Creator: Kocherlakota, Narayana Rao, 1963- Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 275 Abstract:
In this paper, I provide a possible explanation of why nominally risk-free bonds are essential in monetary economies. I argue that the role of nominal bonds is to serve as record-keeping devices in intertemporal exchanges of money. I show that bonds can only serve this role if they are illiquid (costly to exchange for goods). Finally, I show that in economies in which nominal bonds are essential, welfare and nominal interest rates are both positively associated with the supply of illiquid bonds (if that supply is small).
Stichwort: Nominal bonds and Money Fach: E58 - Central Banks and Their Policies, E42 - Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems, and C78 - Bargaining Theory; Matching Theory
Creator: Kocherlakota, Narayana Rao, 1963- Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 274 Abstract:
This paper provides a new rationalization for deposit insurance and systemic disintermediations. I consider an environment in which borrowers face no penalty for failing to repay obligations except the loss of their collateral. I assume that this collateral has aggregate risk. For a subset of the exogenous parameters, I demonstrate that an optimal arrangement features deposit insurance. For a strictly smaller set of parameters, it is optimal in some states of the world to have systemic disintermediation and concomitant falls in real output.
Creator: Hopenhayn, Hugo Andres, Llobet, Gerard, and Mitchell, Matt Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 273 Abstract:
This paper presents a model of cumulative innovation where firms are heterogeneous in their research ability. We study the optimal reward policy when the quality of the ideas and their subsequent development effort are private information. The optimal assignment of property rights must counterbalance the incentives of current and future innovators. The resulting mechanism resembles a menu of patents that have infinite duration and fixed scope, where the latter increases in the value of the idea. Finally, we provide a way to implement this patent menu by using a simple buyout scheme: The innovator commits at the outset to a price ceiling at which he will sell his rights to a future inventor. By paying a larger fee initially, a higher price ceiling is obtained. Any subsequent innovator must pay this price and purchase its own buyout fee contract.
Stichwort: Compulsory Licensing, Innovation, Patents, Policy, Mechanism Design, Asymmetric Information, and Sequential Innovation Fach: L50 - Regulation and Industrial Policy: General, K23 - Regulated Industries and Administrative Law, L51 - Economics of Regulation, D82 - Asymmetric and Private Information; Mechanism Design, D43 - Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection, H41 - Public Goods, and O31 - Innovation and Invention: Processes and Incentives
Creator: Boyd, John H. and Prescott, Edward C. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 272 Beschreibung:
"Financial intermediary-coalitions" (WP 272) replaces "Financial intermediaries" (WP 231) and "Father of financial intermediary-coalitions" (WP 250).
Stichwort: Asset transformers, Core equilibrium, Loan companies, Private information, Consumer finance companies, Commercial banks, Thrift institutions, and Financial intermediation Fach: D82 - Asymmetric and Private Information; Mechanism Design, G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages, and D50 - General Equilibrium and Disequilibrium: General
Creator: Filson, Darren, 1969- and Franco, April Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 272 Abstract:
In high-tech industries, one important method of diffusion is through employee mobility: many of the entering firms are started by employees from incumbent firms using some of their former employers’ technological know-how. This paper explores the effect of incorporating this mechanism in a general industry framework by allowing employees to imitate their employers’ know-how. The equilibrium is Pareto optimal since the employees “pay” for the possibility of learning their employers’ know-how. The model’s implications are consistent with data from the rigid disk drive industry. These implications concern the effects of know-how on firm formation and survival.
Stichwort: Innovation, Industry Dynamics, Spinout, Research and Development, Diffusion, Techonological Change, and Rigid Disk Drive Fach: J24 - Human Capital; Skills; Occupational Choice; Labor Productivity, L11 - Production, Pricing, and Market Structure; Size Distribution of Firms, L63 - Microelectronics; Computers; Communications Equipment, and O31 - Innovation and Invention: Processes and Incentives
Creator: Jones, Larry E., Manuelli, Rodolfo E., and Siu, Henry E. Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 271 Abstract:
We present a class of convex endogenous growth models and analyze their performance in terms of both growth and business cycle criteria. The models we study have close analogs in the real business cycle literature. We interpret the exogenous growth rate of productivity as an endogenous growth rate of human capital. This perspective allows us to compare the strengths of the two classes of models.
To highlight the mechanism that gives endogenous growth models the ability to improve upon their exogenous growth relatives, we study models that are symmetric in terms of human and physical capital formation—our two engines of growth. More precisely, we analyze models in which the technology used to produce human capital is identical to the technologies used to produce consumption and investment goods and in which the technology shocks in the two sectors are perfectly correlated.
Fach: D90 - Micro-Based Behavioral Economics: General and E32 - Business Fluctuations; Cycles
Creator: Todd, Richard M. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 270 Stichwort: Crops, Feed grains, Federal grain programs , Agriculture, Feed prices, and Livestock Fach: Q18 - Agricultural Policy; Food Policy and H81 - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts