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The purpose of this paper is to prove the existence of a marginal pricing economic equilibrium in presence of increasing returns and externalities in a commodity space general enough as to encompass the vast majority of economic situations. This extends the existing literature on competitive equilibria in vector lattices by incorporating market failures, and it also generalises several non-competitive existence results to a larger class of commodity spaces. The key features are a suitable definition for the marginal pricing rule and an adaptation of the properness condition. [ABSTRACT FROM AUTHOR]

During the last decades, natural hazards, such as earthquakes, volcanic eruptions, landslides, floods, storms, droughts, and cyclones, have increased in frequency and severity, influenced by climate change and population growth. These natural hazards can become sudden-onset disasters, causing human losses and property damages that affect economic stability and growth. Although there is a pressing need for risk decrease and adaptation strategies to these unexpected events, targeted natural hazard insurance would be a valuable tool to counteract governmental and individual consequences. This paper summarizes an overview of risk assessment and mitigation strategies based on geological, geomorphological, and meteorological factors. The study includes an examination of monitoring systems for movement and gas emissions, risk and emergency maps, and highlighting the vulnerability of different areas at national and regional levels. Furthermore, the paper addresses the importance of promoting comprehensive geological and geotechnical knowledge among citizens of every socio-economical group and proposing the tools to effectively deliver the message, aiming at increasing the willingness for natural hazard insurance at both individual and governmental scales for human and property protection. [ABSTRACT FROM AUTHOR]

This paper develops an estimated New Keynesian model of a commodity-exporting economy for an integrated policy framework, integrating the full range of policies used in practice and featuring a range of nominal and real rigidities, macro-financial linkages, and transmission channels of external shocks. We jointly examine the optimal conduct of conventional and unconventional monetary policies, macroprudential policy, foreign exchange intervention, capital flow management, and fiscal policy based on the model. The policy analysis framework is applied empirically to Mongolia, a small open and developing economy highly dependent on imports and commodity exports. We find that an eclectic policy mix improves policy trade-offs and a lack of cooperation among policy authorities may result in conflicting policies, hence suboptimal results for overall economic stability. Our optimal policy analysis shows that policy mix adjustments should differ depending on the type of shocks and the policy objectives. The results suggest that the policy analysis framework can help policymakers choose their policy mix adjustments to deal with external shocks in an integrated and optimal way. [ABSTRACT FROM AUTHOR]

With economic development as a primary aim of city–county consolidations, a theoretical and empirical literature explores the effect of consolidation on economic conditions. However, despite the economic development effects arguably being most relevant during economic crisis, no studies have focused on consolidation's effects during recession. Using county-level data from 13 states across the United States, we consider how consolidation influences economic stability during and after the Great Recession. After controlling for demographic, economic, and geographic factors, including potential spillover effects, the results suggest that consolidation does not promote stability for either employment, the unemployment rate, per capita income, or number of business establishments. These null effects are not influenced by government sector employment or driven by results from any particular state. The paper's findings caution against local governments pursuing city–county consolidation in hopes of greater economic stability. [ABSTRACT FROM AUTHOR]

The aim of this paper is to assess the economic impact of the Russian embargo from 7 August 2014 on certain agricultural food products from the EU, the USA, Norway, Canada and Australia. The effects of this economic sanction are analysed in the framework of a computable general equilibrium (CGE) model with a particular focus on bilateral and total exports, production and welfare. The detailed, based on real trade data, calibration of the model allows for an exact identification of the sectoral shares and prohibitive tariffs aggregated to match the CGE model's sectoral level of aggregation. In addition, the paper carries on a validation exercise to compare the model's predictions with real trade data developments. The modelling simulation results show that the impact of the ban on total exports of the EU, the USA, Norway, Canada and Australia is limited. Nevertheless at a disaggregate level there are sectors - 'vegetables and fruits', 'other meat' and 'dairy products' - which experience two digit percentage change declines. [ABSTRACT FROM AUTHOR]

