Search

Unpredictable income poses a significant threat to economic stability for many U.S. households. While budgeting may help to mitigate some of the negative effects of unpredictable income, the process of budgeting can also be more challenging under such circumstances. This paper presents new descriptive evidence on the relationship between income predictability, financial wellbeing, and budgeting behavior using data from a nationally‐representative survey of nearly 4000 U.S. adults. We document a strong negative relationship between income unpredictability and financial wellbeing. However, the strength of this negative relationship is substantially attenuated for those who budget. This suggests that budgeting may be a useful tool for mitigating the adverse effects of unpredictable income. Despite these benefits, the propensity to budget is significantly lower among those with the most unpredictable income. These findings indicate the need for policy reforms that insure households against unpredictable income in addition to efforts targeting individual‐level financial management strategies. [ABSTRACT FROM AUTHOR]

Regional inequality in the process of economic growth has recently been a popular topic. This paper creatively proposes contribution decomposition methods to divide various regions' contributions into economic contribution and population contribution. The methods consider not only economic growth but also population change, which may be more effective than the traditional method that uses the per capita GDP (gross domestic product) as its single measurement indicator. Moreover, the objective is to take a step forward and reveal the spatio‐temporal evolution characteristics of regional disparities by integrating barycentre model and economic development equilibrium model. Lastly, the applicability of the research method proposed in this paper is verified by a case study of Jiangsu province, China; the results show a new regional economic pattern in Jiangsu province. [ABSTRACT FROM AUTHOR]

The paper applies the modern portfolio theory and stochastic frontier analysis to gross value added growth rates in Europe and presents evidence of convex growth‐instability frontiers. Using their national accounts by economic activity, numerical simulations of gross value added shares show that in 2011, industry portfolios were below Markowitz's efficient frontier and that rearranging the share of economic activities lead to efficiency gains in terms of lower output instability and higher growth rates. Gross value added in EU countries in general, and core countries in particular, should be contributed by the "service provider" and "financial activities" sectors, while optimal industry portfolios of periphery countries are more diversified. Stochastic frontier analysis confirms the convex growth‐instability frontiers and finds that technical inefficiencies are explained by differences in the growth rate of labour and the degree of industrial diversification. Getting more efficient is a combination of country characteristics and sector specifics, where efficiency gains are inversely related to industrial diversification during economic development. Reported results are robust to model specifications and data restrictions. [ABSTRACT FROM AUTHOR]

Using a multi‐region, multi‐sector dynamic model of an economy with rural–urban migration fit to Turkish data, this paper explores the evolution of each region's output and factor allocation as well as inter‐regional disparities that emerge with migration. Migration or residence decision of households is endogenous with respect to regional cost‐of‐living differentials. Results show that migration slows down and dampens the shift of labour from urban manufacturing to services, despite the increase in demand for urban services. It is also established that rural–urban migration contributes positively to growth while the reallocation of labour within each region proves to be unfavourable. [ABSTRACT FROM AUTHOR]

This paper investigates the equilibrium spatial distributions of firms in a circular city under monopolistic competition. We show that the uniform distribution constitutes an equilibrium for a very general class of transport cost functions. Moreover, we establish that symmetric partial agglomeration arises as an equilibrium if and only if the transport cost function is linear and the number of locations is even. We also find that all rotationally symmetric distributions with continuous support are spatial equilibria if the transport costs are linear. This multiplicity of equilibria however disappears in the case of strictly concave transport costs: the uniform distribution is then the unique spatial equilibrium distribution with continuous support. [ABSTRACT FROM AUTHOR]

The present paper analyses the impact of the EU funds, for the European region of Azores, as they affect GDP, employment, and the wellbeing of families in different income levels, using a dynamic, multi-sector, computable general equilibrium model ( CGE) - Azor Mod. Simulating the impact of a total cut in transfers and comparing with a base business as usual scenario, it is concluded that the elimination of the EU transfers could cause a sharp permanent fall on public demand and an immediate 2 per cent fall in GDP. The fall in public demand causes a fall in consumer and investment prices which will foster a sharp increase in investment demand that gradually causes GDP to grow back to its initial levels within a ten year period. [ABSTRACT FROM AUTHOR]

