Journal ArticleDOI
High Discounts and High Unemployment
TLDR
According to the leading view of unemployment, when the incentive for job creation falls, the labor market slackens and unemployment rises as discussed by the authors, and thus high discount rates imply high unemployment.Abstract:
Unemployment is high when financial discounts are high. In recessions, the stock market falls and all types of investment fall, including employers' investment in job creation. The discount rate implicit in the stock market rises, and discounts for other claims on business income also rise. A higher discount implies a lower present value of the benefit of a new hire to an employer. According to the leading view of unemployment--the Diamond-Mortensen-Pissarides model--when the incentive for job creation falls, the labor market slackens and unemployment rises. Thus high discount rates imply high unemployment.read more
Citations
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Journal ArticleDOI
Very Long-Run Discount Rates
TL;DR: In this article, the authors exploit a unique feature of housing markets in the U.K. and Singapore, where residential property ownership takes the form of either leaseholds or freeholds.
Journal ArticleDOI
Financial Crises and Risk Premia
Tyler Muir,Tyler Muir +1 more
TL;DR: The authors analyzed the behavior of risk premia in financial crises, wars, and recessions in an international panel spanning over 140 years and over 14 countries and found that expected returns, or risk premium, increase substantially in financial crisis, but not in the other episodes.
Journal ArticleDOI
Labor Force Participation, Wage Rigidities, and Inflation
Francesco Nucci,Marianna Riggi +1 more
TL;DR: In this paper, the authors show that the added worker effect might outweigh the discouragement effect if real wage rigidities are allowed for and/or habit in consumer preferences is sufficiently strong.
Posted Content
Valuation Risk and Asset Pricing
TL;DR: The authors propose a simple theory of asset pricing in which demand shocks play a central role, which gives rise to valuation risk that allows the model to account for key asset pricing moments, such as the equity premium, the bond term premium, and the weak correlation between stock returns and fundamentals.
Journal ArticleDOI
Financial Crises and Risk Premia
TL;DR: The authors analyzed the behavior of risk premia in financial crises, wars, and recessions in an international panel spanning over 140 years and 14 countries and found that expected returns, or risk premias, increase substantially in financial crisis, but not in the other episodes.
References
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Eugene F. Fama,Kenneth R. French +1 more
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Journal ArticleDOI
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TL;DR: In this paper, a job-specific shock process in the matching model of unemployment with non-cooperative wage behavior is modeled and the authors obtain endogenous job creation and job destruction processes and study their properties.
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Equilibrium Unemployment Theory
TL;DR: In this article, the model of balanced growth is used to model the labour market and balance-growth adjustment dynamics, and search intensity and job advertising are modeled as ananlysis of the labor market.