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  • Contract Pricing in Consumer Credit Markets | Becker-Friedman Institute Research Respository
    Consumer Credit Markets We study pricing and contract design in the subprime auto sales market We develop a model of the demand for financed purchases that incorporates both adverse selection and moral hazard effects and estimate the model using detailed transaction level data We use the model to quantify selection and repayment problems and show that different contracting terms in particular car price and required down payment resolve very different

    Original URL path: http://econresearch.uchicago.edu/content/contract-pricing-consumer-credit-markets (2015-06-03)
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  • Credit Rationing, Macro Volatility, and Industrial Evolution in Developing Countries | Becker-Friedman Institute Research Respository
    https instead of http Please contact site admin for help if this error continues User login CNetID or Username Password Request new password Log in Credit Rationing Macro Volatility and Industrial Evolution in Developing Countries Relative to their counterparts in high income regions entrepreneurs in developing countries face less efficient financial markets more volatile macroeconomic conditions and higher entry costs This paper develops a dynamic empirical model that links these features of the business environment to firm ownership patterns firm size distributions productivity distributions borrowing patterns and cross household savings behavior Applied to panel data on Colombian apparel producers the model yields econometric estimates of a credit market imperfection index the sunk costs of creating a new business and various other parameters It also provides a basis for several counterfactual experiments These show inter alia that an efficient credit market would improve the weighted average efficiency of producers by about 5 percent partly by allowing the most productive producers to expand and partly by reducing the incentives for inefficient firms to remain in the market The gains from better intermediation accrue mainly during periods of macro volatility and mainly to households with modest wealth but high entrepreneurial ability Authors Eric

    Original URL path: http://econresearch.uchicago.edu/content/credit-rationing-macro-volatility-and-industrial-evolution-developing-countries (2015-06-03)
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  • Probability and Uncertainty in Economic Modeling | Becker-Friedman Institute Research Respository
    Password Request new password Log in Probability and Uncertainty in Economic Modeling Economic modeling assumes for the most part that agents are Bayesian that is that they entertain probabilistic beliefs objective or subjective regarding any event in question We argue that the formation of such beliefs calls for a deeper examination and for explicit modeling Models of belief formation may enhance our understanding of the probabilistic beliefs when these exist

    Original URL path: http://econresearch.uchicago.edu/content/probability-and-uncertainty-economic-modeling (2015-06-03)
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  • Illiquidity and Interest Rate Policy | Becker-Friedman Institute Research Respository
    HTTPS You can switch to HTTPS by trying to view this page again after changing the URL in your browser s location bar to begin with https instead of http Please contact site admin for help if this error continues User login CNetID or Username Password Request new password Log in Illiquidity and Interest Rate Policy The cheapest way for banks to finance long term illiquid projects is typically by borrowing short term from households But when household needs for funds are high interest rates will rise sharply debtors will have to shut down illiquid projects and in extremis will face more damaging runs Authorities may want to push down interest rates to maintain economic activity in the face of such illiquidity but intervention may not always be feasible and when feasible could encourage banks to increase leverage or fund even more illiquid projects up front Authorities may want to commit to a specific policy of interest rate intervention to restore appropriate incentives For instance to offset incentives for banks to make more illiquid loans authorities may have to commit to raising rates when low to counter the distortions created by lowering them when high We draw implications for interest

    Original URL path: http://econresearch.uchicago.edu/content/illiquidity-and-interest-rate-policy (2015-06-03)
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  • An Assignment Model with Divorce and Remarriage | Becker-Friedman Institute Research Respository
    new password Log in An Assignment Model with Divorce and Remarriage We develop a two sided matching model with positive sorting divorce and remarriage Match quality for each couple is revealed ex post and those with poor draws divorce Competition determines lifetime expected utilities but per period utilities depend on the laws that govern the distribution of assets upon divorce We discuss separately cases in which remarriage is or is not feasible and cases in which commitments are or are not made In all cases lifetime utilities are exactly pinned down by equilibrium stability requirements Moreover ex post Nash bargaining and ex ante commitment yield the same non contingent intertemporal allocations We then analyze the impact of changes in the property division upon divorce considering for instance a reform that favors women The short term impact of the reform on the allocations of already married wives is positive However its long term impact on yet unmarried women is not because such a reform generates lower utility for women within marriage which exactly offsets their higher prospective divorce settlement When remarriage is possible more complex effects could occur the reform typically alters divorce probabilities and it may affect the total surplus

    Original URL path: http://econresearch.uchicago.edu/content/assignment-model-divorce-and-remarriage (2015-06-03)
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  • Correct Specification and Identification of Nonparametric Transformation Models | Becker-Friedman Institute Research Respository
    login CNetID or Username Password Request new password Log in Correct Specification and Identification of Nonparametric Transformation Models This paper derives necessary and sufficient conditions for nonparametric transformation models to be i correctly specified and ii identified Our correct specification conditions come in a form of partial differential equations when satisfied by the true distribution they ensure that the observables are indeed generated from a nonparametric transformation model Our nonparametric

    Original URL path: http://econresearch.uchicago.edu/content/correct-specification-and-identification-nonparametric-transformation-models (2015-06-03)
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  • An Empirical Model of Wage Dispersion with Sorting | Becker-Friedman Institute Research Respository
    to HTTPS by trying to view this page again after changing the URL in your browser s location bar to begin with https instead of http Please contact site admin for help if this error continues User login CNetID or Username Password Request new password Log in An Empirical Model of Wage Dispersion with Sorting The paper studies sources of wage dispersion in a model that allows for sorting in firm worker matches The model is a general equilibrium on the job search model with wage formation similar to that of Cahuc Postel Vinay and Robin 2006 Workers differ in their permanent skill level and firms differ with respect to productivity As shown in Lentz 2007 in this setting positive negative sorting results if the match production function is supermodular submodular If the production function is modular no sorting obtains We propose an identification strategy that allows identification of not only the presence of sorting in matching but also the type of sorting negative or positive Like Eeckhout and Kircher 2008 we find that the commonly used wage decomposition in Abowd Kramarz and Margolis 1999 does not in itself identify sorting although the mechanisms that lead to lack of identification

    Original URL path: http://econresearch.uchicago.edu/content/empirical-model-wage-dispersion-sorting (2015-06-03)
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  • Are Women More Credit Constrained? Experimental Evidence on Gender and Microenterprise Returns | Becker-Friedman Institute Research Respository
    logins using a secure protocol such as HTTPS You can switch to HTTPS by trying to view this page again after changing the URL in your browser s location bar to begin with https instead of http Please contact site admin for help if this error continues User login CNetID or Username Password Request new password Log in Are Women More Credit Constrained Experimental Evidence on Gender and Microenterprise Returns We report on a field experiment providing random grants to microenterprise owners The grants generated large profit increases for male owners but not for female owners We show that the gender gap does not simply mask differences in ability risk aversion entrepreneurial attitudes or differences in reporting behavior but there is some evidence that the gender gap is larger in female dominated industries The data are not consistent with a unitary household model and indeed imply an inefficiency of resource allocation within households We show evidence that this inefficiency is reduced in more cooperative households Authors Suresh De Mel University of Peradeniya David McKenzie World Bank Chris Woodruff University of California San Diego Publication Date January 2009 JEL Classification O12 Microeconomic Analyses of Economic Development O16 Economic Development Financial Markets

    Original URL path: http://econresearch.uchicago.edu/content/are-women-more-credit-constrained-experimental-evidence-gender-and-microenterprise-returns (2015-06-03)
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