This paper studies all‐pay auctions in which there is a buy‐price option for bidders to guarantee purchases at a seller‐specified price. We analyze symmetric increasing bidding equilibria in the first‐ and second‐price all‐pay auctions with the buy‐price option. While the optimal buy‐price in the second price is higher than are those in the first‐price all‐pay auction, both formats maintain the same expected profit. With an endogenous entry process, all‐pay auctions with the buy‐price can attract more consumers and ultimately reach a higher expected profit than does the uniform posted‐price selling mechanism. [ABSTRACT FROM AUTHOR]

This paper introduces a non-linear hyperbolic demand function in a spatial shipping model. We show that, in contrast with the linear demand case, dispersion of firms emerges in equilibrium both when the firms compete through quantities and when they compete through prices. Further, the impact of the marginal production costs on the degree of firms' dispersion in equilibrium is positive when firms compete with prices, and it is inverse U-shape when firms compete with quantities. [ABSTRACT FROM AUTHOR]

This paper offers some preliminary steps in the marriage of some of the theoretical foundations of new economic geography with spatial computable general equilibrium models. Modelling the spatial economy of Colombia using the traditional assumptions of computable general equilibrium (CGE) models makes little sense when one territorial unit, Bogotá, accounts for over one quarter of GDP and where transportation costs are high and accessibility low compared to European or North American standards. Hence, handling market imperfections becomes imperative as does the need to address internal spatial issues from the perspective of Colombia's increasing involvement with external markets. The paper builds on the Centro de Estudios de Economia Regional (CEER) model, a spatial CGE model of the Colombian economy; non-constant returns and non-iceberg transportation costs are introduced and some simulation exercises carried out. The results confirm the asymmetric impacts that trade liberalization has on a spatial economy in which one region, Bogotá, is able to more fully exploit scale economies vis-à-vis the rest of Colombia. The analysis also reveals the importance of different hypotheses on factor mobility and the role of price effects to better understand the consequences of trade opening in a developing economy. [ABSTRACT FROM AUTHOR]

Limited human capital investment is a common characteristic of low-income countries despite the fact that estimated returns to educational investment in low-income countries are generally higher than those in high-income countries. Empirical evidence suggests that income and credit constraints can only account for a part of this underinvestment. Recent experimental evidence shows that families' misperceptions about the returns to education play a role in their low-investment levels. This paper builds a heterogeneous-agent model of human capital and growth that incorporates an adaptive learning mechanism to capture the way agents form perceptions about returns to education. We find natural conditions guaranteeing existence of stable equilibria. Along transition paths, agents' misperceptions about returns to education depress realized returns, which serves to reenforce and perpetuate low human-capital investment. If human capital investments have both private and public returns, we find multiple stable equilibria, including those which are characterized by low investment and low returns. ( JEL D83, O10, I25) [ABSTRACT FROM AUTHOR]

Abstract: Papua New Guinea's (PNG) resource boom has come to an end. Theory suggests that the real exchange rate (RER) should subsequently depreciate in order to restore internal and external balance. In practice, however, the imposition of foreign exchange controls has led to a large backlog in foreign currency orders suggesting that the RER is significantly overvalued. The purpose of this paper is to inform the ongoing policy debate surrounding this issue by estimating the extent to which PNG's RER is currently misaligned. Our results suggest that the kina should depreciate by about 20% to close the gap between the actual and equilibrium value of the RER. Otherwise PNG is likely to pay high economic costs as real overvaluation sustained through foreign exchange restrictions led to resource misallocation, lower economic growth, black markets, and ultimately a balance of payments crisis in many other developing countries in the past. [ABSTRACT FROM AUTHOR]

This paper describes a new monetary open-economy model where firms have market power due to search frictions in the goods market, and endogenous search effort by consumers mitigates this market power. The optimal inflation rate generally depends positively on the cost of search effort, the cost of firm entry, and the cost of trade. Higher inflation always improves a country's terms-of-trade against its trading partners. I also characterize a general class of matching processes which offer a novel approach to modeling firm sales. ( JEL D43, E40, F12) [ABSTRACT FROM AUTHOR]

