In many domains, the combined opinion of a committee of experts provides better decisions than the judgment of a single expert. This paper shows how to implement a successful ensemble strategy for predicting recovery rates on defaulted debts. Using data from Moody’s Ultimate Recovery Database, it is shown that committees of models derived from the same regression method present better forecasts of recovery rates than a single model. More accurate predictions are observed whether we forecast bond or loan recoveries, and across the entire range of actual recovery values.     

Evaluating the economic impact of quality-reducing,seed-borne diseases: Lessons from Karnal bunt of wheat

Estimates of aggregate disease costs can be used for assigning research resources or to evaluate control measures. Most diseases cause production losses, but others affect quality and marketability. Seed-borne diseases also cause problems for the seed production and distribution industry. The aim in this paper is to examine issues relating to the economic impact of a quality-reducing, seed-borne disease, and to highlight differences compared to non-seed-borne diseases affecting yield only. Economic evaluation of quality-reducing, seed-borne diseases needs to incorporate impacts of trading restrictions such as quarantines or embargoes imposed by purchasers. The costs of measures taken to control diseases also represent part of the economic impact of the disease. Full economic costs of a disease include the direct (yield and quality) costs and costs of the control measures. The costs of Karnal bunt of wheat in Mexico were found to include many control costs that have often been overlooked. The optimal amount of resources to invest in controlling a disease depends on the likely annual costs of the disease and of control measures. Before implementing disease control policies, both the costs and the benefits of the policies need to be considered, taking the risks of each option into account, to ensure that the policy itself does not impose greater costs than the uncontrolled disease.     

Alternative trade strategies and employment in the Argentine manufacturing sector

The paper analyses the employment effects of alternative trade strategies within the manufacturing sector. Estimates of effective protection rates show that Argentinian import substitution (I-S) policies have severely discriminated against exportable manufacturing industries. In turn these industries are shown to be at least 15% more labour-intensive than import-competing industries. Export promotion (EP) policies are characterized by low and relatively uniform protection to domestic and export sales together with the maintenance over time of a realistic exchange rate. The adoption of this strategy would imply a radical departure from I-S policies of escalated incentives and overvalued exchange rates which, as shown in the paper, have on average favoured capital-intensive industries.     

Privatization from the Acquirer's Perspective: a Mergers and Acquisitions Based Framework

Privatization, especially in developing countries, presents international firms with opportunities for market entry and growth, but acquirers have to consider the distinct characteristics of a state owned enterprise (SOE) and the influence of the government as seller and policy maker. This study introduces a model, based on mergers and acquisitions literature and microeconomic theory, that explains the critical relationships among characteristics of the SOE, the government, and the acquirer. Public administration research suggests that the critical characteristics of SOEs are their sources of funding and their mode of social control of the organization, and recent work in privatizing countries emphasizes the influence of the government. The theoretical framework for the model suggested here is derived from research within the field of strategic management on mergers and acquisitions. The paper develops propositions regarding the organizational fit between private firms and those heretofore owned by governments and discusses research and managerial implications.     

Electricity Prices and Power Derivatives: Evidence from the Nordic Power Exchange

This paper examines the importance of the regular pattern in the behavior of electricity prices, and its implications for the purposes of derivative pricing. We analyze the Nordic Power Exchange's spot, futures, and forward prices. We conclude that the seasonal systematic pattern throughout the year, in particular, is of crucial importance in explaining the shape of the futures/forward curve. Moreover, in the context of the oneand two factor models analyzed in this paper, a simple sinusoidal functionis adequate in order capture the seasonal pattern of the features and forwardcurve directly implied by the seasonal behavior of spot electricity prices.     

The efficiency of equilibrium traffic flows

This paper studies the behavior of an optimizing driver on a freeway and the equilibrium speed at which specified flows of traffic move. It shows that both when passing is not allowed (the standard car-following framework of the engineering literature) and when it is permitted, the equilibria tend to exhibit speeds below the Pareto optimal speeds. The flat congestion toll proposed by Oron, Pines and Sheshinski (1973) does not, by itself, bring about Pareto optimality.