Working Effort and Endogenous Job Separations in Search Equilibrium

This paper considers job separations in a search model with labour market matching and moral hazard. Both workers and firms value productive matches and take actions to increase match stability: firms offer a share of match surplus to provide workers with correct incentives and workers take hidden actions (effort) negatively affecting the match separation rate. Heterogeneous productivity draws combined with the moral hazard problem give rise to match-specific endogenous separation rates. Additionally a counteraction of two effects - match stability and match scarcity - explains an observed asymmetric shape of a wage probability density function with a unique interior mode on the support.Matching, separation rate, job stability, effort, wage density

Contingent deficit sanctions and moral hazard with a stability pact: Unpublished technical appendices

Technical appendices not intended for publication. Appendices belonging to: "Contingent Deficit Sanctions and Moral Hazard with a Stability Pact" (with Henrik Jensen), Journal of International Economics, Vol.61, No.1, 187-208, 2003

Secured Transactions and Financial Stability: Regulatory Challenges

Although secured transactions traditionally are regulated to protect transacting parties and to make the transactions themselves more efficient, the financial crisis has revealed that regulation should also protect the stability of the financial system. This raises numerous future challenges. For example, regulation to control moral hazard in secured loan origination faces the challenge that the relevant market failure is less likely to be asymmetric information than mutual misinformation. Because of its impact on home ownership, the regulation of collateralization levels and interconnectedness faces fundamentally different challenges than those underlying the (technically) analogous post-Depression regulation of margin lending. Non-traditional secured transactions, including securitization and other forms of structured finance, raise innovative regulatory challenges concerning complexity and the limits of disclosure. The potential for the widening gap between the rich and the poor to undermine stability also raises the challenge (which is itself partly informed by the UCC’s innovative disentanglement of commercial and property law) of whether to recognize de facto rights, in order to enable the poor to use their homes and other commonly held assets as collateral to raise capital

Utjecaj osiguranja depozita na moralni hazard, sigurnosnu mrežu i kontrolu tržišta

Osiguranje depozita je mjera za očuvanje financijske stabilnosti države, ono štiti depozitore u slučaju propadanja banke. Osiguranje depozita je jedna od sastavnica sigurnosne mreže koja služi za zaštitu korisnika usluga neke banke, ona omogućava bankama pristup kratkoročnim kreditima državne rezerve. Kontrola tržišta odnosi se na reakciju banke na različite postupke depozitora, kao što su povlačenje depozita iz banaka ili zahtijevanje više kamatne stope. U ovom radu opisuje se utjecaj uvođenja osiguranja depozita na moralni hazard, sigurnosnu mrežu i kontrolu tržišta. Promatrana su dva modela i prikazani su rezultati istraživanja provedenog na temelju prvog modela koji potvrđuju sljedeće teorijske pretpostavke. Osiguranje depozita smanjuje moralni hazard, ograničava sigurnosnu mrežu i povećava kontrolu tržišta.Deposit insurance promotes financial stability. It is a measure of protection for bank depositors and it is a part of financial safety net. Financial safety net allows access for short-term credit from federal reserve. Market monitoring refers to reaction of the bank on different procedures of banks’ depositors. In this paper are explained effects of introduction of deposit insurance on moral hazard, safety net and market monitoring. There are used two models which provide the proofs for theoretical assumptions. Deposit insurance reduces moral hazard, limits safety net and increases market monitoring of banks