Stackelberg model is a dynamic model, in which two players with different scales and power players act sequentially. However, there are few literatures that apply complex oligopoly dynamics theory in this model. In this paper, based on a traditional Stackelberg model, we improve the model in Peng and Lu (Appl Math Comput 271:259-268, 2015) and construct a multi-period Stackelberg triopoly game model. One leader firm and two followers with bounded rationality behavior are considered. The leader's decision-making variable, which is simplified as a constant in Peng and Lu's paper, is observed by the followers in stage 1 in every period in this model. We arrive at the conclusion that the leader would have the first-move advantage even when the players adopt a gradient output adjustment process in a multi-period Stackelberg triopoly game model. The speeds of output adjustment form a three-dimensional stability region. In the equilibrium state, the outputs of the followers are one-third of the leader's. With adjustment speed of the leader increasing, Stackelberg equilibrium would be broken at a certain point. The effect of adjustment speed on speed of convergence to equilibrium is also analyzed. Theoretical result and numerical simulation both demonstrate that the speed converging to equilibrium is slowing when the Lyapunov exponent increases. Strange attractor and the sensitivity on initial values are presented by numerical simulation, while feedback control method is used to eliminate chaos. Moreover, in the stage of periodic bifurcation outside the stability region, the increase of the adjustment speed of the leader could be incentive for choosing chaos. While in the chaos stage, the average profits of three firms are uncertain, which shows that the relative benefit is closely related to adjustment speed of bounded rationality. [ABSTRACT FROM AUTHOR]

This paper is concerned with the computation of equilibrium for an exchange economy with constant returns production technologies. We convert such an economy into a pure exchange economy by allocating the production to each consumer's endowment evenly. In this way, the market clearing condition of the original economy is reformulated as that of a pure exchange economy, together with an additional complementarity condition to ensure the feasibility of production plans. A homotopy method is proposed to solve these two problems simultaneously. With this approach, the economic equilibrium model with constant returns production can be handled in a similar way to the pure exchange economy. A path-following algorithm is then developed for computing equilibria in these economies. [ABSTRACT FROM AUTHOR]

Summary. This paper discusses the existence of an optimal income tax and distinguishes itself from the previous articles in two respects. In previous papers, the self selection condition was not necessarily consistent with the individual budget constraint. Furthermore, implementability in previous papers was implicit in individual ability, rather than individual income, as the basis of the tax function. We offer a different concept of the self selection conditions: Anti Normal Envy that is consistent with the individual budget constraint and that we show to be equivalent to the competitive equilibrium under a tax function based on income. We then establish the existence of an implementable optimal income tax. [ABSTRACT FROM AUTHOR]

I investigate the incentives to release information in markets in which auctioneers running second-price auctions compete for buyers by releasing information about their products before buyers decide in which auction they wish to participate. I provide sufficient conditions for the existence of an equilibrium in which both sellers release information even if there are only two buyers in the market. This result is in contrast to previous findings reported in the literature showing that the optimal decision for a monopolist facing a fixed set of two buyers is to not release any information. Thus, the results of the paper suggest that competition between auctioneers strengthens the incentives to release information in markets in which selling mechanisms are second-price auctions. [ABSTRACT FROM AUTHOR]

This paper introduces the irregular N-gon solution, a new geometric method for constructing equilibrium distributions in the Colonel Blotto game with heterogeneous battlefield values, generalising known construction methods. Using results on the existence of tangential polygons, it derives necessary and sufficient conditions for the irregular N-gon method to be applied, given the parameters of a Blotto game. The method does particularly well when the battlefield values satisfy some clearly defined regularity conditions. The paper establishes the parallel between these conditions and the constrained integer partitioning problem in combinatorial optimisation. The properties of equilibrium distributions numerically generated using the irregular N-gon method are illustrated. They indicate that the realised allocations, weighted by battlefield value, are less egalitarian and depend more strongly on battlefield values than previously thought. In the context of the US presidential elections, the explicit construction of equilibria provides new insights into the relation between the size of a state and the campaign resources spent there by presidential candidates. [ABSTRACT FROM AUTHOR]