This paper explores the impacts of home appliances going to the countryside ( HAGC) in a spatial general equilibrium model. Main findings include the following: ( i) if the manufactured goods are highly differentiated, HAGC reduces the urban-rural real income gap and improves the social welfare; ( ii) if there exists rural-urban migration, the change in the social welfare due to HAGC will experience a U-shaped curve as transportation cost decreases; and ( iii) when the manufactured goods are highly differentiated, or fairly standardized under either very high or low transportation cost, price subsidy should be expanded to all manufactured goods. Otherwise, the optimal policy is laissez-faire. [ABSTRACT FROM AUTHOR]

This paper documents important changes in the Chinese macroeconomic environment over the last three decades. The volatility of Chinese aggregate economic activities has fallen dramatically by nearly 60 per cent during its reform period, a phenomenon that coincides with the ' Great Moderation' that occurred in most industrialized economies. We employ a provincial panel-data method to investigate the driving forces of the increasing macroeconomic stability in China. We examine the empirical relationship between output volatility and various economic, policy, institutional, and demographic factors. Our results suggest that the acceleration of reform toward the market economy, which began around 1994, generally leads to a widespread output volatility reduction across Chinese provinces. Both state-owned enterprise reform and human capital accumulation are important determinants of output volatility since the mid-1990s; they play an important role in explaining the provincial differences on volatility reduction. [ABSTRACT FROM AUTHOR]

In this paper, we develop an endogenous growth and international trade model with two countries in which equilibrium wages in the two countries are different between two countries. First, when trade costs are high, the share of manufacturing firms in the large country increases with a decline in trade costs because of market size. However, the share of firms then decreases with a decline in trade costs when trade costs are low because of wage differences. Finally, all firms agglomerate in the small country, since production costs in the small country are low. In this process, the innovation sector shifts its location from the large-market and high-wage country to the small-market and low-wage country. [ABSTRACT FROM AUTHOR]

. In this paper, we introduce stochastic R&D into a Hotelling model with two duopolists. With an emphasis on the interaction between firms' R&D decision and location choice, we compare socially and privately optimal locations and levels of R&D. We show that, depending on R&D cost and the degree of technical risk, equilibrium location varies from minimum differentiation to maximum differentiation. From a welfare perspective, the equilibrium distance between the two firms could be either closer, farther or socially best. Moreover, depending on cost structure, firms' R&D expenditures could be either higher, lower or socially optimal, from a welfare viewpoint. [ABSTRACT FROM AUTHOR]

This paper develops a model with heterogeneous households and firms that can locate anywhere in the city. The main features of the model are household preferences for open space which depend on distance to the greenbelts at the city periphery, and agglomeration economies for firms. Numerical results show equilibrium location patterns, rents, and wages under different model specifications. Under most conditions, monocentric location patterns (where there is a higher concentration of firms in the centre zones compared to surrounding zones) are observed, but duocentric location patterns for firms can emerge if both open space values and travel costs are high. [ABSTRACT FROM AUTHOR]

Competition can foster misconduct in any circumstance where the organizer of a contest cannot perfectly monitor contestants' actions or when doing so is prohibitively costly. Although misconduct comprises all actions that are contrary to the interest of the organizer, it is not necessarily the case that it is optimal to prohibit all such behavior. In this paper, we determine the equilibrium level of misconduct chosen by players in a symmetric rank-order tournament between two competitors in which the organizer tolerates some level of misconduct. In addition to showing that zero tolerance may not minimize the level of misconduct in equilibrium, we show that there exists a range of tolerated misconduct where a symmetric mixed strategy equilibrium exists with players cheating (i.e., misconduct above the tolerated level) with some probability. When the gain from misconduct is uncertain and unknown the contest organizer faces a tradeoff: tolerating more misconduct will reduce such behavior when the state of temptation is high, but increase it when temptation is low. ( JEL J33, K42) [ABSTRACT FROM AUTHOR]

Sufficiently high net worth of financial intermediaries ( FIs) is considered a necessary condition for financial and macroeconomic stability. In this paper, we explore why the net worth of FIs is important as compared to that of nonfinancial firms using a dynamic general equilibrium model, in which both FIs and nonfinancial firms rely on costly external debt. We find that an exogenous disruption of the FIs' net worth has a greater aggregate impact than does the same-sized disruption of the nonfinancial firms' net worth. The key reason is that the net worth of the FIs in the United States is small. ( JEL E22, E44, G21) [ABSTRACT FROM AUTHOR]

