The aim of this paper is to study how financial structures and monetary policy regimes (including exchange rate regimes) affect the pattern of business cycle correlation across countries. More specifically, I propose a unitary framework in which international business cycle co-movements are explained jointly by the differences between the financial systems and by the monetary policy regime adopted by the countries concerned.
The European Union is a prime example where my analysis is likely to be relevant. The 12 countries of the euro area have adopted a single currency but are still characterized by different financial structures, as a result of history, legal frameworks, collective preferences and politics. Financial regulations, legislation and bank supervisory policies of these countries have not been unified but remain largely under national control — though pressures towards harmonization and the adoption of common standards, partly as a result of the single currency, are mounting. Of the remaining EU members, many (including several new entrants from Central and Eastern Europe) will adopt the euro before or around the end of this decade, and also in preparation for that are introducing financial market reforms. This process of currency unification and financial reform taking place at continental level provides an ideal testing ground for my theory. Examining the implications of this for business cycles is clearly important for many reasons, e.g. to determine the optimal monetary policy and to study the welfare properties of the currency area.
The book starts with a fairly simple overview of the translation process, of the constituent parts of a compiler, and of the concepts of porting and bootstrapping compilers. This is followed by a chapter on machine architecture and machine emulation, as later case studies make extensive use of code generation for emulated machines, a very common strategy in introductory courses. The next chapter introduces the student to the notions of regular expressions, grammars, BNF and EBNF, and the value of being able to specify languages concisely and accurately.
Two chapters follow that discuss simple features of assembler language, accompanied by the development of an assembler/interpreter system which allows not only for very simple assembly, but also for conditional assembly, macro-assembly, error detection, and so on. Complete code for such an assembler is presented in a highly modularized form, but with deliberate scope left for extensions, ranging from the trivial to the extensive.
Three chapters follow on formal syntax theory, parsing, and the manual construction of scanners and parsers. The usual classifications of grammars and restrictions on practical grammars are discussed in some detail. The material on parsing is kept to a fairly simple level, but with a thorough discussion of the necessary conditions for LL(1) parsing. The parsing method treated in most detail is the method of recursive descent, as is found in many Pascal compilers; LR parsing is only briefly discussed.
How wages are determined, and what relationship wages have with other labor market outcomes are central questions in economics. The literature on wages is extensive, dating back to Malthus’ theory of subsistence wages, and extending to modern compensation theories based on human capital, search, and incentives. A key feature, especially of the modern theories, is the dynamic aspect of wages. As a consequence wage growth ramifications are all too obvious among these theories. For example: human capital theory predicts wage growth due to on-the-job skill accumulation; job search theory predicts wage growth due to imperfect information about the location of high productivity jobs; mismatch theory predicts wage growth due to imperfect information about the match quality of jobs; and, agency theory predicts wage growth due to hiring and monitoring costs. But these theories do not explicitly ask how differences in skill accumulation or search costs or monitoring costs may give rise to permanent differences in wage growth rates among jobs, workers, or occupations. As a consequence, the role of wage growth as a predictor of other labor market outcomes is not addressed. In this paper I present a model of wage and turnover dynamics to directly address: How do wages grow over the duration of an employment relationship? Why do wage growth rates differ among jobs? Why is serial correlation of wage growth an inconclusive test of wage growth heterogeneity? What is the relationship between wage growth on a job and other labor market outcomes such as job turnover?
The theory presented here is an elaboration of job search theory and firm specific human capital theory. The key assumption in job search theory is that each worker-firm pair is characterized by an idiosyncratic (implying of course both a different and firm specific) productivity level. By contrast, my model builds on the idea that each worker-firm pair is characterized by an idiosyncratic productivity profile — that is, by both an initial productivity level and a growth function that determines future productivity on the job. Heterogeneity of productivity profiles across worker-firm pairs therefore underpins the nondegenerate distribution of jobs a worker faces in the labor market. The theory retains the salient characteristic of search, namely, the optimal assignment of workers to jobs. But unlike in traditional job search models where productivity of a worker-firm pair is static, in the model presented here the productivity of a worker-firm pair grows as the employment relationship ages. More specifically, this increased productivity is assumed to be firm specific and the rate of productivity growth to be different among jobs. Since the implications of different rates of investment in firm-specific human capital have not been fully explored in isolation before, it may explain some otherwise anomalous findings on wage and turnover dynamics.
