The Reservation Wage under CARA and Limited Borrowing

A continuous-time sequential job search model with savings and CARA preferences is solved analytically without resorting to unlimited borrowing and real-valued consumption. I isolate the effects of limited borrowing and nonnegative consumption as well as risk-aversion on the reservation wage by using a system of ordinary differential equations

Present and Future in Semileptonic B Decays

In this talk I review the status of our ability to extract the CKM matrix elements |Vub| and |Vcb| from semileptonic decays. I will review both exclusive and inclusive methods and put a strong emphasis on how to ensure keeping the extractions model independent.Comment: 10 pages, Invited plenary talk presented at 9th International Symposium on Heavy Flavor Physics, Caltech, Sep. 10-13, 200

The Reservation Wage under CARA and Limited Borrowing

A continuous-time sequential job search model with savings and CARA preferences is solved analytically without resorting to unlimited borrowing and real-valued consumption. I isolate the effects of limited borrowing and nonnegative consumption as well as risk-aversion on the reservation wage by using a system of ordinary differential equations.labor income risk; wealth-dependent reservation wage; borrowing limit

Competition in an Increasing Variety Growth Model

This paper introduces competitive markets in the Grossman- Helpman [1991, ch. 3] increasing variety growth model. In this standard model of endogenous growth theory, competition has a negative incentive effect. Accordingly, a larger resource base is required to sustain long run growth. In an intermediate range, however, there is path dependence. In this case, too much initial competition may ultimately stall the growth process. Moreover, by introducing asymmetry in market-power, competition gives rise to static welfare losses. In economies with a small positive growth rate, welfare losses due to varying mark-up factors may be large enough to offset the benefits of growth.

Trade, Productivity and semi-endogenous Growth

We investigate the impact of incremental trade liberalization in a dynamic model of endogenous growth with heterogeneous firms and costly trade. Growth originates from horizontal specialization and the steady state productivity growth rate is positive. Innovations require costly R&D and are conducted by profit-seeking researchers. Including physical capital as a factor of production, we find that after appropriate adjustments in the production structure, previous results on the reallocation of resources and the selection of firms following trade liberalization continue to hold. We show, however, that unlike in the Melitz (2003) model, the reallocation effect does not work through increases in the factor price in production.Productivity, entry costs, heterogeneous firms, trade Liberalization

Individual vs. Collective Bargaining in the Large Firm Search Model

We analyze the welfare and employment effects of different wage bargaining regimes. Within the large firm search model, we show that collective bargaining affects employment via two channels. Collective bargaining exerts opposing effects on job creation and wage setting. Firms have a stronger incentive for strategic employment, while workers benefit from the threat of a strike. We find that the employment increase due to the strategic motive is dominated by the employment decrease due to the increase in workers' threat point. In aggregate equilibrium, employment is ineciently low under collective bargaining. But it is not always true that equilibrium wages exceed those under individual bargaining. If unemployment benefits are sufficiently low, collectively bargained wages are smaller. The theory sheds new light on policies concerned with strategic employment and the relation between replacement rates and the extent of collective wage bargaining

Smoking Bans in the Presence of Social Interaction

This paper analyzes the welfare effects of a public smoking ban in bars. We construct a model that captures crucial features of bar life: competing bars, social interaction, and heterogenous preferences for a smoking ban. Smokers and non-smokers simultaneously choose a bar given their preferences for meeting other people. Bars anticipate the behavior of individuals and choose the smoking regime strategically. Since the (dis)utility from smoking and social interaction are substitutes, the smoking regime is a stronger coordination device if the disutility from smoking is large. If all bars allow smoking in equilibrium, a public smoking ban enhances welfare

Sorting into Outsourcing: Are Profits Taxed at a Gorilla's Arm's Length?

This article analyzes profit taxation according to the arm's length principle in a new model where heterogeneous firms sort into foreign outsourcing. We show that multinational firms are able to shift profits abroad even if they fully comply with the tax code. This is because, in equilibrium, intra-firm transactions occur in firms that are better than the market at input production. Transfer prices set at market values following the arm's length principle thus systematically exceed multinationals' marginal costs. This allows for a reduction of tax payments with each unit sold. The optimal organization of firms hence provides a new rationale for the empirically observed lower tax burden of multinational corporations

Heavy Quark Fragmenting Jet Functions

Heavy quark fragmenting jet functions describe the fragmentation of a parton into a jet containing a heavy quark, carrying a fraction of the jet momentum. They are two-scale objects, sensitive to the heavy quark mass, $m_Q$, and to a jet resolution variable, $\tau_N$. We discuss how cross sections for heavy flavor production at high transverse momentum can be expressed in terms of heavy quark fragmenting jet functions, and how the properties of these functions can be used to achieve a simultaneous resummation of logarithms of the jet resolution variable, and logarithms of the quark mass. We calculate the heavy quark fragmenting jet function $\mathcal G_Q^Q$ at $\mathcal O(\alpha_s)$, and the gluon and light quark fragmenting jet functions into a heavy quark, $\mathcal G_g^Q$ and $\mathcal G_l^Q$, at $\mathcal O(\alpha_s^2)$. We verify that, in the limit in which the jet invariant mass is much larger than $m_Q$, the logarithmic dependence of the fragmenting jet functions on the quark mass is reproduced by the heavy quark fragmentation functions. The fragmenting jet functions can thus be written as convolutions of the fragmentation functions with the matching coefficients $\mathcal J_{i j}$, which depend only on dynamics at the jet scale. We reproduce the known matching coefficients $\mathcal J_{i j}$ at $\mathcal O(\alpha_s)$, and we obtain the expressions of the coefficients $\mathcal J_{g Q}$ and $\mathcal J_{l Q}$ at $\mathcal O(\alpha_s^2)$. Our calculation provides all the perturbative ingredients for the simultaneous resummation of logarithms of $m_Q$ and $\tau_N$.Comment: 48 pages, 11 figure