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Conference Paper
The simple microeconomics of government-sponsored enterprises
Newsletter
How Concentrated Is the Clearing Ecosystem and How Has It Changed Since 2007?
After the global financial crisis of 2008–09, regulators across the globe enacted regulations to repair and strengthen financial markets. Part of the regulations were to mandate that more financial market contracts are cleared through central counterparties (CCPs). CCPs are financial institutions that guarantee performance of a financial contract—typically the buying and selling of contracts related to securities or derivatives. In the United States, the regulations for central clearing were established by the Dodd–Frank Act in 2010 and further promulgated by rules enacted by the ...
Working Paper
Evolving to the impatience trap: the example of the farmer-sheriff game
The literature on the evolution of impatience, focusing on one-person decision problems, finds that evolutionary forces favor the more patient individuals. This paper shows that in the context of a game, this is not necessarily the case. In particular, it offers a two- population example where evolutionary forces favor impatience in one group while favoring patience in the other. Moreover, not only evolution but also efficiency may prefer impatient individuals. In our example, it is efficient for one population to evolve impatience and for the other to develop patience. Yet, evolutionary ...
Journal Article
Summer reading: New research in applied microeconomics - conference summary
This Economic Letter summarizes several papers presented at the Federal Reserve Bank of San Francisco's Applied Microeconomics Summer Conference, held June 25-27, 2008. The papers are listed at the end and are available at http://www.frbsf.org/economics/conferences/0806/index.html ; The conference included papers on a number of topics, including analyses of the impacts of government programs and insights into the behavior of businesses. All the papers shared a common approach of applying detailed, microeconomic data to understand behavior and to distinguish causation from correlation.
Conference Paper
Microeconomic policy and technological change
Journal Article
Microstructure theory and the foreign exchange market
Working Paper
Repeated moral hazard with effort persistence
I study a problem of repeated moral hazard in which the effect of effort is persistent over time: each period's outcome distribution is a function of a geometrically distributed lag of past efforts. I show that when the utility of the agent is linear in effort, a simple rearrangement of terms in his lifetime utility translates this problem into a related standard repeated moral hazard. The solutions for consumption in the two problems are observationally equivalent, implying that the main properties of the optimal contract remain unchanged with persistence. To illustrate, I present the ...
Report
Microeconomic inventory adjustment and aggregate dynamics
We examine the microeconomic and aggregate inventory dynamics in the business sector of the U.S. economy. We employ high-frequency firm-level data and use an empirically tractable model, in which the aggregate dynamics are derived explicitly from the underlying microeconomic data. Our results show that the microeconomic adjustment function in both the manufacturing and trade sectors is nonlinear and asymmetric, results consistent with firms using (S,s)-type inventory policies. There are differences in the estimated adjustment functions between the two sectors as well as the durable and ...