In January 1994, the Federal Reserve Board permitted a commercial bank to begin using a new type of computer software that dynamically reclassifies balances in its customer accounts from transaction deposits to a type of personal-saving deposit, the money market deposit account (MMDA).1 This reclassification reduces the bank’s statutory required reserves while leaving unchanged its customers’ p...

FIRM DYNAMICS, PRIVATE INFORMATION, AND THE GENERATION OF NEW TECHNOLOGY The authors present a theory of spinoffs in which the key ingredient is the originator’s private information concerning the quality of his new idea. Because quality is privately observed, by the standard adverse-selection logic, the market can at best offer a price that reflects the average quality of ideas sold. This give...

What is the force of attraction of cities? Leading explanations include the advantages of a concentrated market and knowledge spillovers. This paper develops a model of firm location decisions in which it is possible to distinguish the importance of the concentrated-market motive from other motives, including knowledge spillovers. A key aspect of the model is that it allows for the firm to choo...

Using data from the corporate loan market, we document substantial seasonality in corporate borrowing costs. Firms borrowing during seasonal “sales” in late spring and fall (May/June and October) issue at 19 basis points cheaper than winter and late summer borrowers (January/February and August). Given the ability of firms to move their funding demand to low priced periods, and lenders to shift...

In this paper, we develop an equilibrium model for stock market liquidity and its impact on asset prices when participation in the market is costly. We show that, even when agents’ trading needs are perfectly matched, costly participation prevents them from synchronizing their trades, which gives rise to the endogenous need for liquidity. Moreover, the endogenous liquidity need, when it occurs,...

This paper presents a structural debt valuation model that links default probabilities and recovery rates of corporate securities to asset market liquidity. This linking is advantageous for risk management and regulation of financial institutions in that it provides a method of calibrating the relationship between probability of default (PD) and loss given default (LGD). Two innovations in the ...

This paper studies the impact of the preferential tax treatment of housing, including the mortgage interest deduction, on equilibrium house prices, rents, and homeownership. We build a dynamic model of housing tenure choice that features a realistic progressive tax system in which owner-occupied housing services are tax-exempt, and mortgage interest payments and property taxes are tax deductibl...

Multifunctional battery storage system. In the national research project " Multifunctional Battery Storage System (MBS) " open questions were answered concerning the technical feasibility and profitability of a grid-connected battery storage system using a vanadium-redox-flow battery in combination with the renewable power generation plants PV and small wind power (Sterrer et al., Multifunktion...

Rottenberg and the Economics of Sport after 50 Years: An Evaluation Simon Rottenberg’s seminal 1956 article in the Journal of Political Economy, 1956, is generally accepted as the starting point for the development of the economics of sport. While he recognised that certain features of professional sports leagues were unusual he saw little reason to treat this industry any differently from a co...

4 Non-technical summary 5 Introduction 7 1 The Data: Ten-year Moving Averages in CPI Inflation, 10 Real and Nominal GDP Growth, and M2 Growth II Individual Country and Cross-Country Average Trends in Equation-of-Exchange Variables 18 III Inflationary Expectations Embodied in Bond Rates 33 IV Annual Inflation Estimates Based on Broad Monetary Growth and Bond Market 41 Inflation Expectations V Co...