This paper analyses the effect of skill heterogeneity on regional patterns of production and housing in the presence of pecuniary externalities within a general-equilibrium framework. The analysis allows for interregional commuting. Low-skilled workers choose to live and work in the periphery, the medium-skilled commute to the core, and the highly-skilled live and work in the core. At the regional level, individual choices imply that the average skill level of employees is higher in the core regions than in the peripheral regions. In particular, in the peripheral regions, the average skill level of employees is lower than the average skill level of residents, some of whom commute to the core. [ABSTRACT FROM AUTHOR]

Using a spatial model with two separated markets, this study looks at how taxation alters the incentive to prey of an incumbent firm facing a potential entrance by another firm. The paper shows that for intermediate levels of the transportation costs, the higher are the taxes, the lower are the expected gains from the predatory strategy. This study shows that under some conditions setting a positive level of taxes may induce a duopolistic equilibrium instead of a monopolistic one, and this ultimately increases welfare. Resumen Mediante la utilización de un modelo espacial con dos mercados separados, este artículo examina el modo en que la tributación altera el incentivo depredador de una empresa dominante ante la posible aparición de otra empresa El artículo muestra que, para niveles intermedios de costos de transporte, cuanto mayores los impuestos menores son las ganancias esperadas de la estrategia predatoria. Este estudio muestra que bajo ciertas condiciones el establecer un nivel de tributación positivo puede inducir un equilibrio duopolístico en lugar de uno monopolístico, y que esto crea finalmente bienestar. [ABSTRACT FROM AUTHOR]

This purpose of this paper is twofold: First, we are interested in making a first step towards formally introducing demand uncertainty into the standard model of Löschian competition. Secondly, we wish to explore the effects of demand uncertainty on both the nature of the solution and comparative statics relating to the equilibrium price and market area. Several striking results are derived and then compared with those derived by Capozza and Van Order (1978 ), Benson (1980 ), Appelbaum and Katz (1986 ) and Ishii (1991 ). [ABSTRACT FROM AUTHOR]

The supply chain network equilibrium problem with capacity constraints (SCNE-C) is an extension of the supply chain network equilibrium problem (SCNE), which also takes into account capacity constraints which refer to the maximum production capacity for a manufacturer or the maximum storage/display space for a retailer. Due to inherent link interactions in the demand functions and cost functions, the SCNE-C problem is formulated as a mathematical model using the variational inequality (VI) approach. This VI model is characterised by the so-called Wardrop second principle (in terms of the ‘generalised’ route cost). To solve the model, a path-based four-loop nested diagonalisation method, along with a supernetwork representation, is proposed and demonstrated with a few numerical examples. The obtained results fully comply with the Wardrop second principle at both retailer sector and demand markets and can provide useful route information of the product. In addition, the stricter the capacity constraints imposed, the lower the quantity demanded will be, and provided at a higher product price. The concepts developed in this paper can be extended into many other spatial price equilibrium problems. Resumen El problema de equilibrio en la red de la cadena de abastecimiento con restricciones de capacidad (SCNE-C) es una ampliación del problema de equilibrio en la red de la cadena de abastecimiento, que además tiene en cuenta restricciones de capacidad relacionadas con la máxima capacidad de producción para un fabricante o el espacio máximo de almacenamiento/muestra al público para un comerciante al por menor. Debido a las interacciones inherentes entre vínculos en las funciones de demanda y de costos, formulamos el problema de SCNE-C como un modelo matemático utilizando el enfoque de desigualdad variacional (VI). Este modelo VI se caracteriza por el así llamado segundo principio de Wardrop (en términos de costo de recorrido ‘generalizado’). Para resolver el modelo se propone un método de diagonalización anidado de cuatro bucles basado en la ruta, junto con una representación de red extendida ( supernetwork), y se demuestra con algunos ejemplos numéricos. Los resultados obtenidos cumplen totalmente con el segundo principio de Wardrop tanto para el sector de minoristas como para las demandas del mercado y pueden proporcionar información de ruta útil del producto. Además, cuanto más estrictas sean las restricciones de capacidad impuestas, menor será la cantidad demandada del producto, y se ofrecerá con un precio mayor. Los conceptos desarrollados en este artículo pueden aplicarse a muchos otros problemas espaciales de equilibrio de precios. [ABSTRACT FROM AUTHOR]