In a Nash equilibrium, players' rationality is mutual knowledge. However, both intuition and experimental evidence suggest that players do not know for sure the rationality of opponents. This paper proposes a new equilibrium concept, cautious equilibrium, that generalizes Nash equilibrium in terms of preferences in two person strategic games. In a cautious equilibrium, players do not necessarily know the rationality of opponents, but they view rationality as infinitely more likely than irrationality. For suitable models of preference, cautious equilibrium predicts that a player might take a "cautious" strategy that is not a best response in any Nash equilibrium. [ABSTRACT FROM AUTHOR]

This paper analyzes the problem of selecting a set of items whose prices are to be updated in the next iteration in so called simple ascending auctions with unit-demand bidders. A family of sets called “sets in excess demand” is introduced, and the main result demonstrates that a simple ascending auction always terminates at the minimum Walrasian equilibrium prices if and only if the selection belongs to this family. [ABSTRACT FROM AUTHOR]

The recent development of computational methods in repeated games has made it possible to study the properties of subgame-perfect equilibria in more detail. This paper shows that the lowest equilibrium payoffs may increase in pure strategies when the players become more patient and this may cause the set of equilibrium paths to be non-monotonic. A numerical example is constructed such that a path is no longer equilibrium when the players' discount factors increase. This property can be more easily seen when the players have different time preferences, since in these games the punishment strategies may rely on the differences between the players' discount factors. A sufficient condition for the monotonicity of equilibrium paths is that the lowest equilibrium payoffs do not increase, i.e., the punishments should not become milder. [ABSTRACT FROM AUTHOR]

This paper conduct a quantitative experiment to assess the effectiveness of a hybrid perturbation-projection (HPP) method to solve dynamic stochastic general equilibrium (DSGE) asset pricing models. We employ a macro-based asset pricing model to compare HPP method and value function iteration (VFI) method based on the same reasonable calibrations. This DSGE asset pricing model in the paper incorporates nonlinearities in both household preferences and firm production technologies. Additionally, the market for debt introduces its own type of nonlinearity; leverage can force a nonlinear wedge between asset rates. In the paper, we first show how to apply the HPP method and then assess its accuracy and speed compared with the old VFI method. Accuracy of solutions is demonstrated by comparing standard deviations of the logged values of first order conditions errors of important financial assets. Speed of the solution methods is shown by comparing the computational time. By comparing the results from applying the same DSGE asset pricing model to the competing methods, we find that the HPP method is not only feasible but also robust to the extreme nonlinearities in the asset pricing model. [ABSTRACT FROM AUTHOR]

This paper presents a VAR/VECM analysis of the monetary transmission process in Uzbekistan for the available data from 2000 to 2009. The general findings obtained support the hypothesis that the interest rate channel in Uzbekistan is relatively weak. Monetary transmission via the exchange rate channel seems to be stronger, even if the form of the channel remains quite ambiguous or rather chaotic. Partially this chaos can be blamed on the contradiction between existing restrictions on capital mobility and the dual objectives of a development of the financial sector and provision of macroeconomic stability. On an analytical level this paper suggests the use of a specific methodology for the future evaluation of monetary policy in Uzbekistan. This is especially important, because in future improved and/or more extensive data might alter some of the results obtained so far. [ABSTRACT FROM AUTHOR]

This paper examines the standard symmetric two-period R&D duopoly model, but with a deterministic one-way spillover structure. Though the two firms are ex-ante identical, one obtains a unique pair of asymmetric equilibria of R&D investments, leading to inter-firm heterogeneity in the industry, in R&D roles as well as in unit costs. We analyze the impact of a change in the spillover parameter and R&D costs on firms' levels of R&D and profits. We find that higher spillovers need not lead to lower R&D investments for both firms. In addition, equilibrium profits may improve due to the presence of spillovers, and it may be advantageous to be the R&D imitator rather than the R&D innovator. [ABSTRACT FROM AUTHOR]

