Repo Market Effects of the Term Securities Lending Facility by Michael J. Fleming, Warren B. Hrung and Frank M. Keane. Published in volume 100, issue 2, pages 591-96 of American Economic Review, May 2010
Blonigen and Haynes (2002) calculated that pass-through of antidumping duty estimates to U.S. pricing of 200% would be required to eliminate potential antidumping duties. However, this calculation was based on an error in interpretation of U.S. antidumping practice, that antidumping duties themselves are subtracted in an antidumping calculation. In fact there is no such subtraction, and a pass-through of 100% theoretically suffices to eliminate potential antidumping duties
Farmer, Waggoner, and Zha (2009) (FWZ) show that a new Keynesian model with regime-switching monetary policy can support multiple solutions, appearing to contradict findings in Davig and Leeper (2007) (DL). The explanation is straightforward: FWZ derive solutions using a model that differs from the one to which the DL conditions apply. The FWZ solutions also require that the exogenous driving process is a function of private and policy parameters. This undermines the sharp distinctions among “deep parameters” typical of optimizing models and makes it difficult to ascribe economic interpretations to FWZ's additional solutions. (E12, E31, E43, E52)
This paper examines bidding in over 1,700 knockout auctions used by a bidding cartel (or ring) of stamp dealers in the 1990s. The knockout was conducted using a variant of the model studied by Daniel Graham, Robert Marshall, and Jean-Francois Richard (1990). Following a reduced form examination of these data, damages, induced inefficiency, and the ring's benefit from colluding are estimated using a structural model in the spirit of Emmanuel Guerre, Isabelle Perrigne, and Quang Vuong (2000). A notable finding is that nonring bidders suffered damages that were of the same order of magnitude as those of the sellers.
Every now and then a set of technologies becomes available that sets off a period of “combinatorial innovation. ” Think of standardized mechanical parts in the 1800s, the gasoline engine in the early 1900s, electronics in the 1920s, integrated circuits in the 1970s, and the internet in the last decade or so. The component parts of these technologies can be combined and recombined by innovators to create new devices and applications. Since these innovators are working in parallel with similar components, it is common to see simultaneous invention. There are many well-known examples, such as the electric light, the airplane, the automobile, and the telephone. Many scholars have described such periods of innovation, using terms such as “recombinant growth, ” “general purpose technologies, ” “cumulative synthesis” and “clusters of innovation. ” 1 The internet and the web are wonderful examples of combinatorial innovation. In the last 15 years we have seen a huge proliferation of web applications, all built from a basic set of component technologies. The internet itself was a rather unlikely innovation; I like to describe it as a “lab experiment that got loose. ” Since the internet arose from the research community rather than the private sector, it had no obvious business model. Other public computer networks, such as AOL, CompuServe, and Minitel, generally used a subscription models, but were centrally controlled and offered little scope for innovation at the user level. The internet won out over these alternatives, precisely because it offered a flexible set of component technologies which encouraged combinatorial innovation.
The food commodity price boom of 2003–2008 was the most notable in the past several decades, having a substantial impact on global economic activity. It affected developing nations by impacting real output, the balance of payments, government budgetary positions and, most important, the well being of the very poor. High commodity prices also affected developed countries, by transmitting business cycle disturbances and creating inflationary pressures. Several recent studies tried to identify and quantify the factors that caused the food commodity price boom of 2003–2008 (see, for instance, Isabel Vansteenkiste 2009). These studies suggest that one key factor is growth in demand, which, since the 1980s, has outpaced growth in supply. Other studies argued that biofuel is the culprit, since it increases demand for staple crops (see, for instance, Donald Mitchell 2008). All these studies, however, assumed competitive markets and did not consider the impact of biofuel on energy costs to farmers. Moreover, they ignored the Organization of Petroleum Exporting Countries (OPEC). These studies leave us perplexed regarding the true impact of biofuel on food commodity prices— was it or was it not an important contributor to the recent food commodity boom? We believe that to answer this question, the interactions between energy and food must be modeled and OPEC introduced, and the impact of biofuels compared with other factors that are argued by the literature to be important. This paper aims to analyze the multiple contributions of energy and biofuels to the increase Are Biofuels the Culprit? OPEC, Food, and Fuel
We analyze how family ties affect incentives, with focus on the strategic interaction between two mutually altruistic siblings. The siblings exert effort to produce output under uncertainty, and they may transfer output to each other. With equally altruistic siblings, their equilibrium effort is nonmonotonic in the common degree of altruism, and it depends on the harshness of the environment. We define a notion of local evolutionary stability of degrees of sibling altruism and show that this degree is lower than the kinship-relatedness factor. Numerical simulations show how family ties vary with the environment, and how this affects economic outcomes.
We study a labor market where workers search for jobs both on the job and off the job. In the model, there are aggregate productivity shocks and match-specific shocks. We outline the proof of existence of an equilibrium which we call a block recursive equilibrium (BRE), in which individuals' decisions and market tightness are independent of the distribution of workers over wages or contracts. A critical assumption that is responsible for a BRE to exist is that search is directed by firms' posting of contracts. We explain why a BRE does exist under the assumption of directed search and why it does not under the assumption of random search. Finally, we generalize the proof of existence of a BRE to allow workers to be ex-ante heterogeneous with respect to some observable characteristics such as education and skill. (This abstract was borrowed from another version of this item.)
We study dynamic bargaining with asymmetric information and arrival of exogenous events, which represent arrival of traders or information. We characterize the unique limit of stationary equilibria with frequent offers. The possibility of arrivals changes equilibrium dynamics. There is delay in equilibrium, and the seller slowly screens out buyers with higher valuations. The seller payoff equals what he can achieve by simply awaiting an arrival. In applications, when buyer valuations fall, average prices drop and delay increases. Surplus division depends on relative arrival rates of buyers/sellers and expected time to trade is a nonmonotonic function of the arrival rate.
Insecure property rights over land have multiple ramifications for agriculture and the organization of rural economic activity (Besley and Ghatak 2009). The risk that land will be expropriated deters investment. Insecure property rights reduce the ability of borrowers to pledge land as collateral and thus tighten credit constraints. Ill-defined property right over land can inhibit land transactions – rentals or sales – and potential gains from trade are lost. Scarce resources, like labor, may be devoted to protecting one’s insecure rights over plots (Field 2007). In Ghana, land rights are typically gained by virtue of membership in a corporate group (e.g., extended family), but a robust market is emerging for land purchases and rentals, particularly in urban and periurban areas. Informal land markets in Ghana are beset with a number of problems including land conflicts, protracted litigation and adjudication failures, documentation bottlenecks and uncertainty. Land legislation in Ghana is perceived as incoherent, conflicting and often outdated. An unwieldy public land sector dominates the documentation of land rights, revenue collection and distribution. Land conflicts are becoming more frequent, judicial processes are overburdened, authority is overcentralized and corrupt. Conflict over multiple claims to particular plots occasionally becomes violent. Goldstein and Udry (2008) document the large investment disincentive effects of insecure tenure in agriculture in Ghana. Almost 80% of Ghana’s land is held by customary landowners, mainly families, clans and traditional authorities (Kasanga and Kotey, 2001). These owners often do not record transactions; indeed, many are clothed in secrecy. As land transactions gradually move away from their familial/corporate base to short term rental for commercial purposes, multiple simultaneous transactions on the same plot have be-