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Bank bonus pay as a risk sharing contract

Efing, Matthias; Hau, Harald; Kampkötter, Patrick; … - 2019

We argue that risk sharing motivates the bank-wide structure of bonus pay. In the presence of financial frictions that … make external financing costly, the optimal contract between shareholders and employees involves some degree of risk … to rationalize with incentive theories of bonus pay - but support an important risk sharing motive. In particular …

Persistent link: https://ebvufind01.dmz1.zbw.eu/10011966886

Consumption dynamics and welfare under non-Gaussian earnings risk

Guvenen, Fatih; Ozkan, Serdar; Madera, Rocio - 2024

idiosyncratic risk implied by the benchmark process is between two-to-four times higher than the canonical Gaussian one. Third, the … transitory income (e.g., from a stimulus check) is higher under non-Gaussian earnings risk. …

Persistent link: https://ebvufind01.dmz1.zbw.eu/10014543845

A probabilistic solution to high-dimensional continuous-time macro and finance models

Ji, Huang - 2023

This paper introduces the probabilistic formulation of continuous-time economic models: forward stochastic differential equations (SDE) govern the dynamics of backward-looking variables, and backward SDEs capture that of forward-looking variables. Deep learning streamlines the search for the...

Persistent link: https://ebvufind01.dmz1.zbw.eu/10014331249

Equilibrium unemployment and capital intensity under product and labor market imperfections

Kauppi, Heikki (contributor); Koskela, Erkki (contributor); … - 2004

We study the implications of product and labor market imperfections for equilibrium unemployment under both exogenous and endogenous capital intensity. With endogenous capital intensity, stronger labor market imperfections always increase equilibrium unemployment. The relationship between the...

Persistent link: https://ebvufind01.dmz1.zbw.eu/10002521703

Making sense of non-binding retail-price recommendations

Bühler, Stefan; Gärtner, Dennis - 2010

We model non-binding retail-price recommendations (RPRs) as a communication device facilitating coordination in vertical supply relations. Assuming both repeated vertical trade and asymmetric information about production costs, we show that RPRs may be part of a relational contract,...

Persistent link: https://ebvufind01.dmz1.zbw.eu/10003965874

Illiquidity and under-valuation of firms

Gale, Douglas; Gottardi, Piero - 2009

We study a competitive model in which market incompleteness implies that debt-financed firms may default in some states of nature and default may lead to the sale of the firms' assets at fire sale prices when markets are illiquid. This incompleteness is the only friction in the model and the...

Persistent link: https://ebvufind01.dmz1.zbw.eu/10003923631

Competition and quality in regulated markets with sluggish demand

Brekke, Kurt R.; Cellini, Roberto; Siciliani, Luigi; … - 2010

We investigate the effect of competition on quality in regulated markets (e.g., health care, higher education, public utilities), using a Hotelling framework, in the presence of sluggish demand. We take a differential-game approach, and derive the open-loop solution (providers choose the optimal...

Persistent link: https://ebvufind01.dmz1.zbw.eu/10003935230

Newspaper differentiation and investments in journalism : the role of tax policy

Kind, Hans Jarle; Schjelderup, Guttorm; Stähler, Frank - 2011

Many countries levy reduced-rate indirect taxes on newspapers, with proclaimed policy goals of stimulating investment in journalism and ensuring low newspaper prices. However, by taking into account the fact that the media industry operates in two-sided markets, we find the paradoxical result...

Persistent link: https://ebvufind01.dmz1.zbw.eu/10009302131

The distributional consequences of tax reforms under market distortions

Angelopulos, Kōnstantinos; Jiang, Wei; Malley, James R. - 2011

In this paper we examine the importance of imperfect competition in product and labour markets in determining the long-run welfare effects of tax reforms assuming agent heterogeneity in capital holdings. Each of these market failures, independently, results in welfare losses for at least a...

Persistent link: https://ebvufind01.dmz1.zbw.eu/10009307947

Capacity constraining labor market frictions in a global economy

Holzner, Christian; Larch, Mario - 2011

Convex vacancy creation costs shape firms' responses to trade liberalization. They induce capacity constraints by increasing firms' cost of production, leading a profit maximizing firm not to fully meet the increased foreign demand. Hence, firms will only serve a few export markets. More...

Persistent link: https://ebvufind01.dmz1.zbw.eu/10009307959