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DEPARTMENT SEMINAR 2012-2013

 
 Program October 2012

October 2nd, 2012
11:00-12:30
Location: Ground Floor Library, Department of Economics, building 081 

Frederic MALHERBE (London Business School)
"Self-fulfilling Liquidity Dry-ups"

Abstract: This paper develops a model in which cash holding by an agent imposes a negative externality on others because it worsens future adverse selection in markets for long-term assets, which impairs their role for liquidity provision. Adverse selection worsens when agents hold more cash because fewer sales of long-term assets are then driven by a need to raise cash, and proportionally more sales reflect private information about their quality. Moreover, future market illiquidity makes current cash holding more appealing. This feedback effect may result in widespread hoarding behavior and a market breakdown, which I interpret as a self-fulfilling liquidity dry-up. This mechanism suggests that imposing liquidity requirements to financial institutions may have unintended consequences.

If you would like to have lunch or a meeting with the speaker, please contact Francisco Ruiz-Aliseda 
 

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October 9th, 2012
11:00-12:30
Location: Ground Floor Library, Department of Economics, building 081

Lucas MAESTRI (TSE)
"A Theory of Slow Trading in Bargaining" 

Abstract: A seller dynamically sells a divisible good to a buyer. It is common knowledge that there are gains from trade and that the gains per-unit are decreasing. Payoffs are interdependent as in the Akerlof’s market for lemons. The seller is informed about the good’s quality. The buyer learns about it only through the seller’s behavior. We characterize the stationary equilibrium when the time between offers is small. The buyer starts the game making an offer for the whole good at a price that only sellers with low valuation could accept. If this offer is rejected, the parties reach an impasse and there is delay in trading. After this delay, the buyer makes an offer for a fraction of the good at a price that all sellers accept. Following this acceptance, the buyer makes an offer for the remaining of the good at a price that only sellers with low valuation could accept. If this offer is rejected, a new impasse is reached. We use this characterization to analyze the limit equilibrium as the good becomes more divisible. We prove that there is slow trading: Buyers with high valuation sell the good smoothly over time. Buyers with low valuation are indifferent between selling the remaining part of the good in the current period or mimicking high-valuation buyers for some time and selling the remaining of the good later.

If you would like to have lunch or a meeting with the speaker, please contact Francisco Ruiz-Aliseda 
 

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October 16th, 2012
11:00-12:30
Location: Ground Floor Library, Department of Economics, building 081

Pierre FLECKINGER (PSE)
"Incentives for Quality in Friendly and Hostile Informational Environments" 
Joint work with Matthieu Glachant and Gabrielle Moineville.

Abstract: We develop a simple lemons model with endogenous quality where the amount of information available is quality-dependent. The distinctive feature of the analysis is to contrast friendly informational environments, in which the buyer has better information when quality is high than when it is low, and hostile environments, in which information is better when quality is low. Differences are clear-cut: Hostile environments give rise to a bandwagon effect across sellers, which can lead to multiple equilibria. In contrast, friendly environments create free riding among sellers, which always induces a unique equilibrium. Comparative statics results are also contrasted. A key notion is that incentive provision is relatively better when the informational environment targets less expected evidence. The results shed new light on several insights of the literature on statistical discrimination, collective reputation and quality certification. 

If you would like to have lunch or a meeting with the speaker, please contact Eduardo Perez
 

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October 23rd, 2012
11:00-12:30
Location: Ground Floor Library, Department of Economics, building 081

Jean IMBS (PSE and CEPR)
"Economic Integration and Structural Change"
Joint work with Claudio Montenegro and Romain Wacziarg

Abstract: The dynamic evolution of sectoral production - structural change - is associated with systematic changes in the geographic dispersion of activity. In developing countries, sectoral diversification is accompanied by geographic agglomeration, and regions become heterogeneous. In advanced economies, sectoral specialization is accompanied by geographic dispersion, and regions become homogeneous. We argue that developing countries diversify because their regions integrate with each other, and can specialize according to regional comparative advantage. Advanced economies specialize because they integrate internationally and their regions produce according to the global pattern of comparative advantage. We find systematic support for these claims in international data on sectoral production at the regional level, including in the US, Europe, China and India. Consistent with our theory, we find no such evidence once the samples focus on non-traded sectors. Economic zones formed by specialized, regionally homogeneous countries, such as Europe, tend to diversify and agglomerate, consistent with their constituent countries integrating with each other.

If you would like to have lunch or a meeting with the speaker, please contact Isabelle Méjean
 

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Program November 2012

November 13rd, 2012
11:00-12:30
Location: Ground Floor Library, Department of Economics, building 081

Kevin SHEEDY (LSE)
"Incomplete Markets and Household Debt: A Case for Nominal GDP Targeting" 

Abstract: Financial markets are incomplete, thus for many agents borrowing is possible only by accepting a financial contract that specifies a fixed repayment. However, the future income that will repay this debt is uncertain, so risk can be inefficiently distributed. This paper argues that a monetary policy of nominal GDP targeting can improve the functioning of incomplete financial markets when incomplete contracts are written in terms of money. By insulating agents' nominal incomes from aggregate real shocks, this policy effectively completes the market by stabilizing the ratio of debt to income. The paper argues that the objective of nominal GDP should receive significant weight even in an environment with other frictions that have been used to justify a policy of strict inflation targeting. 

If you would like to have lunch or a meeting with the speaker, please contact Isabelle Méjean
 

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November 20th, 2012
11:00-12:30
Location: Ground Floor Library, Department of Economics, building 081

Jonathon EATON (Penn State)
Title: "tba"

If you would like to have lunch or a meeting with the speaker, please contact Isabelle Méjean
 

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November 27th, 2012
11:00-12:30
Location: Ground Floor Library, Department of Economics, building 081

Joel SHAPIRO (Said, BS Oxford)
Title: "tba"

If you would like to have lunch or a meeting with the speaker, please contact Francisco Ruiz-Aliseda 
 

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Program December 2012

December 4th, 2012
11:00-12:30
Location: Ground Floor Library, Department of Economics, building 081

Olivier GOSSNER (PSE)
Title: "tba"

If you would like to have lunch or a meeting with the speaker, please contact Eduardo Perez
 

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December 11st, 2012
11:00-12:30
Location: Ground Floor Library, Department of Economics, building 081

Matt JACKSON (Stanford University)
Title: "tba"

If you would like to have lunch or a meeting with the speaker, please contact Eduardo Perez