We consider the valuation of contingent claims with delayed dynamics in a Black & Scholes complete market model. We find a pricing formula that can be decomposed into terms reflecting the market values of the past and the present, showing how the valuation of future cashflows cannot abstract away from the contribution of the past. As a practical application, we provide an explicit expression fo...

Relative population growth affects relative prices through the so-called BalassaSamuelson (BS) mechanism and that in turn impacts PPP. This paper empirically investigates the relationship between PPP exchange rate and relative population growth in a panel of 80 selected countries. Following the Balassa-Samuelson hypothesis this paper argues that relative population growth affects nominal wages ...

Introduction Almost 20 percent of the people in the work force are union members. Just in terms of numbers, trade unions are an important influence in the labor market and in the U.S. economy. Further, unions are widely believed to play a major role in determining workers' standard of living and how work is done and in affecting firms' profitability. Freeman and Medoff (1984) recently presented...

This paper revisits an important issue concerning the persistent real effect of a shock to monetary policy. Although recent sentiment has shifted away from price stickiness toward wage stickiness in explaining persistence, the present paper shows that introducing an input–output structure tends to make the former an equally important monetary transmission mechanism. Under staggered wage setting...

High unemployment has been a problem in Europe for three decades. The orthodox view points to the institutional rigidity of national labor markets in Europe as a principal cause of high unemployment, and to labor market ‘flexibilization’ as the cure. An alternative view argues that the problem of unemployment in Europe indicates macroeconomic policy failure – an insufficiency of aggregate effec...

This study examines the relationship between salary distribution and performance using the four most recent completed seasons of the National Hockey League (NHL). The first approach pursues the effect of salary inequality on team performance using end-of-season team outcomes. The second approach focuses on the relationships between salary inequality and the distribution of individual performanc...