The paper presents decomposition of impulse response functions (IRFs) as a new diagnostic tool for dynamic stochastic general equilibrium (DSGE) models. This method works with any DSGE model of arbitrary complexity or theoretical background. It is also applicable to any policy transmission channels. We illustrate it with monetary transmission mechanisms in two New Keynesian general equilibrium models: QUEST_III model of the European Commission and Smets-Wouters model of the USA economy. For that purpose, we use DYNARE platform for solving the models and provide a MATLAB file for IRFs decomposition. The underlying software can handle decomposition of IRFs using both the first-order and the second-order approximation of Taylor series to equilibrium relations. An IRF aggregates partial contributions of all state variables to impulse responses of a model's variable to a stochastic shock. The IRF decomposition identifies individual contributions of state variables and marks each particular channel that a policy shock uses to propagate throughout the model. We show in two illustrated cases that monetary transmission channels might be quite distinct even if DSGE models employ the same (Taylor) policy rule and reveal similar IRFs. More specifically, IRFs initiated by a monetary shock might misrepresent the pure interest rate impact on some variables. Decomposition of monetary IRFs casts more light on flexibility needed in an economy to contain negative impact of a monetary shock. [ABSTRACT FROM AUTHOR]

This paper investigates the effects of oil-financed public investment on economic growth and poverty reduction using a dynamic multi-sectoral general equilibrium model featuring inter-temporal productivity spillovers. The paper shows that the relationship between resource-rent flows and real exchange rates, output growth, and poverty is less straightforward than simple models of the 'resource curse' suggest. Taking Ghana as a stylized agriculture-based economy with poverty most pronounced in a region with home based agricultural production, a policy mix of smoothing the real exchange rate shock and an allocation of infrastructure spending in rural areas seems to be the most promising public investment strategy to enhance growth and reduce poverty. [ABSTRACT FROM AUTHOR]

This paper analyzes the equilibrium and welfare properties of an economy characterized by uncertainty and payoff externalities using a general model that nests several applications. Agents receive a private signal and an endogenous public signal, which is a noisy aggregate of individual actions, and causes an information externality. Agents in equilibrium underweight private information for a larger payoff parameter region in relation to when public information is exogenous. In addition, the socially optimal endogenous degree of coordination is lower than the socially optimal exogenous degree of coordination. The welfare effect of increasing the precision of the noise in the public signal has the same sign with endogenous or exogenous public information, but its magnitude differs. The social value of private information may be overturned in relation to when public information is exogenous: from positive to negative if agents in equilibrium coordinate more than is implied by the socially optimal exogenous degree of coordination, and the opposite if they coordinate less. [ABSTRACT FROM AUTHOR]

This paper studies models where the optimal response functions under consideration are not increasing in endogenous variables, and weakly increasing in exogenous parameters. Such models include games with strategic substitutes, and include cases where additionally, some variables may be strategic complements. The main result here is that the equilibrium set in such models is a non-empty, complete lattice, if, and only if, there is a unique equilibrium. Indeed, for a given parameter value, a pair of distinct equilibria are never comparable. Therefore, with multiple equilibria, some of the established techniques for exhibiting increasing equilibria or computing equilibria that use the largest or smallest equilibrium, or that use the lattice structure of the equilibrium set do not apply to such models. Moreover, there are no ranked equilibria in such models. Additionally, the analysis here implies a new proof and a slight generalization of some existing results. It is shown that when a parameter increases, no new equilibrium is smaller than any old equilibrium. (In particular, in n-player games of strategic substitutes with real-valued action spaces, symmetric equilibria increase with the parameter.) [ABSTRACT FROM AUTHOR]

Summary. Following the seminal works of Schmeidler (1989), Gilboa and Schmeidler (1989), roughly put, an agent’s subjective beliefs are said to be ambiguous if the beliefs may not be represented by a unique probability distribution, in the standard Bayesian fashion, but instead by a set of probabilities. An ambiguity averse decision maker evaluates an act by the minimum expected value that may be associated with it. In spite of wide and long-standing support among economists for indexation of loan contracts there has been relatively little use of indexation, except in situations of extremely high inflation. The object of this paper is to provide a (theoretical) explanation for this puzzling phenomenon based on the hypothesis that economic agents are ambiguity averse. The paper considers a general equilibrium model based on Magill and Quinzii (1997) with ambiguity averse agents, where both nominal and indexed bond contracts are available for trade and all relevant prices are determined endogenously. We obtain conditions which prompt an endogenous cessation of trade in indexed bonds: i.e., conditions under which there is no trade in indexed bonds in any equilibrium; only nominal bonds are traded. [ABSTRACT FROM AUTHOR]

