Lumpy Consumer Durables, Market Power, and Endogenous Business Cycles

This paper examines the role of lumpy consumer durables and market power in generating endogenous cycles which seem to be consistent with the facts. When goods are durable, past consumption choices determine the current market size which consists of consumers who have not purchased the good previously, and who have the income to make their potential demand effective. Larger past sales, ceteris paribus, thus naturally result in a smaller current market size and income. In this manner, the seeds of a downturn are sown in an upturn.

Wage Equality in a General Equilibrium Model with Indivisibilities.

This paper looks at some consequences of a comittment to wage equality in some sectors of the economy which produce lumpy consumer goods. We show that in this setting, there are two equilibria, with high or low wages, incomes and output. In this closed economy, growth may be immiserizing. We also show that redistribution may eliminate the low wage equilibrium in productive economies but in unproductive ones it eliminates the market for indivisible good itself! This suggests why redistribution could be a "rich man's game".

When Does Trade Hurt? Market, Transition and Developing Economies

This paper argues that labor market distortions in transition and developing economies help explain differential impacts of trade liberalization. We assume that workers differ in ability. In a market economy their earnings depend on their ability. However, earnings are independent of ability due to a common wage set in manufacturing in a transition economy and because of family farms in a developing economy. Our work suggests that trade liberalization without structural reform can have serious adverse effects in transition and developing economies: there can even be mutual losses from trade.

Lumpy Consumer Durables, Market Power, and Endogenous Business Cycles

This paper examines the role of lumpy consumer durables and market power in generating endogenous cycles which seem to be consistent with the facts. When goods are durable, past consumption choices determine the current market size which consists of consumers who have not purchased the good previously, and who have the income to make their potential demand effective. Larger past sales, ceteris paribus, thus naturally result in a smaller current market size and income. In this manner, the seeds of a downturn are sown in an upturn.

Trade with Labor Market Distortions and Heterogeneous Labor: Why Trade Can Hurt

This paper explains the differential impacts of trade on countries in terms of institutional differences which result in factor market distortions. We modify the Ricardian, Specific Factor and Hecksher Ohlin models of trade to capture these. Trade has both terms of trade effects and output effects. Both work to raise welfare in an undistorted economy. In a distorted economy, price effects work to improve welfare, while output effects work to reduce it. Large distorted countries are more likely to lose from trade as beneficial price effects are lower. In addition the greater the substitutability between goods, the more likely it is that welfare rises through trade.

The Ghost of Corruption

This paper features a continuum of firms that apply for a permit and randomly get matched with a potentially corrupt bureaucrat. Although firms have the reporting option, they prefer paying low enough bribes to avoid reporting costs. Hence, full-corruption is the unique equilibrium. Furthermore, the value of entry is always negative for the marginal firm. Hence, there will be no entry. If firms are offered sufficiently high rewards for reporting, corruption could be eliminated. However, a reward high enough to uproot corruption would lead to false accusations. Thus, rewarding could help reduce corruption, but only if the market is viable in its absence. The paper also argues that in the presence of corruption, the shadow economy and the official economy are complements. Similarly, formal punishment for corruption and the moral cost of corruption could complement each other.

Lumpy consumer durables, market power, and endogenous business cycles

In this paper we show that lumpy consumer durables and market power can generate endogenous cycles consistent with the facts. Past sales determine the current market size of durable goods. Larger past sales, ceteris paribus, thus naturally result in a smaller current market size and income. In this manner, the seeds of a downturn are sown in an upturn.

Better Luck Next Time: Learning through Retaking

This paper provides some evidence that repeat taking of competitive exams may reduce the impact of background disadvantages on educational outcomes. Using administrative data on the university entrance exam in Turkey, the paper estimates cumulative learning between the first and the nth attempt while controlling for selection into retaking in terms of observed and unobserved characteristics. Large learning gains measured in terms of improvements in the exam scores are found, especially among less advantaged students.