Common Components in Firms' Growth and the Sectors Scaling Puzzle

In this paper we show how a simple modification of a well-known multiplicative process of firms' growth, taking into account common and idiosyncratic elements, allows to reconcile an old aggregate-sector puzzle (Quandt, 1966) on firms'' size distribution reported in the literature.

Coase theorem and exchangeable rights in non-cooperative games

In this paper, we consider the Coase theorem in a non cooperative game framework. In particular, we explore the robustness of the Coase theorem with respect to the ?nal distribution of alienable property rights which constitutes, as far as we know, a less cultivated ?eld of research. In our framework, in order to reach e¢ ciency, agents have to stipulate binding contracts. In the analysis, we distinguish between permanent and temporary contracts showing the di¤erent implication of the two kinds of contracts with respect to the ?nal attribution of individual rights. More precisely, we show that, with temporary binding contracts and under particular assumptions, the ?nal attribution if individual rights does not converge.Coase theorem, binding contracts, side payments

Metastable Features of Economic Networks and Responses to Exogenous Shocks

It has been proved that network structure plays an important role in addressing a collective behaviour. In this paper we consider a network of firms and corporations and study its metastable features in an Ising based model. In our model, we observe that if in a recession the government imposes a demand shock to stimulate the network, metastable features shape its response. Actually we find that there is a minimum bound where demand shocks with a size below it are unable to trigger the market out from recession. We then investigate the impact of network characteristics on this minimum bound. We surprisingly observe that in a Watts-Strogatz network though the minimum bound depends on the average of the degrees, when translated into the economics language, such a bound is independent of the average degrees. This bound is about $0.44 \Delta$GDP, where $\Delta$GDP is the gap of GDP between recession and expansion. We examine our suggestions for the cases of the United States and the European Union in the recent recession, and compare them with the imposed stimulations. While stimulation in the US has been above our threshold, in the EU it has been far below our threshold. Beside providing a minimum bound for a successful stimulation, our study on the metastable features suggests that in the time of crisis there is a "golden time passage" in which the minimum bound for successful stimulation can be much lower. So, our study strongly suggests stimulations to be started within this time passage.Comment: 13 pages, 10 figures, accepted for publication in PloS On

A Big Mac test of price dynamics and dispersion across euro area

Based on the prices of McDonald's Big Mac hamburger in 11 Eurozone countries over the 1986–2009 period, the present article investigates whether the adoption of the euro was accompanied by an increase in inflation and how far it affected developments in price dispersion. Our results indicate that the Eurozone inflation rate after the introduction of the euro is on average significantly higher than prior to the changeover. Additionally, we find no evidence of a further significant reduction in price dispersion since the euro switchover in comparison with the previous period during which progress towards a leveling of existing price differentials had been made.Euro, inflation, price dispersion, Big Mac

What's that got to do with the price of fish? Buyers behavior on the Ancona fish market

In this paper we analyze the Ancona wholesale fish market (MERITAN) where transactions take place in three simultaneous Dutch auctions. Our objective is to characterize the behavior of market participants and, in particular, buyers in such a market structure. Our analysis of the data shows that buyer-seller relationships are less important than in a pairwise bargaining market such as the Marseille Fish market but that a significant amount of “loyalty" is still present under the auction mechanism. We provide an explanation of the “declining price paradox" for the fish market of Ancona by linking the rule used by the buyers to set their bid to the relationship between the variation in the price of the last transactions in the day and the quantity of fish available on that day. In fact, the average price tends to increase for last transactions on days characterized by limited supply of fish.wholesale fish market; Dutch auction

Systemic risk and macro-prudential policies: A credit network-based approach

Assessing systemic risk and defining macro-prudential policies aiming at reducing economic system vulnerability have been at the center of the economic debate of the last years. Credit networks play a crucial role in diffusing and amplifying local shocks, following the network-based financial accelerator approach (Delli Gatti et al., 2010; Battiston et al., 2012), we constructed an agent based model reproducing an artificial credit network populated by heterogeneous firms and banks. Calibrating the model on a sample of firms and banks quoted on Japanese stock-exchange mar- kets from 1980 to 2012, we try to define both early warning indicators of crises and policy precautionary measures based on the analysis of the endogenous dynamics of credit network connectivity

What's that got to do with the price of fish? Buyers behavior on the Ancona fish market

In this paper we analyze the Ancona wholesale fish market (MERITAN) where transactions take place in three simultaneous Dutch auctions. Our objective is to characterize the behavior of market participants and, in particular, buyers in such a market structure. Our analysis of the data shows that buyer-seller relationships are less important than in a pairwise bargaining market such as the Marseille Fish market but that a significant amount of “loyalty" is still present under the auction mechanism. We provide an explanation of the “declining price paradox" for the fish market of Ancona by linking the rule used by the buyers to set their bid to the relationship between the variation in the price of the last transactions in the day and the quantity of fish available on that day. In fact, the average price tends to increase for last transactions on days characterized by limited supply of fish

Adaptive expectations versus rational expectations: Evidence from the lab

The aim of the present work is to shed light on the extensive debate about expectations in financial markets. We analyze the behaviors of subjects in an experimental environment in which it is possible to observe expectations directly, since the sole task of each player is to predict the future price of an asset. We investigate the mechanism of expectation formation in two different contexts: first, where the fundamental value is constant; second, where the fundamental price increases over repetitions. First of all, we look at whether there is a convergence to the rational equilibrium even if agents have adaptive expectations, according to the main results of Palestrini and Gallegati (2015). Moreover, we concentrate on the accuracy of aggregate forecasts compared with individual forecasts. We find that there is collective rationality instead of individual rationality. In the context of an increasing fundamental value, contrary to theoretical predictions, players are able to capture the trend, but underestimate that value. This implies that there is no full convergence to the rational expectations equilibrium if all agents make their forecasts according to an adaptive scheme