Cancellation Latency: The Good,the Bad,and the Ugly

This paper provides several statistics concerning cancellation latency that would be helpful to regulators as they consider policies to establish a minimal quote life. We find that cancellation latency is related to market quality and is not constant. Rather, it varies depending upon the time of day, order price and size, market congestion, trader type, firm size, order imbalance, and technology used for submitting an order.     

A bottleneck capital model of development

A simple augmentation of the Ramsey-Cass-Koopmans growth model allows it to match observed transitions by initially poor economies. A high-convexity installation cost directly dampens investment demand for a first capital input. The resulting scarcity acts as a bottleneck, strongly dampening demand for investment in a complementary capital input as well. The match to observed transitions holds both for narrow and broad interpretations of capital. In either case, the bottleneck capital's share of factor income need not be large.     

Monetary and real shocks in a monetary Union: The Swiss case

We analyze to what extent real and monetary shocks affect price levels and real exchange rates in seven Swiss regions. A structural time series model is set up and estimated using the Kalman filter under two assumptions on the persistence of monetary shocks. We find that the variability of changes in price levels is mainly due to real shocks. The variance of monetary shocks is small but the monetary component of inflation differences across regions differs from zero with some persistence. As the Swiss case shows this does not seem to be a major obstacle to forming a monetary union.We thank Ernst Baltensperger, Tobias Rötheli, and participants at the Econometric Society European Meeting 1994 for stimulating discussions. The paper has also benefitted from constructive comments of two anonymous referees. Both authors gratefully acknowledge financial support provided by the Swiss National Foundation through Grants no: 8210-040206 (T.J.) and 12-40498.94 (C.L.).     

HAYEKIAN ECONOMIC INFRASTRUCTURE AS A FOUNDATION FOR SUSTAINED PROSPERITY

Rather than debate whether technical advances have created a ‘new economy’, economists should focus on the more interesting and useful question: How do we create the sort of environment in which innovation and the productive use of new technology thrive, thereby creating economic prosperity? Such an environment is the product of government laying the appropriate infrastructure, manifested in the culture of the institutions it supports. This article discusses the features governments must incorporate into their institutions in order to build an economic infrastructure that promotes prosperity.     

Ambient-based pollution mechanisms: A comparison of homogeneous and heterogeneous groups of emitters

Over the last two decades, ambient-based tax mechanisms have been offered as a potential solution to the problem of nonpoint source water pollution. Previous theoretical analyses suggest that the performance of ambient-based tax mechanisms does not depend on firm characteristics, such as size, whilst policy discussions advocate that such mechanisms are best suited for regulating relatively homogeneous firms. Using controlled laboratory experiments, we provide empirical evidence that the distribution of firm sizes does have a significant impact on observed group decision making and further that heterogeneity has the potential to generate both some relatively desirable outcomes as well as some outcomes that are not attractive. These results suggest that richer theoretical models that capture important strategic interactions and social preferences are needed to better describe laboratory behavior and, by extension, behavior in potential policy settings.     

Why do the poor live in cities? The role of public transportation

More than 19 percent of people in American central cities are poor. In suburbs, just 7.5 percent of people live in poverty. The income elasticity of demand for land is too low for urban poverty to come from wealthy individuals' wanting to live where land is cheap (the traditional explanation of urban poverty). A significant income elasticity for land exists only because the rich eschew apartment living, and that elasticity is still too low to explain the poor's urbanization. The urbanization of poverty comes mainly from better access to public transportation in central cities.     

Activity-Based Costing for Economic Value Added®

Economic value added, which is the currently popular term for the traditional accounting concept of residual income (RI), subtracts from operating income an interest charge for invested capital. This paper provides an activity-based cost system that supports RI maximization. We construct a model of participative budgeting for a multi-activity firm in which the cost system allocates plant and equipment cost to products using a formula that includes the interest charge. The budget system we design enables decision makers to identify RI-improving opportunities for outsourcing and dropping unprofitable products. The budget system also has the open-architecture property that additional informal communication among activity managers can only serve to increase RI.     

Returns to job satisfaction in the presence of horizontal mismatch

ABSTRACT

In this paper, we study the relationship among horizontal mismatch, job satisfaction and wages using data from the 2013 Scientists and Engineers Statistical Data System (SESTAT). Estimates from 2SLS indicate that 1) field-occupation match in the highest degree has a positive effect on job satisfaction and wages; and 2) controlling for field-occupation matches, job satisfaction has a positive but diminishing effect on wages with a large heterogeneity across different age groups. In addition, we also distinguish between job satisfaction arising from benefits and job satisfaction that is productivity enhancing and find both to have a positive but nonlinear effect on wages.