Analysis of the the standard labor-market matching model usually focuses on labor productivity as an important source business of cycles. A shortcoming of this model is that it cannot account for observed labor market fluctuations with aggregate labor productivity as the only shock in the economy. Yet analysis of this framework disregards another potentially important source of business cycle f...

Since electricity, and its reliable provision on command, is a multi-attribute commodity, it should be priced over multiple dimensions if it is to be provided efficiently, and that requires multiple but related markets. So far New York is the only domestic electricity market that has introduced separate segments for ancillary services, together with eleven locationally defined markets for energ...

The paper builds on the baseline Goodwin (1967) model which describes the reserve army mechanism of capitalist economies. We add to this model segmented labor markets as described in Marx’s Capital, Vol.I. The model exhibits a unique steady state solution which depends on the speeds with which workers are pushed into or out of the labor market segments. We investigate the stability properties o...

Innovations in financial services continuously influence the scope of financial intermediation and the nature of competition between intermediaries. This paper examines the optimal exercise of strategic real options to invest in such an innovation, Internet banking technology, within a two-stage game, parameterized by the distribution of bank size and uncertainty over the profitability of inves...

One important characteristic of the recent mortgage crisis is the prevalence of subprime mortgages with adjustable interest rates and their high default rates. In this paper, we build and estimate a dynamic structural model of adjustable-rate mortgage defaults using unique mortgage loan level data. The data contain detailed information not only on borrowers’ mortgage payment history and lender ...

Rhodes-Kropf and Viswanathan (2004) suggest an adverse selection role of corporate cash reserve. Specifically, if investors know a bidder does not have to issue to invest, an attempt to do so sends a strong pessimistic signal of overvaluation. Despite its intuitiveness, this notion has not been explicitly studied in the empirical literature. Using a sample of acquisitions that are solely financ...

In an auction market, the auctioneer exerts significant influence in choosing and administering a selling strategy. We make the case for viewing the auctioneer as a market maker, whose success depends on how well he manages externalities without jeopardizing the trust of the buyers and sellers. We illustrate that incentives of the market maker may not be aligned with that of individual sellers....

This paper uses a disaggregated approach to study the volatility of common stocks at the market, industry, and firm levels. Over the period from 1962 to 1997 there has been a noticeable increase in firm-level volatility relative to market volatility. Accordingly, correlations among individual stocks and the explanatory power of the market model for a typical stock have declined, whereas the num...

Senior Research Assistant, and Vice President and Economist, respectively, Federal Reserve Bank of Boston. The authors thank Lynn Browne, Richard Kopcke, and Scott Schuh for helpful comments, Joe Ritter for access to the gross worker flows data, and Dan Feenberg at the National Bureau of Economic Research for help in obtaining MORG data. Shifts in the Beveridge Curve, Job Matching, and Labor Ma...

This paper uses a disaggregated approach to study the volatility of common stocks at the market, industry, and firm levels. Over the period from 1962 to 1997 there has been a noticeable increase in firm-level volatility relative to market volatility. Accordingly, correlations among individual stocks and the explanatory power of the market model for a typical stock have declined, whereas the num...