IV Working Papers

Current Papers	Sustainable Migration Policies By: Pierre M. Picard and Tim Worrall Abstract: This paper considers whether countries might mutually agree a policy of open borders, allowing free movement of workers across countries. For the countries to agree, the short run costs must outweighed by the long term benefits that result from better labour market flexibility and income smoothing. We show that such policies are less likely to be adopted when workers are less risk averse workers and when countries trade more. More surprisingly, we find that some congestion costs can help. This reverses the conventional wisdom that congestion costs tend to inhibit free migration policies. Date: September 2011 Keywords: Migration • limited commitment • self-enforcement • repeated games JEL Classification: F22 • J61 • R23 PDF File:
	Dynamic Relational Contracts with Credit Constraints By: Jonathan P. Thomas and Tim Worrall Abstract: This paper considers a long-term relationship between two agents who undertake costly actions or investments which produce a joint benefit. Agents have an opportunity to expropriate some of the joint benefit for their own use. The question asked is how to structure the investments and division of the surplus over time so as to avoid expropriation. It is shown that investments may be either above or below the efficient level and that actions and the division of the surplus converges to a stationary solution at which either both investment levels are efficient or both are below the efficient level. Date: March 2010 Keywords: Credit constraints • limited commitment • self-enforcement • relational contracts JEL Classification: C61 • C73 • D86 • D91 PDF File:
	Currency Unions and International Assistance By: Pierre M. Picard and Tim Worrall Abstract: This paper considers a simple stochastic model of international trade with three countries. Two of the tree countries are in an economic union. Comparisons are made between equilibrium welfare for these two countries under fixed and flexible exchange rate regimes. Within the model it is shown that flexible exchange rate regimes generate greater welfare. However, we then consider comparisons of welfare when the two countries also engage in some international assistance in order to share risk. Such risk sharing is limited by enforcement constraints of cross border assistance. It is shown that taking into account limited commitment risk-sharing fixed exchange rates or currency areas can dominate flexible exchange rate regimes reversing the previous result. Date: January 2009 Keywords: Monetary union • currency areas • fiscal federalism • limited commitment • mutual insurance JEL Classification: F12 • F15 • F31 • F33 PDF File:
	Cost Padding in Regulated Monopolies By: Spiros Bougheas and Tim Worrall Abstract: This paper considers a regulated monopoly that can pad or falsify its costs to increase its cost reimbursement from a regulator. The firm can also engage in a cost reducing investment before it enters into a regulatory contract. The investment in cost reduction determines the firm type and the paper derives the optimum incentive compatible falsification contracts and an equilibrium for the type distribution. It shows that at the optimum price setting regulation is relaxed and the regulator tolerates some cost padding. There is under-investment in cost reduction and investment is distorted away from the cost minimizing level. It also shows that where there is an equilibrium type distribution it is continuous and there are no mass points. Date: January 2009 Keywords: Cost padding • costly state falsification • endogenous screening JEL Classification: D82 • L43 • L52 PDF File:
Recent Working Papers	Dynamic Relational Contracts with Consumption Constraints By: Jonathan P. Thomas and Tim Worrall Abstract: This paper considers a long-term relationship between two agents who undertake costly actions or investments which produce a joint benefit. Agents have an opportunity to expropriate some of the joint benefit for their own use. The question asked is how to structure the investments and division of the surplus over time so as to avoid expropriation. It is shown that investments may be either above or below the efficient level and that actions and the division of the surplus converges to a stationary solution at which either both investment levels are efficient or both are below the efficient level. Series: Keele Economics Research Papers, No. 2007/16, December 2007 Keywords: Consumption constraints • relational contracts • self-enforcement JEL Classification: C61 • C73 • D74 • D92 • L22 PDF File:
