Benjamin Eden - Academia.edu (original) (raw)
Papers by Benjamin Eden
Blackwell Publishing Ltd eBooks, Dec 13, 2007
Using representative individual-level data from the first round of the European Social Survey fie... more Using representative individual-level data from the first round of the European Social Survey fielded in 2002/03, this paper provides an empirical analysis of unionization in 18 countries of the European Union. We show that union density varies considerably in Europe, ranging from 84 per cent in Denmark to 11 per cent in Portugal. Estimating identical models for each country, we find that individuals' probability of union membership is significantly affected by their personal characteristics, their attitudes and the characteristics of their workplace, whereas social factors seem to play a minor role. The presence of a union at the workplace and employees' attitudes concerning strong unions are the two variables with the most widespread effects on unionization.
Journal of International Economics, Sep 1, 2007
I study an example of a competitive environment in which trade occurs in a sequential manner. In ... more I study an example of a competitive environment in which trade occurs in a sequential manner. In this example, a country with a stable demand may suffer from trade with a country with unstable demand, there may be too much trade, a country may import and export the same good in the same period (cross-hauling) and dumping may occur. The assumption about the timing of delivery is critical for our results. When delivery occurs before trade (delivery to stocks) trade improves welfare, there is dumping but no cross-hauling. When delivery occurs after trade (delivery to order), trade may reduce welfare, cross-hauling may occur but dumping does not occur.
Journal of Political Economy, Oct 1, 1993
ABSTRACT Trade is sequential: buyers arrive in batches and each batch completes trade before the ... more ABSTRACT Trade is sequential: buyers arrive in batches and each batch completes trade before the next arrives. Producers allocate the available supply among all potential batches of buyers. Inventories accumulate whenever a batch does not arrive. Shocks to cost and demand are serially independent. There is a stationary relationship between inventories and prices with the following properties. Larger beginning-of-period inventories tend to depress prices. Inventories are positively serially correlated. A unit increase in inventories leads to an increase in the price spread. Output tends to vary more than sales. Copyright 1993 by University of Chicago Press.
Review of Economic Dynamics, Jul 1, 2004
We use large unpublished data set about the prices by store of 381 products collected by the Isra... more We use large unpublished data set about the prices by store of 381 products collected by the Israeli bureau of statistics during 1991-92 in the process of computing the CPI. On average 24% of the stores changed * This paper benefited from comments provided by the participants of the workshop at the Chicago Fed and by comments provided by Jeff Campbell.
World Bank, Washington, DC eBooks, Feb 1, 2016
The Policy Research Working Paper Series disseminates the findings of work in progress to encoura... more The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
RePEc: Research Papers in Economics, 2005
RePEc: Research Papers in Economics, 1991
RePEc: Research Papers in Economics, Jul 1, 1980
RePEc: Research Papers in Economics, Sep 1, 2011
I study the real effects of bubbles in a price-setting environment. Bubbles cause price dispersio... more I study the real effects of bubbles in a price-setting environment. Bubbles cause price dispersion and overinvestment in assets that are overvalued. And when they pop some goods are not sold and capacity is not fully utilized. I argue that a government monopoly on the creation of bubble assets is desirable but may be difficult to achieve. A non-linear tax on capital gains and a "high" interest rate policy can play a role in protecting the government's monopoly on the creation of bubble assets.
RePEc: Research Papers in Economics, Jul 11, 2012
I examine the argument that a low interest rate policy can lead to "overvalued" private assets or... more I examine the argument that a low interest rate policy can lead to "overvalued" private assets or privately created bubbles (private bubbles). Using the standard approach to bubbles, I find that a policy of a low real interest rate may support private bubbles but a policy of a low nominal interest rate may actually reduce the importance of private bubbles. I then attempt a less conventional way of modeling bubbles focusing on the supply of private bubbles. The paper uses results from the Friedman rule literature, the fiscal approach to the price level and the literature on rational bubbles.
RePEc: Research Papers in Economics, 1994
ABSTRACT use large datasets on prices by products and stores from recent inflationary periods in ... more ABSTRACT use large datasets on prices by products and stores from recent inflationary periods in Israel to compare simple menu cost models with simple uncertain and sequential trade (UST) models. The main empirical findings are (a) price erosion due to inflation explains only a tiny fraction of the variation in nonzero nominal price changes, (b) stores whose last nominal price change was relatively low are likely to choose a nominal price change that is relatively high, (c) stores that reduce their nominal price charge a lower price relative to stores that increase their nominal price, and (d) relative price variability is not related to inflation. (Copyright: Elsevier)
RePEc: Research Papers in Economics, Nov 1, 1994
A store that increases the nominal price of a given good by more than other stores will tend to w... more A store that increases the nominal price of a given good by more than other stores will tend to wait longer before it increases its nominal price again, but only by as much as 15% of the additional time interval predicted by models which assume fixed menu-type costs for changing nominal prices. This finding is based on large data sets of prices by products and stores during recent inflationary periods in Israel. It suggests that coordination-type costs are important relative to menu-type costs.
