We argue that a transaction tax is likely to amplify, not dampen, volatility in the foreign exchange mar-kets. Our argument stems from the decentralised trading practice and the presumable discrepancy be-tween ‘informed’ and ‘uninformed’ traders’ valuations. Since informed traders’...

The paper introduces a model of enterprise formation in a unionized economy with labor protection and wage bargaining. Enterprise formation is subject to future market risk and is shaped by labor market institutions in the post-entry stage. The predictions of the model are tested in...

The model for evaporation or condensational growth of a monodisperse binary droplet population is presented. Three methods for estimating steady state gas phase mass fluxes are compared. The uncoupled model neglects the coupling between mass transfer rates; the film theoretical model is based on...

We show that two horizontally differentiated banks can implement separating equilibria in markets for bank loans by using non-linear price schedules. The optimal strategies of the banks induce 'high-risk' borrowers to patronize their preferred, that is closer, bank. 'Low-risk' borrowers accept...

We show that risk-based capital requirements can eliminate the market failure, caused by asymmetric information between entrepreneurs and banks, which distorts the efficient allocation of low-risk and high-risk investment projects among entrepreneurs. If project success probabilities decline in...

We study the adverse selection problem in imperfectly competitive credit markets and illustrate the circumstances where a separating equilibrium emerges, even without collateral. The borrowers are heterogeneous in their preferences concerning the banks. Separation obtains in market segments...

Although beneficial allocational effects have been a central motivation for the Basel II capital adequacy reform, the interaction of these effects with Basel II’s procyclical impact has been less discussed. In this paper, we investigate the effect of Basel II on the efficiency of bank lending....

We study the determinants of the skill premium in a matching model where wages are set in bilateral meetings between workers and firms. As a novelty, disagreeing parties do not have to separate immediately, but they may opt to wait for competing agents to arrive. This waiting option is...

We argue that a transaction tax is likely to amplify, not dampen, volatility in foreign exchange markets. Our argument stems from the decentralized trading practice and the presumable discrepancy between 'informed' and 'uninformed' traders' valuations. Given that the informed valuations are...