We study an economy characterized by competitive search and asymmetric information. Money is essential. Buyers decide their cash holdings after observing the contracts posted by firms and experience match-specific preference shocks which remain unknown to sellers. Firms are allowed to post general contracts. In the baseline model with indivisible goods, we show that, when the number of potential buyers is fixed, inflation decreases markups. This, in turn, increases aggregate output and ex ante welfare. When goods are divisible the negative effect of inflation on markups holds for unconstrained agents but is ambiguous for constrained agents. Still, optimal monetary policy implies a positive nominal rate. When there is buyers' free entry, asymmetric information causes a congestion effect that can be corrected by monetary policy.

Interleukin-15 is a pleiotropic cytokine type I four alpha-helical bundle cytokine that along with IL-2, IL-4, IL-7, IL-9, and IL-21 shares the common cytokine receptor γ chain, γc. IL-15 is vital for the development, survival, and expansion of natural killer cells and for the development of CD8+ memory T cells. Whereas other family γc cytokines signal by directly binding to their target cells, IL-15 is distinctive in that it binds to IL-15Rα, a sushi domain containing binding protein that is expressed on a number of cell types, including monocytes and dendritic cells as well as T cells, and then is trans-presented to responding cells that express IL-2Rβ and γc. This distinctive mechanism for IL-15 relates to its role in signaling in the context of cell-cell interactions and signaling synapses. The actions of IL-15 and ways of manipulating its actions to potential therapeutic benefit are discussed.

We study information and consumption and whether consumers respond symmetrically to good and bad news. We define a news variable and show that it has explanatory power. We, then, test the hypothesis that consumers react more to bad news than to good news using the PSID to analyze the response of households’ consumption to news about aggregate future income.We find that our news variable helps one predict households’ consumption change and that consumption responses are larger following negative (bad) news than positive (good) news and suggest that observed asymmetric consumption responses could be due to agents’ aversion to ambiguous information.

We offer a structural interpretation of survey measures of consumer confidence. Our approach is based on a simple forward-looking model of consumption. The model decomposes observed consumption fluctuations in changes due to fundamentals, and changes due to temporary errors caused by noisy information. Our model-based measure, estimated using national accounts, closely mimics out-of-sample survey data in the U.S. and a majority of European countries. The results provide a theoretical foundation for the use of survey-based consumer confidence indices. In addition, since national accounts are an internationally consistent measure of activity, our structural method provides an alternative and internationally consistent measure of consumer confidence.

In a behavioral variant of a New Keynesian model, in which individuals use simple heuristic rules to forecast future in ation and output gap, if there are limits on the amount of debt that economic agents are allowed to bear, we observe occasionally severe downturns. Differences in beliefs combined with borrowing constraints tend to dampen expansions, but give rise to a chain reaction that exacerbates the recessions. The model is an example of endogenous credit cycles with expansions, severe recessions, and persistent inequality in the distribution of wealth. Monetary policy can both stabilize the economy and cause increased average output.

In the USA a high relative price of housing is associated with log GDP growth over the following 5 years. It is possible to forecast the great recession using this pattern and a trend both estimated with 20th century data. The forecast recession is even more severe than the actual recession.

ABSTRACT The article explores the relationship between top marginal tax rates on personal income and economic growth. Using a data set of consistently measured top marginal tax rates for a panel of 18 OECD countries over the period 1965–2009, this article finds evidence in favour of a quadratic top tax–growth relationship. This represents the first reported evidence of a nonmonotonic significant relationship between top marginal income tax rates and economic growth. The point estimates of the regressions suggest that the marginal effect of higher top tax rates becomes negative above a growth-maximizing tax rate in the order of 60%. As top marginal tax rates observed after 1980 are below the estimated growth-maximizing level in most of the countries considered, a positive linear relationship between top marginal tax rates and GDP growth is found over the sub-period 1980–2009. Overall, results show that raising top marginal tax rates which are below their growth maximizing has the largest positive impact on growth when the related additional revenues are used to finance productive public expenditure, reduce budget deficits or reduce some other form of distortionary taxation.

Participants in the De Nederlandsche Bank Household Survey were asked questions allowing to elicit subjective discount factors over different time horizons. The answers of most participants indicate present-bias as they show a higher annualized nominal rate of return for a 3-month delay than for a 12-month delay. One way to deal with one’s present-bias problem is to impose limits on future spending by holding wealth in non-liquid assets. We therefore predict that agents with more severe present-bias problems hold a lower share of their wealth as money. Our data provide statistically significant evidence in support of this prediction.

This paper shows that the under-investment in firm-financed training caused by hold up can justify the introduction of firing taxes in a laissez-faire economy with search frictions and risk neutral agents. More precisely we highlight two results. First, the introduction of a firing tax for newly hired workers combined with hiring subsidies, always acts as a Pareto improving policy. Second, with no hiring subsidies, the introduction of a firing tax for the newly hired always increase the welfare of employed while its impact on the welfare of unemployed depends on the returns to training. We also analyze the implications of such a policy if a minimum wage is binding for newly hired workers.

Do health outcomes depend on relative income as well as on an individual's absolute level of income? We use infant mortality as a health status indicator and find a significant and positive link between infant mortality and income inequality using cross-national data for 93 countries. Holding constant the income of each of the three poorest quintiles of a country's population, we find that an increase in the income of the upper 20% of the income distribution is associated with higher, not the lower infant mortality. Our results are robust and not just caused by the concave relationship between income and health. The estimates imply a decrease in infant mortality by 1.5% for a one percentage point decrease in the income share of the richest quintile. The overall results are sensitive to public policy: public health care expenditure, educational outcomes, and access to basic sanitation and safe water can explain the inequality-health relationship. Thus, our findings support the hypothesis of public disinvestment in human capital in countries with high income inequality. However, we are not able to determine whether public policy is a confounder or mediator of the relationship between income distribution and health. Relative deprivation caused by the income distance between an individual and the individual's reference group is another possible explanation for a direct effect from income inequality to health.