RePEc: Research Papers in Economics, Sep 1, 2007
I use price dispersion to model liquidity. Buyers may be rationed at the low price. An asset is m... more I use price dispersion to model liquidity. Buyers may be rationed at the low price. An asset is more liquid if it is used relatively more in low price transactions and the probability that it will buy at the low price is relatively high. In the equilibrium of interest government bonds are more liquid than stocks. Agents with a relatively stable demand are willing to pay a high "liquidity premium" for holding bonds and they specialize in bonds. In equilibrium only a fraction of households (those with relatively unstable demand) hold stocks and the equity premium may be large.
RePEc: Research Papers in Economics, 1994
RePEc: Research Papers in Economics, 1992
Reforms in education is currently a hot topic . Many suggestions for reform use elements of Fried... more Reforms in education is currently a hot topic . Many suggestions for reform use elements of Friedman's voucher scheme. According to this scheme parents get a transfer of money (vouchers) from the government, which they must spend on education. But they are free to choose the type of education they want for their children . In particular, they can choose among alternative schools. Surprisingly, the ideas sketched by Friedman about thirty years ago were not examined in the rigorous general equilibrium tools which are now available. Here I attempt to fill this gap. It is argued that vouchers are not sufficient for successful decentralization: To achieve the socially optimal amounts of educational outputs the government must pay schools for the educational outputs in addition to payments for the employment of students. Once this achievement based system (ABS) is in place, there is no need to worry about school integration: the optimal amount of integration will arise voluntarily, because in the ABS schools face the correct shadow wages for the employment of students.
RePEc: Research Papers in Economics, 2008
The standard power utility function is widely used to explain asset prices. It assumes that the c... more The standard power utility function is widely used to explain asset prices. It assumes that the coefficient of relative risk aversion is the inverse of the elasticity of substitution. Here I use the Kihlstrom and Mirman (1974) expected utility approach to relax this assumption. I use time consistent preferences that lead to time consistent plans. In our examples, the past does not matter much for current portfolio decisions. The risk aversion parameter can be inferred from experiments and introspections about bets in terms of permanent consumption (wealth). Evidence about the change in the attitude towards bets over the life cycle may also restrict the value of the risk aversion parameter. Monotonic transformations of the standard power utility function do not change the predictions about asset prices by much. Both the elasticity of substitution and risk aversion play a role in determining the equity premium.
Journal of Monetary Economics, Nov 1, 1986
It is argued that when money and bonds are distinct and money yields a lower rate of return, the ... more It is argued that when money and bonds are distinct and money yields a lower rate of return, the quantity of private bonds that is exchanged for money is a signal for demand in the near future. Therefore. competitive price setters who observe transactions in the capital market will find it easier to quote prices when money and bonds are distinct relative to the case in which money and bonds are perfect substitutes. In the example analyzed, imposing a cash-in-advance constraint leads to fewer price-setting mistakes and to a Pareto improvement.
Journal of Monetary Economics, Sep 1, 1985
RePEc: Research Papers in Economics, 2009
ABSTRACT Why do people hold dollar denominated assets when higher rate of return alternatives are... more ABSTRACT Why do people hold dollar denominated assets when higher rate of return alternatives are available? Can a country collect seigniorage payments from other countries in the long run? Does the supplier of the international currency benefit from doing so? I provide qualitative answers to these related questions in terms of a model with price dispersion, heterogeneous agents and two government-backed assets (interest-bearing monies). In the steady state one of the assets is used primarily in low price transactions and earns a relatively low (measured) real rate of return. The stable demand country that issues the relatively liquid asset gets seigniorage but its welfare may be less than under autarky because trade increases the uncertainty about demand in the relevant markets and uncertainty sometimes leads to ex-post pricing mistakes and waste.
RePEc: Research Papers in Economics, Nov 1, 2006
What are the "liquidity services" provided by "over-priced" assets? Will competition drive intern... more What are the "liquidity services" provided by "over-priced" assets? Will competition drive international seigniorage payments to zero? Does a country gain when other hold its "over-priced" assets? These questions are analyzed here in a model with demand uncertainty (taste shocks) and sequential trade. It is shown that a country with a relatively stable demand may issue "over priced" debt and get seigniorage payments from countries with unstable demand. But this does not necessarily improve welfare in the stable demand country.