	Evaluating the Performance of UK Research in Economics By: Nicholas Vasilakos, Gauthier Lanot and Tim Worrall Abstract: This paper reports on available bibliometric evidence on the performance of UK research in economics. It examines some standard and non-standard sources of bibliometric evidence and in particular evidence from the ISI and EconLit databases and the Repository of Papers in Economics (RePEc). It also reports on research capacity of UK economics and some non-bibliometric sources of evidence. Series: Keele Economics Research Papers, No. 2007/10, August 2007 Keywords: Research evaluation • bibliometrics JEL Classification: A10 • I23 PDF File: (final report from December 2007 )
	Limited Commitment Models of the Labour Market By: Jonathan P. Thomas and Tim Worrall Abstract: We present an overview of models of long-term self-enforcing labour contracts in which risk sharing is the dominant motive for contractual solutions. A base model is developed which is sufficiently general to encompass the two-agent problem central to most of the literature, including variable hours. We consider two-sided limited commitment and look at its implications for aggregate labour market variables. We consider the implications for empirical testing and the available empirical evidence. We also consider the one-sided limited commitment problem for which there exists a considerable amount of empirical support. Series: Keele Economics Research Papers, No. 2007/11, September 2007 Keywords: Labour contracts • self-enforcing contracts • business cycles • unemployment JEL Classification: E32 • J41 PDF File:
	Unemployment Insurance under Moral Hazard and Limited Commitment: Public vs Private Provision By: Jonathan P. Thomas and Tim Worrall Abstract: This paper analyses a model of private unemployment insurance under limited commitment and a model of public unemployment insurance subject to moral hazard in an economy with a continuum of agents and an infinite time horizon. The dynamic and steady-state properties of the private unemployment insurance scheme are established. The interaction between the public and private unemployment insurance schemes is examined. Examples are constructed to show that for some parameter values increased public insurance can reduce welfare by crowding out private insurance more than one-to-one and that for other parameter values a mix of both public and private insurance can be welfare maximising. Series: Keele Economics Research Papers, No. 2002/20, October 2002 Keywords: Social insurance • moral hazard • limited commitment • unemployment insurance • crowding out JEL Classification: D61 • H31 • H55 • J65 PDF File:
Older Working Papers	Informal Insurance Arangements in Village Economies By: Ethan Ligon, Jonathan P. Thomas and Tim Worrall Series: Keele Working Paper Series in Economics, No. 97/08, August 1997 PDF File: (version from October 2000: )
	Risk Sharing in Village Economies By: Tim Worrall Series: Keele Working Paper Series in Economics, No. 98/15, June 1998 PDF File:
	Mutual Insurance, Individual Savings and Limited Commitment By: Ethan Ligon, Jonathan P. Thomas and Tim Worrall Series: Keele Working Paper Series in Economics, No. 98/14, December 1998 PDF File:
	Informal Insurance Arangements in Village Economies By: Jonathan P. Thomas and Tim Worrall Series: Liverpool Research Papers in Economics and Finance, No. 9402, November 1994 PDF File:
	Asymmetric Information, Investment Finance and Real Business Cycles By: Brian Hillier and Tim Worrall Series: Liverpool Research Papers in Economics and Finance, No. 9313, October 1993 PDF File:
	The Welfare Implications of Costly Monitoring in the Credit Market By: Brian Hillier and Tim Worrall Series: Liverpool Research Papers in Economics and Finance, No. 9310, April 1993 PDF File:
	Foreign Direct Investment and the Risk of Expropriation By: Jonathan P. Thomas and Tim Worrall Series: Keil Working Paper No. 411, February 1990 PDF File:
	Debt with Potential Repudiation By: Tim Worrall Series: Sonderforschungsbereich 178, Universität Konstanz, Diskusionsbeiträge, Serie-II, No. 69, June 1988. PDF File:
	Debt with Potential Repudiation: Short-Run and Long-Run Contracts By: Tim Worrall Series: University of Reading Discussion Paper in Economics, Series A, No. 186, June 1987 PDF File:
	Self-Enforcing Wage Contracts By: Jonathan P. Thomas and Tim Worrall Series: University of Cambridge, Economic Theory Discussion Paper No. 74, April 1984 PDF File:
	Implicit Contracts and Asymmetric Information By: Tim Worrall Series: University of Liverpool Discusion Papers in Economics, No. 46, February 1983 PDF File: