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2012 Working Papers

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Title/Author(s) Abstract Number

A New Analysis of A Priori Voting Power in the IMF: Recent Quota Reforms Give Little Cause for Celebration

Dennis Leech & Robert Leech

The weighted voting system used by the International Monetary Fund creates problems of democratic legitimacy since each member's influence or voting power is not in general equal to its voting weight. [read more] 1001

Ex-Ante Price Commitment with Renegotiation in a Dynamic Market

Adrian Masters and Abhinay Muthoo

This paper studies a dynamic model of a market such as a labour market in which firms post wages and search for workers but trade may occur at a negotiated wage procedure in markets characterized by match-specific heterogeneity. [read more] 1000

How Should Peer-Review Panels Behave?

Daniel Sgroi and Andrew J. Oswald

Many governments wish to assess the quality of their universities. A prominent example is the UK’s new Research Excellence Framework (REF) 2014. In the REF, peer-review panels will be provided with information on publications and citations. This paper suggests a way in which panels could choose the weights to attach to these two indicators. [read more] 999

Public Disclosure by ‘Small’ Traders (updated November)

Luca Gelsomini

We model strategic trading by a rent-seeking insider, who exchanges without being spotted, and propose a comprehensive theory of market non-anonymity. Several novel results are established. [read more] 998

The Value to the Environmental Movement of the New Literature on the Economics of Happiness

Andrew J. Oswald

Many environmentalists have not yet discovered and understood the value to them of a new research literature. That literature is the economics of happiness. [read more]


Is Psychological Well-being Linked to the Consumption of Fruit and Vegetables?

David G. Blanchflower, Andrew J. Oswald

Humans run on a fuel called food. Yet economists and other social scientists rarely study what people eat. We provide simple evidence consistent with the existence of a link between the consumption of fruit and vegetables and high well-being. [read more] 996

Subjective and Ex Post Forecast Uncertainty : US Inflation and Output Growth

Michael P. Clements

Survey respondents who make point predictions and histogram forecasts of macrovariables reveal both how uncertain they believe the future to be, ex ante, as well as their expost performance. [read more]


Noncooperative Oligopoly in Markets with a Continuum of Traders: A Limit Theorem

Francesca Busetto, Giulio Codognato and Sayantan Ghosal

In this paper, in an exchange economy with atoms and an atomless part, we analyze the relationship between the set of the Cournot-Nash equilibrium allocations of a strategic market game and the set of the Walras equilibrium allocations of the exchange economy with which it is associated. [read more] 994

Price flexibility in British supermarkets

Jonathan S Seaton and Michael Waterson

This paper delivers a significantly different empirical perspective on micro pricing behaviour and its impact on macroeconomic processes than previous studies. We examine a seven year period of pricing behaviour by the major British supermarkets encompassing the recession year 2008 and the partial recovery of 2009. [read more] 993

Measuring the administrative water allocation mechanism and agricultural amenities

Erez Yerushalmi

Many arid countries use an administrative water allocation mechanism. Quotas, price discrimination, and increasing block tariffs are set and enforced by prohibiting the resale of water. [read more] 992

Do Reservation Wages Decline Monotonically? A Novel Statistical Test

Daniel Gutknecht

This paper develops a test for monotonicity of the regression function under endogeneity. The novel testing framework is applied to study monotonicity of the reservation wage as a function of elapsed unemployment duration. [read more] 991

Customers' Complaints and Quality Regulation

Luciana A.Nicollier

By studying a monopoly investment decision, this paper considers the informativeness of customers complaints in contexts characterised by the absence of direct benefits and free riding incentives. [read more] 990

Everyone Wants a Chance : Initial Positions and Fairness in Ultimatum Games

Gianluca Grimalda , Anirban Kar and Eugenio Proto

Fairness emerges as a relevant factor in redistributive preferences in surveys and experiments. We study experimentally the impact of varying the probability with which players are assigned to initial positions in Ultimatum Games (UGs). [read more] 989