Blackwell Publishing Ltd eBooks, Dec 13, 2007
Using representative individual-level data from the first round of the European Social Survey fie... more Using representative individual-level data from the first round of the European Social Survey fielded in 2002/03, this paper provides an empirical analysis of unionization in 18 countries of the European Union. We show that union density varies considerably in Europe, ranging from 84 per cent in Denmark to 11 per cent in Portugal. Estimating identical models for each country, we find that individuals' probability of union membership is significantly affected by their personal characteristics, their attitudes and the characteristics of their workplace, whereas social factors seem to play a minor role. The presence of a union at the workplace and employees' attitudes concerning strong unions are the two variables with the most widespread effects on unionization.
Journal of International Economics, Sep 1, 2007
I study an example of a competitive environment in which trade occurs in a sequential manner. In ... more I study an example of a competitive environment in which trade occurs in a sequential manner. In this example, a country with a stable demand may suffer from trade with a country with unstable demand, there may be too much trade, a country may import and export the same good in the same period (cross-hauling) and dumping may occur. The assumption about the timing of delivery is critical for our results. When delivery occurs before trade (delivery to stocks) trade improves welfare, there is dumping but no cross-hauling. When delivery occurs after trade (delivery to order), trade may reduce welfare, cross-hauling may occur but dumping does not occur.
Journal of Political Economy, Oct 1, 1993
ABSTRACT Trade is sequential: buyers arrive in batches and each batch completes trade before the ... more ABSTRACT Trade is sequential: buyers arrive in batches and each batch completes trade before the next arrives. Producers allocate the available supply among all potential batches of buyers. Inventories accumulate whenever a batch does not arrive. Shocks to cost and demand are serially independent. There is a stationary relationship between inventories and prices with the following properties. Larger beginning-of-period inventories tend to depress prices. Inventories are positively serially correlated. A unit increase in inventories leads to an increase in the price spread. Output tends to vary more than sales. Copyright 1993 by University of Chicago Press.
Review of Economic Dynamics, Jul 1, 2004
We use large unpublished data set about the prices by store of 381 products collected by the Isra... more We use large unpublished data set about the prices by store of 381 products collected by the Israeli bureau of statistics during 1991-92 in the process of computing the CPI. On average 24% of the stores changed * This paper benefited from comments provided by the participants of the workshop at the Chicago Fed and by comments provided by Jeff Campbell.
World Bank, Washington, DC eBooks, Feb 1, 2016
The Policy Research Working Paper Series disseminates the findings of work in progress to encoura... more The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
RePEc: Research Papers in Economics, 2005
RePEc: Research Papers in Economics, 1991
RePEc: Research Papers in Economics, Jul 1, 1980
RePEc: Research Papers in Economics, Sep 1, 2011
I study the real effects of bubbles in a price-setting environment. Bubbles cause price dispersio... more I study the real effects of bubbles in a price-setting environment. Bubbles cause price dispersion and overinvestment in assets that are overvalued. And when they pop some goods are not sold and capacity is not fully utilized. I argue that a government monopoly on the creation of bubble assets is desirable but may be difficult to achieve. A non-linear tax on capital gains and a "high" interest rate policy can play a role in protecting the government's monopoly on the creation of bubble assets.
RePEc: Research Papers in Economics, Jul 11, 2012
I examine the argument that a low interest rate policy can lead to "overvalued" private assets or... more I examine the argument that a low interest rate policy can lead to "overvalued" private assets or privately created bubbles (private bubbles). Using the standard approach to bubbles, I find that a policy of a low real interest rate may support private bubbles but a policy of a low nominal interest rate may actually reduce the importance of private bubbles. I then attempt a less conventional way of modeling bubbles focusing on the supply of private bubbles. The paper uses results from the Friedman rule literature, the fiscal approach to the price level and the literature on rational bubbles.
RePEc: Research Papers in Economics, 1994
ABSTRACT use large datasets on prices by products and stores from recent inflationary periods in ... more ABSTRACT use large datasets on prices by products and stores from recent inflationary periods in Israel to compare simple menu cost models with simple uncertain and sequential trade (UST) models. The main empirical findings are (a) price erosion due to inflation explains only a tiny fraction of the variation in nonzero nominal price changes, (b) stores whose last nominal price change was relatively low are likely to choose a nominal price change that is relatively high, (c) stores that reduce their nominal price charge a lower price relative to stores that increase their nominal price, and (d) relative price variability is not related to inflation. (Copyright: Elsevier)
RePEc: Research Papers in Economics, Nov 1, 1994
A store that increases the nominal price of a given good by more than other stores will tend to w... more A store that increases the nominal price of a given good by more than other stores will tend to wait longer before it increases its nominal price again, but only by as much as 15% of the additional time interval predicted by models which assume fixed menu-type costs for changing nominal prices. This finding is based on large data sets of prices by products and stores during recent inflationary periods in Israel. It suggests that coordination-type costs are important relative to menu-type costs.