This article presents a collection of papers dedicated to Marcel K. Richter, in appreciation of the fundamental impact that his research, mentoring, and personality has had on economics and on economists. Marcel K. Richter's research has taken economic theory to places it needed to go, and along the way has left tight, crisp, important, and beautifully elegant results. A good representative of Ket Richter's work is his 1966 "Econometrica" paper "Revealed Preference Theory." This paper has had a profound influence, not only on the problem of preference characterization, but also on the use of powerful logical tools in economic theory. Using set theory and mathematical logic, it provided a simple, clear, and general method to address the topic of consumer rationality, which strongly contrasted with the complex alternative literature on revealed preference and integrability theory. This was followed by "Rational Choice" and by a joint work with Leonid Hurwicz, "Revealed Preference Without Demand Continuity Assumptions," both published in "Preferences, Utility and Demand," edited by J. Chipman, L. Hurwicz, M. K. Richter and H. Sonnenschein. Revealed preference is the topic with which Marcel K. Richter is most associated.

In a standard two-country international macro model, the paper asks whether imposing restrictions on international noncontingent borrowing and lending is ever desirable. The answer is yes. If one country imposes capital controls unilaterally, it can generate favorable changes in the dynamics of equilibrium interest rates and the terms of trade, and thereby benefit at the expense of its trading partner. If both countries simultaneously impose capital controls, the welfare effects are ambiguous. The paper identifies calibrations in which symmetric capital controls improve terms-of-trade insurance against country-specific shocks and thereby increase welfare for both countries. [ABSTRACT FROM AUTHOR]

This paper provides closed-form formulas for a multidimensional two-sided matching problem with transferable utility and heterogeneity in tastes. When the matching surplus is quadratic, the marginal distributions of the characteristics are normal, and when the heterogeneity in tastes is of the continuous logit type, as in Choo and Siow (J Polit Econ 114:172-201, ), we show that the optimal matching distribution is also jointly normal and can be computed in closed form from the model primitives. Conversely, the quadratic surplus function can be identified from the optimal matching distribution, also in closed-form. The closed-form formulas make it computationally easy to solve problems with even a very large number of matches and allow for quantitative predictions about the evolution of the solution as the technology and the characteristics of the matching populations change. [ABSTRACT FROM AUTHOR]

This paper studies relational contracts with partially persistent states, where the distribution of the state depends on the previous state. The optimal contracts have properties similar to those of stationary contracts in Levin (Am Econ Rev 93:835-857, ), but stationary contracts are no longer optimal. This paper characterizes the optimal contracts. Then, the paper considers two types of persistent states and shows that in both cases the joint surplus in the second best increases with the state. A sufficient condition for stationary contracts to be optimal is provided. [ABSTRACT FROM AUTHOR]

In labor market models as well as in exchange economies with indivisible goods gross substitutability is used as a property to guarantee the existence of competitive equilibria. This paper develops an easy way to check gross substitutability for utility functions concerning a finite set of indivisible goods (or employees) and money. Concavity is one of the conditions that has to be satisfied. Only one other, but similar, type of relation must be checked to guarantee gross substitutability. [ABSTRACT FROM AUTHOR]

Summary. The paper presents a human capital driven endogenous growth model which, in general, permits a multiplicity of equilibrium balanced growth paths. It is shown that allowing tot perfect capital mobility across countries increases the range of parameter values for which the model permits equilibrium indeterminacy. As opposed to the closed capital markets case, simple restrictions on preferences are no longer sufficient to eliminate the indeterminacy. Intuitively, under perfect capital mobility agents are able to smooth consumption completely. This induces an economy with open capital markets to behave like a closed economy with linear preferences thereby increasing the possibility of equilibrium indeterminacy. [ABSTRACT FROM AUTHOR]