Gupta et al. (2004 ) shows that in a circular market under spatial Cournot discrimination, the location equilibria can be categorised into several patterns. This paper proves that, given the same number of firms producing differentiated products, one location pattern constitutes an equilibrium in price competition if and only if it constitutes an equilibrium in quantity competition. That is, the location equilibrium is irrelevant to whether the firms compete with each other on quantities or prices. Gupta et al. (2004 ) muestra que en un mercado circular bajo discriminación espacial de Cournot, los equilibrios de localización pueden categorizarse de acuerdo a varios patrones. Este artículo prueba que, dado el mismo número de empresas produciendo productos con características distintivas, un patrón de localización constituye un equilibrio en competencia en precio si y solo si constituye un equilibrio en competencia en cantidad. Es decir, el equilibrio de localización es irrelevante a que las empresas compitan entre sí en cantidad o en precio. [ABSTRACT FROM AUTHOR]

This paper investigates whether government bonds are viewed as net wealth. If they are, the nominal interest rate in steady-state equilibrium should be an increasing function of the government debt and of government spending. Using forward interest rates realized during World War II, this paper finds no evidence of such a relationship. These data afford an especially powerful test because the federal debt rose from 29 to 106 percent of trend output during the war. This enormous increase in government debt actually appears to have reduced forward interest rates by a statistically significant, but small, amount. [ABSTRACT FROM AUTHOR]

This paper investigates zoning in a duopoly model of spatial price discrimination. We find that the zone in which the firms are not allowed to locate depends on the bias of the regulator. A bias toward firms is deduced when locations around the central area are forbidden, and a bias toward consumers exists when firms are only allowed to locate at places around the central area. The design of the zoned area guarantees that firms locate optimally and works under simultaneous or sequential choice of locations by the two firms. (JEL L13, R38 ) [ABSTRACT FROM AUTHOR]

This paper analyzes firms' choice of a merger or a strategic alliance in bundling their products with other complementary products. Tying two products of unequal value makes them equally valuable as they become inseparable for purchase. Consequently, firms can charge a higher price for the bundled products than before. If foreclosure is not the main purpose of bundling, firms would prefer strategic alliances to mergers because mergers only intensify competition by internalizing the complementarities of two products. In equilibrium, bundling occurs only through strategic alliances. ( JEL L4, L11, L13, L23) [ABSTRACT FROM AUTHOR]

The paper presents a model system, which consists of a partial equilibrium model and process-based terrestrial biogeochemistry models, to determine the optimal distributions of both Miscanthus ( Miscanthus × giganteus) and short rotation coppice willow ( SRC) ( Salix. viminalis L. x S. viminalis var Joruun) in Great Britain ( GB), as well as their potential contribution to meet heat and electricity demand in GB. Results show that the potential contribution of Miscanthus and SRC to heat and electricity demand is significant. Without considering farm-scale economic constraints, Miscanthus and SRC could generate, in an economically competitive way compared with other energy generation costs, 224 800 GWh yr−1 heat and 112 500 GWh yr−1 electricity, with 8 Mha of available land under Miscanthus and SRC, accounting for 66% of total heat demand and 62% of total electricity demand respectively. Given the pattern of heat and electricity demand, and the relative yields of Miscanthus and SRC in different parts of GB, Miscanthus is mainly favoured in the Midlands and areas in the South of GB, whereas SRC is favoured in Scotland, the Midlands and areas in the South of GB. [ABSTRACT FROM AUTHOR]

This study focuses on the role of local climate conditions in spurring interregional migration in China over the period 2000 to 2010. We developed a robust empirical approach based on a correlated random effects model and a prefecture‐level panel dataset which allows us to account for both within province migration flows and prefecture‐specific characteristics. Empirical results reveal that climate conditions are important determinants of migration in China. Specifically, prefectures with warmer winter, cooler summer, and more available sunshine are more attractive to migrants. Economic factors such as income level and employment opportunities are also important drivers of population growth. [ABSTRACT FROM AUTHOR]

