Invited programme

[ Plenary sessions | Invited sessions in Economic Theory| Invited sessions in Econometrics ]

Plenary sessions

August, 25th - Sunday
16.30-18.00
Joint Economic Theory and Econometric Invited Sessions
THE EMPIRICAL ANALYSIS OF BEHAVIOUR IN AUCTION MARKETS
Prof. Robert PORTER, Northwestern University, USA

This talk will review recent empirical research on auction markets. I will begin with a discussion of some theoretical results, and then describe attempts to estimate or test some related empirical models. Examples include (1) recent attempts to test whether bidders are rational, in the sense that they behave according to the predictions of non-cooperative equilibrium, (2) attempts to distinguish between private and common value environments, (3) the incidence and consequences of bidder coalitions, either via legal joint bids or illegal bidding rings, and (4) bidding in multi-unit auctions, either simultaneous or sequential.

Discussant: Prof. Bernard SALANIE, INSEE-CREST - Malakoff, France



August, 26th - Monday
16.00-17.30
Fisher-Schultz Lecture
INTEREST RATES, LIQUIDITY, AND ASSET PRICES
Prof. Douglas GALE, New York University, New York, USA

The classical theory of asset-price determination assumes synchronized trade and instantaneous netting of payments. When these assumptions are violated, market liquidity plays a crucial role in the determination of equilibrium interest rates and prices. These phenomena help explain financial crises and systemic risk.



August, 27th - Tuesday
16.30-18.00
Presidential Address
INCOME MAINTENANCE AND INCENTIVES TO WORK
Prof. Guy LAROQUE, INSEE - Malakoff, France

(Full paper .pdf version)

Welfare reform has recently often focused on incentives to work. Optimal taxation, under a Rawlsian criterion, can bring useful insights in the analysis of there reforms. The theoretical part of the paper studies optimal taxation in an economy where the only decision of the agents is to participate, or not, to the labor force, drawing heavily on the work of Choné and Laroque (2001). The crucial feature of the economy that determines the shape of the optimal tax and benefit scheme is the joint distribution of the agents’ productivity and aversions to work.
If one takes as given the maintenance income provided by the welfare state (the theorist has little to say on the relatives weights that society puts on households depending on their composition), the Rawlsian optimum provides a benchmark: it maximizes government revenue and any utilitarian criterion would give larger financial incentives to work than the Rawlsian criterion.
Theory puts little restrictions on the shape of the optimal Rawlsian schedules. Essentially anything can happen provided that the financial incentives to work are nondecreasing with productivity and smaller than productivity. A qualitative analysis shows that a 100% marginal tax rate is likely to be optimal when the cumulative distribution function of work aversions has a kink. Positive work subsidies or negative marginal tax rates are optimal in a region where the c.d.f. has some discrete mass points.
Everything therefore hinges on the distribution of work aversions, which has to be recovered from the data. I posit a structural model which is estimated on a sample of French women aged 25-50. I compute the optimal Rawlsian financial incentives to work for single women, and for married women with two children or more. Quite surprisingly, the actual incentives to work appear to be very close to what a Rawlsian planner would recommend. It is as if the interactions between the multiple agencies that shape the income tax schedule in France manage to extract the maximum possible surplus from the population.