This paper investigates the effects of global oil and food price shocks to consumer prices in Middle East-North African (MENA) countries using threshold cointegration methods. Oil and food price shocks increase domestic prices in the long run, whereby the impact of food prices dominates. While global prices are weakly exogenous, consumer prices respond to deviations from the equilibrium relationship. The short run adjustment pattern exhibits asymmetries and is particularly strong after positive shocks. Downward rigidities on wages may play a crucial role in this regard, as the relatively weak reactions of consumer prices after negative shocks are related to labour market institutions and public subsidies. The more rigid the regulations the more pronounced are the asymmetries. Robustness checks show that international price shocks do not affect GDP growth. [ABSTRACT FROM AUTHOR]

Negishi's remarkable youthful contribution to welfare economics, general equilibrium theory and, with the benefit of hindsight, also to one strand of computable general equilibrium theory, all within the span of six pages in one article, has become one of the modern classics of general equilibrium theory and mathematical economics. Negishi's celebrated theorem and what has been called Negishi's Method have formed one foundation for computable general equilibrium theory. In this paper I investigate the computable and constructive aspects of the theorem and the method. [ABSTRACT FROM AUTHOR]

In this paper, we study macroeconomic stabilization in the Economic and Monetary Union (EMU) using a dynamic games approach. In modeling this problem, it turns out that the players include the time derivative of the state variable of the game in their performance criterion. As far as the authors know, this kind of problem has not before been dealt with rigorously in dynamic games theoretic literature. Therefore, we first consider a generalization of the linear—quadratic differential game, in which we allow for cross terms in the performance criteria. Following the analysis of Engwerda [10,12], we present formulas to calculate open-loop Nash equilibria for both the finite-planning horizon and the infinite-planning horizon. Particular attention is paid to computational aspects. In the second part of this paper, we use the obtained theoretical results to study macroeconomic stabilization in the Economic and Monetary Union (EMU). [ABSTRACT FROM AUTHOR]

Abstract. Chichilnisky (1997) claims that another variant of her condition limiting arbitrage is necessary and sufficient for existence of equilibrium and nonemptiness of the core in an economy with short sales allowing half lines in indifference surfaces. Her proof, however, is based on a proposition purporting to relate her notion of "global cone" (see Chichilnisky (1997) for references) to the Page-Wooders "increasing cone." In this paper, we present a counterexample showing that parts (i) and (ii) of Chichilnisky's proposition are false. Thus, Chichilnisky's claimed result is without proof. [ABSTRACT FROM AUTHOR]

This paper studies the sensitivity of economic equilibria to perturbations when the implicit function theorem cannot be applied on account of the presence of boundaries. It presents results from the mathematical programming literature which provide conditions under which equilibria are robust to perturbation and are locally unique Lipschitz continuous functions of parameters. Economic applications include search equilibrium, Cournot equilibrium and general equilibrium. [ABSTRACT FROM AUTHOR]

The laboratory experiment described in this paper provides evidence on play in signaling games in the context of electoral competition. In this game, voters must infer the preferred policy of each candidate from the candidate’s choice of whether to announce (truthfully) his preferred policy or to take no position. Bayesian voters would put high probability on a candidate having an extreme policy preference after observing him take no position, but cursed voters would not fully appreciate the informational content of the decision to take no position. Stated beliefs reveal substantial uncertainty about other players’ strategies. Based on estimates of a structural model of cursed equilibrium allowing for heterogeneity in the degree of cursedness, 32% of choices between candidates are consistent with Bayesian updating, 32% imply no inferences about others’ types after observing their actions, and the remainder indicate partial updating. Though the experiment also includes treatments with subjects in both roles, these estimates are based on interactions with programmed candidates, implying that uncertainty about others’ rationality and strategic sophistication is not driving the result. We also find that the quantal response error structure in which errors depend on payoff differences cannot explain the pattern of errors that subjects make. [ABSTRACT FROM AUTHOR]