Economic models are often judged by the reality of their assumptions or their success at predicting realistic outcomes. In this paper I suggest a different criterion for judging models in international trade theory in competitive settings: (i) Does the model conform to common sense in leading to results that even suggest the model is not necessary, and yet (ii) Can the same model be used as a tool to reveal in simple terms why certain outcomes that may appear surprising (often labeled a paradox in trade theory) nonetheless are correct. Many trade theory paradoxes appear as the result of income effects in simple general equilibrium models. Here attention centers instead on two of the familiar production models: the specific factors model and the Heckscher-Ohlin model, either separately or when combined. It is shown that very basic properties of production underlie many of the surprising results in competitive trade theory. ( JEL F11, D50) [ABSTRACT FROM AUTHOR]

This paper investigates economies of scale (ES) in financial intermediation as a source of equilibrium indeterminacy. Financial intermediation is embedded into a standard flexible-price monetary model, and provides deposits (inside money) that substitute with currency to purchase consumption. The results indicate that equilibrium indeterminacy does not depend on a large degree of ES in intermediation nor a large intermediation sector, but on monetary policy and the determination of nominal interest rates. Monetary policies not targeting nominal rates allow for indeterminacy to arise for any positive degree of ES, while policies targeting nominal rates eliminate indeterminacy for all degrees of ES. ( JEL C62, E44, E52) [ABSTRACT FROM AUTHOR]

The empirical success of Real Business Cycle (RBC) models is often judged by their ability to explain the behavior of a multitude of real macroeconomic variables using a single exogenous shock process. This paper shows that in a model with the same basic structure as the bare bones RBC model, monetary, cost-push or preference shocks are equally successful at explaining the behavior of macroeconomic variables. Thus, the empirical success of the RBC model with respect to standard RBC evaluation techniques arises from the basic form of the dynamic stochastic general equilibrium model, not from the specific role of the productivity shock. ( JEL E32, E37) [ABSTRACT FROM AUTHOR]

This paper reports an experiment conducted to evaluate a “near-continuous” variant of the posted offer trading institution, where the number of periods in a market session is increased by reducing sharply each period’s maximum length. Experimental results suggest that although decisions in time-truncated periods are not equivalent to periods of longer duration, extensive repetition improves considerably the drawing power of equilibrium predictions in some challenging environments. Nevertheless, significant deviations remain in the near-continuous framework. We also observe that the extra data collected in the near-continuous framework allow new insights into price convergence and signaling. ( JEL C92, L12, L11) [ABSTRACT FROM AUTHOR]

The paper studies bidder behavior in simultaneous, continuous, ascending price auctions. We design and implement a “collusion incubator” environment based on a type of public, symmetrically “folded” and “item-aligned” preferences. Tacit collusion develops quickly and reliably within the environment. Once tacit collusion developed, it proved remarkably robust to institutional changes that weakened it as an equilibrium of a game-theoretic model. The only successful remedy was a non-public change in the preference of participants that destroyed the symmetrically, “folded” and “item aligned” patterns of preferences, creating head-to-head competition between two agents reminiscent of the concept of a “maverick.”( JEL L50, L94, D43) [ABSTRACT FROM AUTHOR]

This paper develops a dynamic model with overlapping generations where there are two possible equilibria: one without child labor, and one with it. It is shown that intergenerational transfers can eliminate the child labor equilibrium and that this intervention is Pareto improving. However, if society does not believe that the government will implement the transfer program, it won’t, reinforcing society’s expectations. This is true even if the transfer program would have been implemented in the absence of uncertainty. Thus a government may be powerless to prevent the child labor equilibrium if it does not command the confidence of their populace, leaving the country in an expectations trap. ( JEL D91, E60, J20, O20) [ABSTRACT FROM AUTHOR]

A standard prediction of neoclassical microeconomics is that with perfect competition, free entry, and atomistic firms producing a homogeneous product, equilibrium finds all firms employing that technology which has minimum average cost. That competition drives out inefficient producers and reduces heterogeneity within industries is, consequently, a commonplace rule of thumb in economic thinking. This paper demonstrates that demand uncertainty is sufficient to produce heterogeneity in the equilibrium employment of production technologies and to permit the coexistence of producers exhibiting different minimum average costs. This heterogeneity is ubiquitous because the conditions for its presence are not stringent. [ABSTRACT FROM AUTHOR]