Life Satisfaction, Household Income and Personality Traits

Eugenio Proto and Aldo Rustichini

We show that personality traits mediate the effect of income on Life Satisfaction. The effect is strong in the case of Neuroticism, which measures the sensitivity to threat and punishment, in both the British Household Panel Survey
and the German Socioeconomic Panel. [read more]

Identifying and characterising price leadership in British supermarkets

Jonathan S. Seaton and Michael Waterson

Price leadership is a concept that lacks precision. We propose a deliberately narrow, falsifiable, definition and illustrate its feasibility using the two leading British supermarket chains. [read more]


US inflation expectations and heterogeneous loss functions, 1968–2010

Michael P Clements

The recent literature has suggested that macroeconomic forecasters may have asymmetric loss functions, and that there may be heterogeneity across forecasters in the degree to which they weigh under and over-predictions. [read more] 986

Testing for optimal monetary policy via moment inequalities

Laura Coroneo, Valentina Corradi and Paulo Santos Monteiro

The specification of an optimizing model of the monetary transmission mechanism requires selecting a policy regime, commonly commitment or discretion. In this paper we propose a new procedure for testing optimal monetary policy, relying on moment inequalities that nest commitment and discretion as two special cases. [read more] 985

Expectations and Fluctuations : The Role of Monetary Policy

Michael Rousakis

How does the economy respond to shocks to expectations? This paper addresses this question within a cashless, monetary economy. A competitive economy features producers and consumers/workers with asymmetric information. [read more] 984

Implementation Cycles : Investment-Specific Technological Change and the Length of Patents

Michael Rousakis

This paper shows that implementation cycles, introduced in Shleifer (1986) , are possible in the presence of capital and the absence of borrowing constraints. [read more] 983

Markov Switching Monetary Policy in a two-country DSGE Model

Konstantinos Mavromatis

In this paper I show, using both empirical and theoretical analysis, that changes in monetary policy in one country can have important effects on other economies. [read more] 982

Smithian Growth Through Creative Organization

Patrick Legros, Andrew F. Newman & Eugenio Proto

We consider a model in which appropriate organization fosters innovation, but because of contractibility problems, this benefit cannot be internalized. The organizational design element we focus on is the division of labor, which as Adam Smith argued, facilitates invention by observers of the production process. [read more] 981

The Impact of “Rollover” Contracts on Switching Costs in the UK Voice Market: Evidence from Disaggregate Customer Billing Data

Gregory S. Crawford, Nicola Tosini, and Keith Waehrer

In February 2008, British Telecommunications (BT) introduced automatically renewing, or “rollover”, contracts into the UK market for fixed-voice telephone service. These contracts included a 12-month Minimum Contract Period (MCP) with associated Early Termination Charges (ETCs). [read more] 980

Endogenous Product Choice: A Progress Report

Gregory S. Crawford

Empirical models of differentiated product demand are widely used by both academics and practitioners. While these methods treat carefully the potential endogeneity of price, until recently they have assumed the number and characteristics of the products o.ered by firms are exogenous. [read more] 979

Self-Centered Beliefs : An Empirical Approach

Eugenio Proto and Daniel Sgroi

We perform an experiment designed to assess the accuracy of beliefs about distributions. The beliefs relate to behavior (mobile phone purchasing decisions, hypothetical restaurant choices), attitudes (happiness, politics) and observable characteristics (height, weight) and are typically formed through real world experiences. [read more] 978

The Household Effects of Government Spending

Francesco Giavazzi and Michael McMahon

This paper provides new evidence on the e ects of scal policy by studying, using household-level data, how households respond to shifts in government spending. Our identification strategy allows us to control for time-specific aggregate effects, such as the stance of monetary policy or the U.S.-wide business cycle. [read more] 977

Probability Distributions or Point Predictions? Survey Forecasts of US Output Growth and Inflation

Michael P Clements

We consider whether survey respondents’probability distributions, reported as histograms, provide reliable and coherent point predictions, when viewed through the lens of a Bayesian learning model, and whether they are well calibrated more generally. [read more] 976