Central banks in emerging market economies often grapple with understanding the monetary policy response to an inter-sectoral terms of trade shock. To address this, we develop a three sector closed economy NK-DSGE model calibrated to India. Our framework can be generalized to other emerging markets and developing economies. The model is characterized by a manufacturing sector and an agricultural sector. The agricultural sector is disaggregated into a grain and vegetable sector. The government procures grain from the grain market and stores it. We show that the procurement of grain leads to higher inflation, a change in the sectoral terms of trade, and a positive output gap because of a change in the sectoral allocation of labor. We compare the transmission of a single period positive procurement shock with a single period negative productivity shock and discuss the implications of such shocks for monetary policy setting. Our paper contributes to a growing literature on monetary policy in India and other emerging market economies. [ABSTRACT FROM AUTHOR]

The last decades have shown a tendency towards higher central bank transparency. This leads to the question of how central bank transparency is entangled with price stability and inflation volatility. A plethora of studies analysed the relationship from a theoretical point of view and came to contradictory results. Thus, the article aims to analyse this question empirically and to better understand the mechanism behind it. Firstly, the results show that transparency reduces inflation expectations and inflation even if we control for other determinants. However, transparency alone is not sufficient to produce stable prices. Secondly, the paper proves that the effect on inflation mainly comes from reduced inflation expectations. Thirdly, we show that central bank transparency seems to diminish inflation uncertainty. This confirms the economic importance of central bank transparency. [ABSTRACT FROM AUTHOR]

A singular biological economic model which considers a prey-predator system with time delay and stage structure is proposed in this paper. The local stability at the equilibrium point and the dynamic behavior of the model are studied. Local stability analysis of the model without time delay reveals that there is a phenomenon of singularity-induced bifurcation due to the economic equilibrium. Furthermore, the phenomenon of Hopf bifurcation of the model at the boundary equilibrium point occurs as the time delay satisfies certain conditions. In order to apply variable structure control to eliminate the complex behaviors caused by singularity-induced bifurcation, the singular model is transformed into a single-input and single-output model with parameter varying within definite intervals. Then variable structure control with sliding mode based on a power reaching law is designed to stabilize the model. Numerical simulations are given to verify the effectiveness of the conclusions. [ABSTRACT FROM AUTHOR]

This paper develops a hierarchical agency model of deposit insurance. The main purpose of the analysis is to propose a micro-founded model of deposit insurance schemes and study their effects on the behavior of depositors and the monitoring problem for a bank. This paper also characterizes a risk-based premium in equilibrium, and conducts a comparative statics analysis of depositors' optimal actions. The results supply the basic theoretical foundation for designing deposit insurance schemes. Our findings are consistent with the empirical research on depositor behavior. [ABSTRACT FROM AUTHOR]

Longevity risk threatens the financial stability of private and government sponsored defined benefit pension systems as well as social security schemes, in an environment already characterized by persistent low interest rates and heightened financial uncertainty. The mortality experience of countries in the industrialized world would suggest a substantial age-time interaction, with the two dominant trends affecting different age groups at different times. From a statistical point of view, this indicates a dependence structure. It is observed that mortality improvements are similar for individuals of contiguous ages (Wills and Sherris, Integrating financial and demographic longevity risk models: an Australian model for financial applications, Discussion Paper PI-0817, ). Moreover, considering the dataset by single ages, the correlations between the residuals for adjacent age groups tend to be high (as noted in Denton et al., J Population Econ 18:203-227, ). This suggests that there is value in exploring the dependence structure, also across time, in other words the inter-period correlation. In this research, we focus on the projections of mortality rates, contravening the most commonly encountered dependence property which is the 'lack of dependence' (Denuit et al., Actuarial theory for dependent risks: measures. Orders and models, Wiley, New York, ). By taking into account the presence of dependence across age and time which leads to systematic over-estimation or under-estimation of uncertainty in the estimates (Liu and Braun, J Probability Stat, 813583:15, ), the paper analyzes a tailor-made bootstrap methodology for capturing the spatial dependence in deriving confidence intervals for mortality projection rates. We propose a method which leads to a prudent measure of longevity risk, avoiding the structural incompleteness of the ordinary simulation bootstrap methodology which involves the assumption of independence. [ABSTRACT FROM AUTHOR]