This paper develops a simultaneous stochastic rational-expectations model of futures- and spot-price determination. Using the model, we find that increases in what we term speculative intensity increase spot-price variability arising from storage-cost shocks, but decrease spot-price variability arising from demand shocks. In contrast, increases in speculative intensity unambiguously decrease futures-price variability, regardless of the underlying source of disturbances. We are able to develop these comparative- static results because the model has a unique equilibrium. [ABSTRACT FROM AUTHOR]

This paper develops an example of a noncooperative game between fiscal authorities in two countries. The key strategic link between countries is the terms of trade. An equilibrium without cooperation is characterized by excessive tax rates and public spending levels in each country. The outcome is analogous to the Nash equilibrium of the static optimal tariff game in trade theory. But in this model there is also a dynamic distortion caused by noncooperative behaviour. This dynamic distortion depresses capital accumulation and reduces the equilibrium capital stock in each country. Numerical examples suggest a significant welfare benefit of cooperation. [ABSTRACT FROM AUTHOR]

This paper shows that under constant returns to scale and free entry, customer discrimination unlike employer or employee discrimination, can cause long-run wage differentials. The general equilibrium impact of affirmative action policies on wages, productivity and unemployment is contrasted under these types of discrimination. The empirical literature on affirmative action is surveyed in light of these models and some support is found for models of employer prejudice. Finally, by changing the composition of output, affirmative action policies raise the probability of a nondiscriminatory general equilibrium outcome under customer prejudice. [ABSTRACT FROM AUTHOR]

This paper reports on a series of laboratory experiments designed to evaluate a mechanism for the voluntary provision of public good. The public good is provided if the total contributions meet or exceed a threshold and all contributions are returned if the public good is not provided. The members of the group all know the threshold, the incomes, and the valuations assigned the public good by all other members. The results support the prediction that this mechanism will yield Pareto efficient outcomes and suggest that economic agents adopt strategies which form equilibria satisfying certain refinements to the Nash equilibrium. [ABSTRACT FROM AUTHOR]

This paper investigates the properties of industry equilibrium under price uncertainty given free entry and exit. For any form of risk-averse behavior, it is shown that an increase in demand uncertainty (as measured by a mean-preserving spread) increases mean output price and reduces output of firms in long-run equilibrium. [ABSTRACT FROM AUTHOR]

This paper presents a dynamic computational general equilibrium model in which expectations regarding future prices can be varied systematically. The model is employed to evaluate how expectations influence the effect of long-run tax policy changes. Under policies (like a consumption tax) that reduce rates of return over time, individuals with perfect foresight save less than individuals with myopic beliefs. This is because consumers with foresight are better able to anticipate the lower returns. Lower saving means that existing distortions due to capital taxes are not offset as much, so that welfare gains are smaller under perfect foresight. [ABSTRACT FROM AUTHOR]

This paper develops a model in which the term-structure of interest rates obtains as an equilibrium outcome of the interactions of firms, households and rationally informed speculators. Exogenous disturbances whose impact effects fall only in the market for short-term bonds generate equilibrium movements in the yield on long-term bonds and the level of investment spending. In the case of risk-averse speculators, a purely transitory, unanticipated shock to the money supply generates a long distributed-lag effect on the level of aggregate demand. [ABSTRACT FROM AUTHOR]

J.M. Keynes first introduced the theory of "normal backwardation" in futures markets. In the language of (British) commodities markets, a "backwardation" is an excess of the spot price overfutures prices. As is well-known, Keynes suggested that this might be explained as a risk premium. Less well known is that Keynes actually proposed two distinct theories of backwardation.Of these two theories of backwardation, the latter has recently received much attention. The purpose of this paper is to formalize Keynes' first theory, his "liquid stocks" theory, with an eyeto its eventual empirical test.We follow the recent formalizations of the risk premium theory by assuming the existence of perfectly competitive asset markets. To emphasize the differences between the two theories, however, we assume that there are well-funded risk neutral investors. Thus, risk premia cannot explain backwardation under our assumptions. Instead, backwardations arise because of interactions between equilibrium in the commodities exchange, both in spot and futures trading, and the production, consumption and storage decisions taken on the real side of the economy. [ABSTRACT FROM AUTHOR]

