Search-Money-and-Barter Models of Financial Stabilization

A macroeconomic model based on search-theoretical foundations is built to show that in an economy with structural deficiencies of the Russian Virtual Economy, money substitutes appear as a result of optimizing behavior of agents. Moreover, the volume of money substitutes is typically large, and it is impossible to reduce their volume significantly by using standard instruments as an increase of the money supply or decreasing the tax level. The result obtains for an economy, where there are large natural monopolies and widespread informal networks.

Survival of Political Leadership

We focus on political violence as a mechanism that allows the political leader to fight off opposition and increase his chances of re-election. In a collusive equilibrium, the leader allocates a bribe to the army, and the latter responds by producing political violence. Such an equilibrium is more likely, the larger are the public resources available to the leader; the lower is army�s potential punishment and salary offered by the opposition regime; the more severe is the incumbent�s potential punishment; and when the political leader is sufficiently patient, but the army is shortsighted enough.

Positive self-image in tournaments

This paper analyzes the implications of worker overestimation of productivity for firms in which incentives take the form of tournaments. Each worker overestimates his productivity but is aware of the bias in his opponent’s self-assessment. The manager of the firm, on the other hand, correctly assesses workers’ productivities and self-beliefs when setting tournament prizes. The paper shows that, under a variety of circumstances, firms make higher profits when workers have positive self-image than if workers do not. By contrast, workers’ welfare declines due to their own misguided choices.Self-Image; Tournaments; Behavioral Economics

What future for codetermination and corporate governance in Germany?

Contrary to the prognosis derived from the variety of capitalism literature, since the mid-90s the significant restructuring of large German corporations in the direction of shareholder value seems to have been compatible with the persistence of a genuine configuration of industrial relations, including co-determination at the firm level. This article investigates whether this is a long lasting compatibility and tests various research programs in institutional economics and thus explores the consequences alternative hypotheses about institutional complementarity or hierarchy, comparative institutional analysis, comparative historical analysis, hybridization and finally régulation theory. Even if the process is highly uncertain, one major conclusion emerges: the old German model is probably irreversibly transformed and is evolving towards an unprecedented configuration, with only mild and distant relations to a typical liberal brand of capitalism.variety of capitalisms ; codetermination ; shareholder value ; german capitalism ; institutional complementarity / hierarchy ; comparative institutional analysis ; hybridization ; "régulation" theory ; german crisis

Active Labour Market Programmes and Unemployment in a Dual Labour Market

The paper presents a theoretical analysis of the macroeconomic effects of active labour market programmes in a dual labour-market framework. The paper uses the Shapiro-Stiglitz efficiency-wage model. Active labour market programmes train unskilled labour and transfer them from a high-unemployment to a low-unemployment sector. Programmes have a direct labour-transfer effect which tends to reduce total unemployment. They also have effects on wages via expectations. The later effects were to a very large extent neglected in earlier discussions of active labour-market policy. The model formally identifies and defines the effects on wages via expectations. The net sign of the latter effects depend on how programmes are targeted. In general, the net effect on unemployment is ambiguous. The model explains the conditions under which active labour market programmes reduce aggregate unemployment.Active labour market programme; unemployment; dual labor market; efficiency wage

Knowledge creation and control in organizations

The incremental innovations that underly much of modern economic growth typically involve changes to one or more components of a complex product. This creates a tension. On the one hand, a principal would like an agent to contribute innovative components. On the other hand, ironing out incompatibilities between interdependent components can be a drain on the principal's energies. The principal can conserve her energies by tightly controlling the innovation process, but this may inadvertently stifle the agent's incentive to innovate. We show precisely how this tension betweencreating knowledge and controlling knowledge shapes organizational forms.The novel concepts introduced are illustrated with case studies of the flatpanel cathode ray tube industry and Boeing's recent location decisions.incremental innovation, incomplete contracts, imperfect substitutability, appropriability, control