RePEc: Research Papers in Economics, Sep 1, 2007
I use price dispersion to model liquidity. Buyers may be rationed at the low price. An asset is m... more I use price dispersion to model liquidity. Buyers may be rationed at the low price. An asset is more liquid if it is used relatively more in low price transactions and the probability that it will buy at the low price is relatively high. In the equilibrium of interest government bonds are more liquid than stocks. Agents with a relatively stable demand are willing to pay a high "liquidity premium" for holding bonds and they specialize in bonds. In equilibrium only a fraction of households (those with relatively unstable demand) hold stocks and the equity premium may be large.
RePEc: Research Papers in Economics, 1994
RePEc: Research Papers in Economics, 1992
Reforms in education is currently a hot topic . Many suggestions for reform use elements of Fried... more Reforms in education is currently a hot topic . Many suggestions for reform use elements of Friedman's voucher scheme. According to this scheme parents get a transfer of money (vouchers) from the government, which they must spend on education. But they are free to choose the type of education they want for their children . In particular, they can choose among alternative schools. Surprisingly, the ideas sketched by Friedman about thirty years ago were not examined in the rigorous general equilibrium tools which are now available. Here I attempt to fill this gap. It is argued that vouchers are not sufficient for successful decentralization: To achieve the socially optimal amounts of educational outputs the government must pay schools for the educational outputs in addition to payments for the employment of students. Once this achievement based system (ABS) is in place, there is no need to worry about school integration: the optimal amount of integration will arise voluntarily, because in the ABS schools face the correct shadow wages for the employment of students.
RePEc: Research Papers in Economics, 2008
The standard power utility function is widely used to explain asset prices. It assumes that the c... more The standard power utility function is widely used to explain asset prices. It assumes that the coefficient of relative risk aversion is the inverse of the elasticity of substitution. Here I use the Kihlstrom and Mirman (1974) expected utility approach to relax this assumption. I use time consistent preferences that lead to time consistent plans. In our examples, the past does not matter much for current portfolio decisions. The risk aversion parameter can be inferred from experiments and introspections about bets in terms of permanent consumption (wealth). Evidence about the change in the attitude towards bets over the life cycle may also restrict the value of the risk aversion parameter. Monotonic transformations of the standard power utility function do not change the predictions about asset prices by much. Both the elasticity of substitution and risk aversion play a role in determining the equity premium.
Journal of Monetary Economics, Nov 1, 1986
It is argued that when money and bonds are distinct and money yields a lower rate of return, the ... more It is argued that when money and bonds are distinct and money yields a lower rate of return, the quantity of private bonds that is exchanged for money is a signal for demand in the near future. Therefore. competitive price setters who observe transactions in the capital market will find it easier to quote prices when money and bonds are distinct relative to the case in which money and bonds are perfect substitutes. In the example analyzed, imposing a cash-in-advance constraint leads to fewer price-setting mistakes and to a Pareto improvement.
Journal of Monetary Economics, Sep 1, 1985
RePEc: Research Papers in Economics, 2009
ABSTRACT Why do people hold dollar denominated assets when higher rate of return alternatives are... more ABSTRACT Why do people hold dollar denominated assets when higher rate of return alternatives are available? Can a country collect seigniorage payments from other countries in the long run? Does the supplier of the international currency benefit from doing so? I provide qualitative answers to these related questions in terms of a model with price dispersion, heterogeneous agents and two government-backed assets (interest-bearing monies). In the steady state one of the assets is used primarily in low price transactions and earns a relatively low (measured) real rate of return. The stable demand country that issues the relatively liquid asset gets seigniorage but its welfare may be less than under autarky because trade increases the uncertainty about demand in the relevant markets and uncertainty sometimes leads to ex-post pricing mistakes and waste.
RePEc: Research Papers in Economics, Nov 1, 2006
What are the "liquidity services" provided by "over-priced" assets? Will competition drive intern... more What are the "liquidity services" provided by "over-priced" assets? Will competition drive international seigniorage payments to zero? Does a country gain when other hold its "over-priced" assets? These questions are analyzed here in a model with demand uncertainty (taste shocks) and sequential trade. It is shown that a country with a relatively stable demand may issue "over priced" debt and get seigniorage payments from countries with unstable demand. But this does not necessarily improve welfare in the stable demand country.