In the literature, the range of market sizes (spacings between firms) consistent with free-entry equilibrium, in various models of spatial competition, extends from the zero-profit market size, up to the market size for which 'sophisticated entry' halfway between two existing firms, by an entrant that correctly foresees post-entry prices, is marginally deterred. I argue that the upper limit might be the (significantly smaller) market size for which 'merger-forcing entry' by an entrant right next to an existing firm, causing severe price competition and inducing a horizontal merger between the entrant and the existing firm, is marginally deterred. [ABSTRACT FROM AUTHOR]

We study the tradeoff between megacities and networks of smaller cities in a model of recombinant growth and endogenous amenities. Three factors are key: local returns to scale in innovation, the housing supply elasticity and the importance of local amenities. Even with global increasing returns, local returns to scale in innovation may be decreasing, making networks more appealing. Inelastic housing supply makes density costlier and may explain why networks are more popular in Europe than the US. Megacities can prevail thanks to amenities if the benefits of scale overwhelm the costs of density. The skilled are more likely to prefer megacities than the unskilled. Megacities may have short-run costs yet improve upon networks in the long run. [ABSTRACT FROM AUTHOR]

Using a dynamic computable general equilibrium model of the Chinese economy we investigate the economic effects of relaxing China's household registration system over the period 2008 to 2020. The modelling results show that reducing the institutional restriction to rural labour movement will encourage rural workers to move from agricultural and rural non-agricultural sectors into urban sectors. This enhanced labour movement will not only increase China's GDP and real consumption of households but it will also raise the real wages of agricultural and rural non-agricultural workers. Although the real wage of rural migrant workers will increase at a slightly lower rate than in the baseline scenario, rural migrant workers remain considerably better paid than agricultural and rural non-agricultural workers. [ABSTRACT FROM AUTHOR]

This critical review focuses on the development of spatial competition models à la Hotelling in which the location choice of firms plays a major role. We start by quantifying the research in this field by using bibliometric tools. Thereafter, this study identifies the main research paths within spatial competition modelling. Specifically, the type of strategy (Bertrand vs. Cournot competition), the assumptions that are made in respect to the market (linear vs. circular), production costs, transportation costs, the number of firms and the type of information (complete vs. incomplete) and their effects on the location equilibria are also discussed. [ABSTRACT FROM AUTHOR]

We revisit the Hotelling duopoly model with linear transportation costs, introducing network effects and brand loyalty. We show that, while network externalities destabilize prices, the lock-in effect generated by exogenous switching costs, if sufficiently high, eliminates the incentive to undercut, thereby restoring the existence of the pure strategy equilibrium in prices, and the corresponding minimum differentiation principle. [ABSTRACT FROM AUTHOR]

Input-output (IO) tables and demand-driven multiplier techniques are absolutely appropriate for conventional pollution attribution (accounting) analyses as they provide all the required information on pollution embodied in intersectoral interactions and interregional trade flows. However, as a model of how the economy adjusts in response to a marginal change in activity, IO is unlikely to be appropriate as it is only a very special case of general equilibrium models. We propose an integrated IO and computable general equilibrium (CGE) approach, with CGE analysis of the impacts of a change in activity and model results used to inform an IO attribution analysis of pollution embodied in interregional trade flows before and after the change is introduced. Resumen. Las tablas input-output (IO) y las técnicas multiplicadoras en función de la demanda son totalmente apropiadas para los análisis (contables) convencionales de atribución de la contaminación ya que proporcionan toda la información requerida acerca de la contaminación que acompaña a las interacciones intersectoriales y flujos comerciales interregionales Sin embargo, como modelo acerca de cómo la economía se ajusta en respuesta a cambios marginales de la actividad, es poco probable que IO sea apropiado ya que es solamente un caso muy especial de modelos de equilibrio general. Proponemos un enfoque integrado de IO con equilibrio general computable (EGC), con un análisis EGC de los impactos de un cambio en la actividad y siendo los resultados del modelo utilizados para instruir un análisis de atribución IO de la contaminación presente en flujos comerciales interregionales, antes y después de la introducción del cambio. [ABSTRACT FROM AUTHOR]