Entrepreneurial risk choice and credit market equilibria

We analyze under what condiitons credit markets are efficient in providing loans to entrepreneurs who can start a new project after previous failure. An entrepreneur of uncertain talent chooses the riskiness of her project. If banks cannot perfectly observe the risk of previous projects, two equilibria may coexist: (1) an inefficient equilibrium in which the entrepreneur undertakes a low-risk project and has no access to finance after failure; and (2) a more efficient equilibrium in which the entrepreneur undertakes high-risk projects and gets financed even after an endogenously determined number of failures.

Information acquisition and decision making in committees: a survey

JEL Classification: D71, E52Committees, costly information acquisition, monetary policy committees, strategic voting

The impact of wealth inequality on imperfect capital markets

This dissertation contributes to the analysis of the macroeconomic impact of wealth inequality on imperfect capital markets. The analysis assesses its occurrence and consequences in a general equilibrium framework with wealth heterogeneity among agents and a convex technology. The essential point is that because of the commitment value of wealth on imperfect capital markets, productive opportunities might vary along the wealth distribution via access to credit. Thus, the larger the fraction of society whose financial constraint is binding, the more the capital allocation and the production outcome deviate from their full information counterparts. In each of the three substantive Chapters, the setting is adapted to focus on a specific aspect of the role of inequality: its impact on (i) growth when explicitly allowing for autarkic production, (ii) efficiency when coupled with banking market power as an additional market friction and (iii) the beneficence of international financial integration when countries are heterogeneous. Chapter 2 dynamizes the basic model, in order to show how productive inefficiencies affect the evolution of inequality and how they lead to a multiplicity of steady-states, which depend on initial conditions. However, taking into account the possibility of autarkic production allows identifying the existence of credit-constrained net lenders. The fact that they profit from high interest rates countervails the poor's pauperization, changes distributional dynamics and thus the convergence to the bad steady-state. Extending the static setting, Chapter 3 challenges what hitherto models typically take for granted: perfect competition on the deposit and loan market. Among others, banking market power triggers the existence of autarkic entrepreneurs in equilibrium, but might also help to solve the imperfect information problem and consequently to restore the first-best outcome. In this context, inequality is found to be constraining the scope of banking market power. Likewise through the imperfect capital market lens, Chapter 4 finally scrutinizes the real consequences of financial market integration. It dismantles credit rationing as a new cost of financial market integration and shows that inequality provides higher absorptive capacities for capital inflows after external financial liberalization

Abstracts from the 8th International Conference on cGMP Generators, Effectors and Therapeutic Implications

This work was supported by a restricted research grant of Bayer AG

The Real Consequences of Financial Market Integration when Countries Are Heterogeneous

This paper studies the mechanisms through which financial integration affects the pattern of international capital flows and the domestic economic performances when explicitly accounting for wealth inequality on imperfect capital markets. Balancing the impact of a firm size and a credit rationing effect on the net credit position and on aggregate production will help predicting the distribution of gains and losses among and within countries on the basis of a country’s aggregate wealth and its distribution. Altogether, the results contribute new explanations for some empirical puzzles. They also bear important implications for policy making, supranational treaty design and financial stability.international financial integration, inequality, imperfect capital markets and allocative efficiency

Entrepreneurial risk choice and credit market equilibria

© by De Gruyter 2015. We analyze under what conditions competitive credit markets are efficient in providing loans to entrepreneurs who can start a new project after failure. An entrepreneur of uncertain talent chooses the riskiness of her project. If banks privately observe the entrepreneur's risk choices, two equilibria coexist: (1) an inefficient equilibrium in which the entrepreneur realizes a low-risk project and has no access to finance after failure and (2) a more efficient equilibrium in which the entrepreneur first realizes high-risk projects and then, after continuous failures, a low-risk project. There is a non-monotonic relationship between bank information and potential credit market inefficiency. We discuss the implications for credit registers and entrepreneurial education.status: publishe

Mobilität und Datierung - sieben neolithische Warburger neu untersucht

This paper presents new AMS dates and the results of strontium and oxygen isotope anal­yses carried out an seven individuals from three gallery graves at the Late Neolithic cem­etery of Warburg. A first set of samples point to interesting new research approaches to the study of mobility pattems and different life­styles and economic systems of the individual funerary communities; the insight gained will be enhanced by DNA analyses that are cur­rently underway