Capital Market Frictions and the Business Cycle

We augment a RBC model with capital and labor market frictions. We follow the approach of Wasmer and Weil (2004) which model market imperfections as search processes : firms must sequentially find a match with a bank first and then with a worker in order to start production. We show that the interactions between labor and capital market frictions may generate a financial accelerator or decelerator, depending on a parameter condition. We compare our model with US National Accounts data and with the empirical findings of Dell’Ariccia and Garibaldi (2005) : we find that the financial accelerator as well as real wage rigidities help in improving the statistical propqerties of the model

Search in the Product Market and the Real Business Cycle

Empirical evidence suggests that most firms operate in imperfectly competitivemarkets. We develop a search-matching model between wholesalers and retailers. Firms face search costs and form long-term relationships. Price bargain results in both wholesaler and retailer markups, depending on firms’ relative bargaining power. We simulate the model to explore the role of product market search frictions in business cycles. We show that the way search costs are modelled is crucial to provide a realistic picture of firms’ business environment and improve the cyclical properties of an otherwise standard real business cycle model.Business cycle, Frictions, Product market, Price bargain

Modification of Proton Velocity Distributions by Alfvenic Turbulence in the Solar Wind

In the present paper, the proton velocity distribution function (VDF)in the solar wind is determined by solving numerically the kinetic evolution equation. We compare the results obtained when considering the effects of ex- ternal forces and Coulomb collisions with those obtained by adding effects of Alfven wave turbulence. We use Fokker-Planck diffusion terms due to Alfvenic turbulence, which take into account observed turbulence spectra and kinetic effects of finite proton gyroradius. Assuming a displaced Maxwellian for the proton VDF at the simulation boundary at 14 solar radii, we show that the turbulence leads to a fast (within several solar radii) development of the anti-sunward tail in the proton VDF. Our results provide a natural explanation for the nonthermal tails in the proton VDFs, which are often observed in-situ in the solar wind beyond 0.3 AU

Financial (in)stability, supervision and liquidity injections : a dynamic general equilibrium approach

This paper develops a dynamic stochastic general equilibrium model with interactions between an heterogeneous banking sector and other private agents. We introduce endogenous default probabilities for both firms and banks, and allow for bank regulation and liquidity injection into the interbankmarket. Our aim is to understand the importance of supervisory and monetary authorities to restore financial stability. The model is calibrated against real data and used for simulations. We show that liquidity injections reduce financial instability but have ambiguous effects on output fluctuations. The model also confirms the partial equilibrium literature results on the procyclicality of Basel II.DSGE, Banking sector, Default risk, Supervision, Money

Dynamics of Megaelectron Volt Electrons Observed in the Inner Belt by PROBA-V/EPT

Using the observations of the EPT (Energetic Particle Telescope) onboard the satellite PROBA-V we study the dynamics of inner and outer belt electrons from 500 keV to 8 MeV during quiet periods and geomagnetic storms. This high time-resolution (2 sec) spectrometer operating at the altitude of 820 km on a low polar orbit is providing continuously valuable electrons fluxes for already 5 years. We emphasize especially that some MeV electrons are observed in low quantities in the inner belt, even during periods when they are not observed by Van Allen Probe (VAP). We show that they are not due to proton contamination but to clear injections of particles from the outer belt during strong geomagnetic storms of March and June 2015, and September 2017. Electrons with lower energy are injected also during less strong storms and the L-shell of the electron flux peak in the outer belt shifts inward with a high dependence on the electron energy. With the new high resolution EPT instrument, we can study the dynamics of relativistic electrons, including MeV electrons in the inner radiation belt, revealing how and when such electrons are injected into the inner belt and how long they reside there before being scattered into the Earth's atmosphere or lost by other mechanisms

Demography, capital flows and unemployment

This paper contributes to the already vast literature on demography-induced international capital flows by examining the role of labor market imperfections and institutions. We setup a two-country overlapping generations model with search unemployment, which we calibrate on EU15 and US data. Labor market imperfections are found to significantly increase the volume of capital flows, because of stronger employment adjustments in comparison with a competitive economy. We next exploit themodel to investigate how demographic asymmetriesmay have contributed to unemployment and welfare changes in the recent past (1950-2010). We show that a policy reform in one country also has an impact on labor markets in other countries when capital is mobile.demographics; capital flows; overlapping generations; general equilibrium; unemployment

Job Turnover, Unemployment and Labor Market Institutions

This paper studies the role of labor market institutions on unemployment and on the cyclical properties of job flows. We construct an intertemporal general equilibrium model with search unemployment and endogenous job turnover, and examine the consequences of introducing an unemployment benefit, a firing cost and a downward wage rigidity. The simulations suggest that downward wage rigidities, rather than unemployment benefit or firing cost, may well play a dominant role in explaining both the high unemployment rate and the job flows dynamics of such an economy.Unemployment, Job flows dynamics, Institutions

Demography, Capital Flows and Unemployment

This paper contributes to the already vast literature on demography-induced international capital flows by examining the role of labor market imperfections and institutions. We setup a two-country overlapping generations model with search unemployment, which we calibrate on EU15 and US data. Labor market imperfections are found to significantly increase the volume of capital flows, because of stronger employment adjustments in comparison with a competitive economy. We next exploit the model to investigate how demographic asymmetries may have contributed to unemployment and welfare changes in the recent past (1950-2010). We show that a policy reform in one country also has an impact on labor markets in other countries when capital is mobile.demographics, capital flows, overlapping generations, general equilibrium, unemployment

Search in the product market and the real business cycle

We develop a search-matching model, where firms search for customers (e.g. in form of advertising). Firms use long-term contracts and bargain over prices, resulting in a price mark up above marginal cost, which is pro- cyclical and depends on firms’ relative bargaining power. Product market frictions decrease the steady state equilibrium, improve the cyclical properties of the model and provide a more realistic picture of firms’ business environment. This suggests that product market frictions may well be crucial in explaining business cycle fluctuations. Finally, we also show that welfare costs of price rigidities are negligible relative to welfare costs of frictions. JEL Classification: E10, E31, E32business cycle, Frictions, Price bargain, product market