Human Capital Investment and Work Incentives

Traditional human capital theory based on the work by Gary Becker shows that firms do not invest in general human capital but offer firm‐specific training that is only useful for the training firm. I extend the traditional approach by adding two natural assumptions—workers cannot be forced to acquire new knowledge, and they exert unobservable effort to produce valuable output for their employer. I show under which conditions firms do not offer firm‐specific training but invest in general human capital, which increases the workers' outside option. This investment behavior is well in line with the documented prevalence of industry‐specific and occupation‐specific human capital over firm‐specific human capital.     

Monetary and fiscal policy interaction and government debt stabilization

Employing differential games, this paper models the strategic interaction between monetary authorities who control monetization and fiscal authorities who control primary fiscal deficits. We analytically compute and interpret the cooperative and noncooperative Nash open-loop equilibria. Furthermore, we reinterpret unpleasant monetarist arithmetic and analyze the impact of a more conservative central bank. Finally, to explore the consequences of a more independent central bank, we analyze Stackelberg open-loop equilibria.     

Decentralized credit and monetary exchange without public record keeping

Summary. We relax a standard assumption on the matching technology in a search model of money. In particular, agents may remain in a long-term partnership as long as it is in their self-interest. With this simple modification, it is possible to support self-enforcing, intertemporal trade which resembles credit without a public record keeping device. We examine conditions for co-existence of currency and credit and the welfare gains/losses associated with the introduction of money.Received: 20 April 2003, Revised: 10 July 2003JEL Classification Numbers: E0.An earlier version of this paper was entitled Money and Search with Enduring Relationships. We wish to thank Narayana Kocherlakota, Rachel Kranton, Jeff Lacker, Andrei Shevchenko, Shouyong Shi, Ted Temzelides, Chris Waller, and especially David Andofolatto, Gabriele Camera, Drew Saunders, and Randy Wright for helpful comments on that earlier draft, as well as seminar participants at the University of Pennsylvania, Purdue University, American Economic Association Meetings, Summer Econometric Society Meetings, and NBER Summer Workshop. Corbae wishes to thank the Research Department at the Federal Reserve Bank of St. Louis for research support.Correspondence to: D. Corbae     

Cooperation in Stochastic OLG games

This paper builds on Cremer's (Quart. J. Econ. 101 (1986) 33) seminal analysis which shows that (almost) complete cooperation can be achieved as an equilibrium in a game played by overlapping generations of players if the institution in which players cooperate is infinitely lived.We analyze a similar model in which the costs of cooperation are subject to random shocks. Even if these random shocks are very small, the range of parameters for which cooperation can be sustained is decreased considerably in comparison to the deterministic case. Furthermore, we show how the efficient outcome can be approximated if the level of cooperation can be varied continuously and the cooperation technology has decreasing or constant returns to scale, while this is not possible in the case of increasing returns to scale.     

Transitions in the stock markets of the US,UK and Germany

In an analysis of the US, the UK and German stock market, we find a change in the behaviour based on the stocks’ beta values. In the years 1995–2006, trades of stocks with high beta and large volume were concentrated in the IT and technology sector, whereas in 2006–2012 those trades are dominated by stocks from the financial sector. We show that an agent-based model can reproduce such a transition. We further show that the initial impulse for the transition might stem from the increase of high-frequency trading at that time.     

La crisis del concepto prudencia a causa del tránsito de las normas nacionales austriacas de información financiera a las normas internacionales

As a member of the European Union (EU), Austrian nation has gradually incorporated International Financial Reporting Standards (IFRS), Normas Internacionales de Información Financiera (NIIF) in spanish, to its accounting and Disclosure of Financial Information processes in replacement of Local National Standards called Unternehmensgesetzbuch (UGB). During this process of convergence, prudence principle has been in crisis within IFRS conceptual frame because it has been changed by fair value principle. That is way this paper presents the basic principles of national Austrian, UGB, compared with those of the IFRS to analyze, first, the reasons why prudence concept went into crisis and, secondly, if fair value principle is right to replace it.     

Are There Rational Bubbles in REITs? New Evidence from a Complex Systems Approach

This study applies a complex systems approach to test for the presence of rational bubbles in the Equity REITs market. The applied model is based on theoretical implications of the evolution of prices under rational bubble regimes. The advantage of the approach is twofold. The model is able to detect rational bubbles while they rise and to predict the most likely time of their collapse. We apply the model to daily price data on U.S. Equity REITs from 1989 to 2011. Our findings suggest the existence of a bubble for the period of 2003 to 2007. Tests for sub-markets reveal that the bubble developed in the Residential REITs market, but not in the Office REITs market.