This article studies whether anomalies in consumption can be explained by a behavioural model in which agents make predictable errors in forecasting income. We use a micro-data set containing subjective expectations about future income. This article shows that the null hypothesis of rational expectations is rejected in favour of the behavioural model, since consumption responds to predictable forecast errors. On average, agents who we predict are too pessimistic increase consumption after the predictable positive income shock. On average, agents who are too optimistic reduce the consumption.

This paper shows that the under-investment in firm financed training caused by hold up can justify the introduction of firing taxes in a laissez-faire economy with search frictions and risk neutral agents. More precisely we highlight two results. First, the introduction of a firing tax for newly hired workers combined with hiring subsidies, always acts as a Pareto improving policy. Second, with no hiring subsidies, the introduction of a firing tax for the newly hired always increase the welfare of employed while its impact on the welfare of unemployed depends on the returns to training. We also analyze the implications of such a policy if a minimum wage is binding for newly hired workers.

A health care system is efficient when an increase in spending results in significant improvements in the health of a population. We test the relative efficiency of public and private health care spending in reducing infant and child mortality using cross-national data for 163 countries. There are two remarkable findings: First, an increase in public funds is both, significantly correlated with a lower mortality and significantly more efficient in reducing mortality than private health care expenditure. Second, private health care expenditure is in all estimations associated with higher, not lower, mortality, although this association is often not statistically significant. The results suggest, holding total health care expenditure constant, a potential decrease in total infant mortality in the 163 countries from 6.9 million deaths (2002) to 4.2-5.3 million deaths for completely publicly financed health care systems, but an increase to 9.0-10.0 million deaths for completely privately financed health care. We can explain some of the estimated difference in the efficiency of public and private health care expenditure by geographies and socioeconomic factors such as HIV prevalence, sanitation standards, corruption, and income distribution. However, the efficiency dfference remains large and statistically significant in all regressions.

Kirsch et al. (2008, Initial severity and antidepressant benefits: a meta-analysis of data submitted to the Food and Drug Administration. PLoS Med 5: e45), conducted a meta-analysis of data from 35 placebo controlled trials of four newer antidepressants. They concluded that while these drugs are statistically significantly superior to placebo in acute depression, the benefits are unlikely to be clinically significant. This paper has attracted much attention and debate in both academic journals and the popular media. In this critique, we argue that Kirsch et al.'s is a flawed analysis which relies upon unusual statistical techniques biased against antidepressants. We present results showing that re-analysing the same data using more appropriate methods Leads to substantially different conclusions. However, we also believe that psychopharmacology has lessons to Learn from the Kirsch et al. paper. We discuss issues surrounding the interpretation of clinical trials of antidepressants, including the difficulties of extrapolating from randomized controlled trials to the clinic, and the question of failed trials. We call for more research to establish the effectiveness of antidepressants in clinically relevant populations under naturalistic conditions, for example, in relapse prevention, in patients with co-morbidities, and in primary care settings.

The signs of forecast errors can be predicted using the difference between individuals' forecasts and the average of earlier forecasts of the same variable. It is possible to improve forecasts without worsening any. It is difficult to reconcile this result with the rational expectations hypothesis, because the average of earlier forecasts is in the information set of the forecasters

In this paper we study the connection between the married women's labour force participation, family policies and time spent in take care of children in Mediterranean countries. We use the new database from the EUSILC (European Survey on Income and Living Conditions) and data from the ECHP(European Community Household Panel) The re- sults show that while Mediterranean countries have advanced in the incorporation of women into the labour market, most of them still have to assume total responsibility for housework and the care of the children.

Parents in the labor force have balance their work and home life, including the choice of the type of care to provide for their children while they work. In this paper we study the connection between the married women's labor force participation, child care arrangements and the time that husbands and wives spent to take care of children in Mediterranean countries. As more women now are in the labor force the interest in the use child care and housework of husband have grown. We use the new database from the EU-SILC (European Survey on Income and Living Conditions) in 2006 and data from the ECHP (European Community Household Panel)in 2001, because these two data-set give us different information about child care and housework. The traditional role of mothers in child care activities is highly valued by many families, especially in Southern European countries. The results show that while Mediterranean countries have advanced in the incorporation of women into the labor market, most of them still have to assume total responsibility for housework and the care of the children. Child care arrangements is an important instrument for women to enter in paid employment.

Do health outcomes depend on relative income as well as on an individual's absolute level of income? We use infant mortality as a health status indicator and find a significant and positive link between infant mortality and income inequality using cross-national data for 98 countries. Holding constant the income of each of the three poorest quintiles of a country's population, we find that an increase in the income of the upper 20% of the income distribution is associated with higher, not lower infant mortality. Our results imply that a one percentage point decrease in the income share of the richest quintile correlates with a decrease in infant mortality by nearly two percent. The surprisingly positive coefficient becomes insignificant when we control for public health care expenditure. Low public expenditure on health care seems to translate into limited access to health care for the poor.

We define a bivariate mixture model to test whether economic growth can be considered exogenous in the Solovian sense. For this purpose, the multivariate mixture approach proposed by Alfo and Trovato is applied to the Bernanke and Gurkaynak extension of the Solow model. We find that the explanatory power of the Solow growth model is enhanced, since growth rates are not statistically significantly associated with investment rates, when cross-country heterogeneity is considered. Moreover, no sign of convergence to a single equilibrium is found. Copyright (C) 2008 John Wiley & Sons, Ltd.