The Optimal Control of Heteroscedastic Macroeconomic Models

This paper analyses the implications of heteroscedasticity for optimal macroeconomic policy and welfare. We find that changes in the variance structure driven by exogenous processes like generalized autoregressive conditional heteroscedasticity (GARCH) affect welfare but not the optimal feedback rule. However, changes in the variance structure driven by state-dependent processes affect both. We also derive certainty-equivalent transformations of state-dependent volatility models that allow standard quadratic dynamic programming algorithms to be employed to study optimal policy. These results are illustrated numerically using a reduced-form model of the US economy in which changes in volatility are driven by a GARCH process and the rate of inflation. Copyright © 2015 John Wiley & Sons, Ltd

Voluntary participation and intergenerational risk sharing in a funded pension system

We explore the feasibility of a funded pension system with intergenerational risk sharing when participation in the system is voluntary. Typically, the willingness of the young to participate depends on their belief about the future young's willingness to do so. We characterise equilibria with voluntary participation and show that the likelihood of their existence increases with risk aversion and financial market uncertainty. We find that mandatory participation is often necessary to sustain a funded pension pillar and to let participants benefit from intergenerational risk sharing

European Unemployment: From a Worker’s Perspective

After several decades of low unemployment rates and low mean durations of unemployment, European countries experienced high rates and average durations of unemployment during the 1980’s and 1990’s. We impute these outcomes to the effects of increasing economic turbulence confronting displaced workers combined with the incentive effects on labor supply of generous European unemployment compensation systems. We use a general equilibrium search model where workers accumulate skills on the job and lose skills during unemployment. To highlight the forces at work, we perform an artificial natural experiment by comparing the decisions and life-time employment experiences of two initially identical workers. Although subjected to identical shocks, they make different decisions because they confront different unemployment compensation systems

Vilka faktorer värdesätter Kalmars sjöbefälsstudenter högst hos en arbetsgivare? : En enkätstudie på Sjöfartshögskolan i Kalmar

Arbetet handlade om vad sjöbefälsstudenterna på Sjöfartshögskolan i Kalmar prioriterade mest när de skulle söka sitt första jobb till sjöss. Samt även vilka drivkrafter som låg bakom för att studenterna skulle söka sig ut på den internationella marknaden. Syftet med arbetet var att genom en enkätundersökning ta reda på vilka prioriteringar som hade störst betydelse för studenterna. För att få ett överskådligt material att jobba med använde vi oss av en kvantitativ metod. Resultaten skilde inte mycket mellan klasserna. Samtliga respondenter ansåg att lönen var den viktigaste punkten när de skulle söka sitt första jobb. De övriga faktorerna som var viktiga för respondenterna visar på att de satte stort värde på det sociala livet ombord och möjlighet till kompetensutveckling och den fortsatta karriären

Local social capital and geographical mobility

In the North of Europe, club membership is higher than in the South, but the frequency of contacts with friends, relatives and neighbors is lower. We link this fact to another one: the low geographical mobility rates in the South of Europe relative to the North.To interpret these facts, we build a model of local social capital and mobility. Investing in local ties is rational when workers do not expect to move to another region. We find that observationally close individuals may take different paths characterized by high local social capital, low mobility and high unemployment, vs. low social capital, high propensity to move and higher employment probability. Employment protection reinforces the accumulation of local social capital and thus reduces mobility.European data supports the theory: within a country and at the individual level, more social capital is associated with lower mobility. © 2010 Elsevier Inc.SCOPUS: ar.jinfo:eu-repo/semantics/publishe