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15:00 | Macro Research Seminar
Dr. Jean-Paul L’Huillier: “Consumers' Imperfect Information and Price Rigidities”
Einaudi Institute for Economics and Finance, Italy
Author: Jean-Paul L’Huillier
Abstract:
This paper develops a model of price rigidities and information diffusion in decentralized markets with private information. First, I provide a strategic microfoundation for price rigidities, by showing that firms are better off delaying the adjustment of prices when they face a high number of uninformed consumers. Second, in an environment where consumers learn from firms' prices, the diffusion of information follows a Bernoulli differential equation. Therefore, learning follows nonlinear dynamics. Third, the price rigidity produces an informational externality that affects welfare. Fourth, the dynamics of output are hump-shaped due to consumer learning.
Full Text: “Consumers' Imperfect Information and Price Rigidities”
16:30 | Applied Micro Research Seminar
Universitat Pompeu Fabra, Barcelona, Spain
Racial Fragmentation, Income Inequality and Social Capital Formation: New Evidence from the US
Abstract:
Existing studies of social capital formation in US metropolitan areas have found that social capital is lower when there is more income inequality and greater racial fragmentation. I add to this literature by examining the role of income inequality between racial groups (racial income inequality). I find that greater racial inequality reduces social capital. Also, racial fragmentation is no longer a significant determinant of social capital once racial income inequality is accounted for. This result is consistent with a simple conceptual framework where concurrent differences in race and income are especially detrimental for social capital formation. I find empirical support for further implications deriving from this assumption. In particular, I show that racial income inequality has a more detrimental effect in more racially fragmented communities and that trust falls more in minority groups than the majority group when racial income inequality increases.
Full Text: “Racial Fragmentation, Income Inequality and Social Capital Formation: New Evidence from the US”
