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This paper presents a tractable model that allows us to study career concerns when the strength of a worker's incentives depends on his employment history. More specifically, the paper incorporates standard job assignments into the main model in Holmstrom (1999). Equilibrium wages, equilibrium job assignments, and the strength of career-concern incentives are the same for all employment histories that lead to the same worker's reputation. (With reputation we refer to beliefs about the worker's future productivity.) We show that, typically, workers with better reputation have stronger incentives than workers with worse reputation. Furthermore, we show that when the strength of incentives depends on employment history, (i) a ratchet effect may appear, (ii) in spite of this ratchet effect, incentives may be stronger, and (iii) incentives may be stronger when beliefs about ability are more precise.

In Mexico, state actors controlled the channels for business-government relations during the NAFTA negotiations. However, state actors depended on the private sector for information, political support and adaption to free trade. This analysis of five agro-industrial sectors shows that sectors with large homogeneous firms, strong associations and perceived export potential enjoyed better access to government negotiators than did sectors with numerous producers of different sizes, weaker associations and weak export potential. The authors suggest that trade policy analysis should pay attention to both state strength and business leverage and should not neglect the importance of future expectations in shaping business preferences. (Lat Am Caribb Stud/DÜI)

This paper finds optimal fiscal rule parameter values and measures the effects of imposing fiscal rules using a default model calibrated to an economy that in the absence of a fiscal rule pays a significant sovereign default premium. The paper also studies the case in which the government conducts a voluntary debt restructuring to capture the capital gains from the increase in its debt market value implied by a rule announcement. In addition, the paper shows how debt ceilings may reduce the procyclicality of fiscal policy and thus consumption volatility