The speed of ination adjustment to aggregate technology shocks is substantially larger than to monetary policy shocks. Prices adjust very quickly to technology shocks, while they only respond sluggishly to monetary policy shocks. This evidence is hard to reconcile with existing models of stickiness in prices. I show that the di¤erence in the speed of price adjustment to the two types of shocks arises naturally in a model where price setting …rms optimally decide what to pay attention to, subject to a constraint on information ows. In my model, … rms pay more attention to technology shocks than to monetary policy shocks when the former a¤ects pro…ts more than the latter. Furthermore, strategic complementarities in price setting generate complementarities in the optimal allocation of attention. Therefore, each …rm has an incentive to acquire more information on the variables that the other …rms are, on average, more informed about. These complementarities induce a powerful ampli…cation mechanism of the di¤erence in the speed with which prices respond to technology shocks and to monetary policy shocks. 1

The equilibrium outcome of a symmetric interaction between two people may depend on the weight they place on each other’s payoff. A positive, negative or zero weight represents altruism, spite or complete selfishness, respectively. Paradoxically, the real, material payoff in a symmetric equilibrium for a pair of altruists may be lower than for selfish or spiteful individuals. However, this can only be so if the equilibrium strategies are unstable. If they are stable, the payoff can only increase with decreasing selfishness or remain unchanged. JEL Classification: C62, C72, D64.

The marketplace, along with its price system, is the single most important institution in a western-style free enterprise economy. The ability of prices to adjust to changes in supply and demand conditions enables the market to function efficiently, and that ability lies behind the magical invisible hand mechanism. The behaviour of prices and in particular the ability of prices to adjust to changes in market conditions, therefore, have fundamental implications for many key issues in many areas of both microeconomics as well as macroeconomics. It is, therefore, critical to study and understand whether there are barriers to price adjustments, what are the nature of these barriers, how the barriers lead to price rigidity, what are the possible implications of these rigidities, etc. This introductory essay briefly summarizes the 14 empirical studies of price rigidity that are included in this special issue. Copyright # 2007

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We investigate the relationship between remittances and migrantseduca-tion both theoretically and empirically, using original bilateral remittance data. At a theoretical level we lay out a model of remittances interacting migrants human capital with two dimensions of immigration policy: restrictiveness, and selectivity. The model predicts that the relationship between remittances and migrantseducation is ambiguous and depends on the immigration policy con-ducted at destination. The e¤ect of education is more likely to be positive when the immigration policy is more restrictive and less skill-selective. These predictions are then tested empirically using bilateral remittance and migration data and proxy measures for the restrictiveness and selectivity of immigration policies at destination. The results strongly support the theoretical analysis, suggesting that immigration policies determine the sign and magnitude of the relationship between remittances and migrantseducation.

Abstract: There has been increasing interest in understanding how firms undertake nonprice adjustment activities, especially in situations where prices may be rigid despite changes in market conditions. Using scanner price data for over 4,500 different food products from a large US supermarket chain, we document periods of rigidity in product additions and deletions: new products are less likely to be introduced, and existing products are less likely to be discontinued during holiday periods than throughout the rest of the year. We argue that this is due to higher costs of undertaking these kinds of product assortment activities during holiday periods. We discuss how this relates to the exiting literature on non-price adjustment and price rigidity.

Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Abstract This article analyzes income redistribution in the inter-ethnic context. The model shows that redistribution in favor of less prosperous ethnic minorities raises fertility among the unskilled minority recipients, lowers fertility among the contributing local skilled, slows human capital accumulation, and reduces the per-capita output growth. The analysis also demonstrates that income redistribution, although financed by taxes levied on the skilled, generates a mechanism that, via its disincentive effect on human capital investment, works strongly against another weak segment of societythe local unskilled. This may provide a purely economic explanation for antipathy toward minorities, especially, among less educated.

Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Political Profit and the Invention of Modern Currency Dror Goldberg Department of Economics Bar Ilan University Abstract The Massachusetts currency of 1690 was the first inconvertible paper money to be supported solely by a legal tender law. The circumstances that led to its creation exceed the typical story of wartime specie shortage. Due to temporary political constraints of that turbulent period, the currency could be neither backed by land nor granted a full legal tender status, as was then standard. Instead, it had to be disguised from England as a simple, private-like IOU. By pleasing both its pay-demanding troops and England, the government maximized its probability of survival subject to the constraints. * dg@drorgoldberg.com. I thank John Hanson for his guidance. I benefited from suggestions and comments of

Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Abstract In a recent book and earlier studies, Donald Saari well clarifies the source of three classical impossibility theorems in social choice and proposes possible escape out of these negative results. The objective of this note is to illustrate the relevance of these explanations in justifying the metric approach to the social compromise with the unanimity criterion.

Abstract: Analyzing a large scanner price dataset, we uncover a surprising regularity— small price increases occur more frequently than small price decreases for price changes of up to 10¢. Furthermore, we find that inflation can explain some of the asymmetry. Inflation, however, offers a partial explanation because substantial proportion of the asymmetry remains unexplained, even after accounting for the inflation. For example, the asymmetry holds also after excluding inflationary periods from the data, and even for products whose price had not increased. The findings hold for different aggregate and disaggregate measures of inflation and also after allowing for lagged price adjustments.