This rejoinder contains a few remarks on my paper published in this journal with the title 'A Constructive Proof of the Existence of Collateral Equilibrium for a Two-Period Exchange Economy Based on a Smooth Interior-Point Path' and Ragupathy and Velupillai's notes on a 'Constructive Proof of the Existence of Collateral Equilibrium' published recently in the same journal. [ABSTRACT FROM AUTHOR]

Terrestrial and marine biodiversity provides the basis for both ecosystems functioning and numerous commodities or services that underpin human well-being. From several decades, alarming trends have been reported worldwide for both biodiversity and ecosystem services. Therefore the sustainable management of biodiversity requires a double viewpoint balancing ecological conservation with the welfare of human societies. Understanding the underlying trade-offs, synergies and interactions imposes the development of interdisciplinary researches and methods. In that respect, bio-economic or ecological economic modeling is likely to play a major role. The present paper intends to elicit the key features, strengths and challenges of bio-economic approaches especially in mathematical and computational terms. It first recall the main bio-economic methods, models and decisional instruments used in these types of analyses. Then the paper shows to what extent bio-economic sustainability lies between equilibrium, viability and optimality mathematical frameworks. It ends up by identifying new major challenges among which the operationalization of ecosystem based management, the precautionary principle and the implementation of governance are especially important. [ABSTRACT FROM AUTHOR]

Traditional means of studying environmental economics and management problems consist of optimal control and dynamic game models that are solved for optimal or equilibrium strategies. Notwithstanding the possibility of multiple equilibria, the models’ users—managers or planners—will usually be provided with a single optimal or equilibrium strategy no matter how reliable, or unreliable, the underlying models and their parameters are. In this paper we follow an alternative approach to policy making that is based on viability theory. It establishes “satisficing” (in the sense of Simon), or viable, policies that keep the dynamic system in a constraint set and are, generically, multiple and amenable to each manager’s own prioritisation. Moreover, they can depend on fewer parameters than the optimal or equilibrium strategies and hence be more robust. For the determination of these (viable) policies, computation of “viability kernels” is crucial. We introduce a MATLAB application, under the name of VIKAASA, which allows us to compute approximations to viability kernels. We discuss two algorithms implemented in VIKAASA. One approximates the viability kernel by the locus of state space positions for which solutions to an auxiliary cost-minimising optimal control problem can be found. The lack of any solution implies the infinite value function and indicates an evolution which leaves the constraint set in finite time, therefore defining the point from which the evolution originates as belonging to the kernel’s complement. The other algorithm accepts a point as viable if the system’s dynamics can be stabilised from this point. We comment on the pros and cons of each algorithm. We apply viability theory and the VIKAASA software to a problem of by-catch fisheries exploited by one or two fleets and provide rules concerning the proportion of fish biomass and the fishing effort that a sustainable fishery’s exploitation should follow. [ABSTRACT FROM AUTHOR]

This paper considers populations of agents whose behavior when playing some underlying game is governed by perturbed best (or better) response dynamics with perturbation probabilities that depend log-linearly on payoffs, a class that includes the logit choice rule. A convention is a state at which every agent plays a strategy that corresponds to the same strict Nash equilibrium of the underlying game. For coordination games with zero payoff off-diagonal, it is shown that the difficulty of leaving the basin of attraction of a convention can be well approximated by only considering paths of transitions on which an identical perturbation repeatedly affects one of the populations. [ABSTRACT FROM AUTHOR]

In this paper, we develop a new local meshless approach based on radial basis functions (RBFs) to solve the Black-Scholes equation. The global RBF approximations derived from conventional global collocation method usually lead to ill-conditioned matrices. The new scheme employs the idea of the finite difference method to localize them. It removes the difficulty of ill-conditioning of the original method. The new proposed approach is unconditionally stable as it is shown by Von-Neumann stability analysis. As well as it is fast and it produces accurate results as shown in numerical experiments. [ABSTRACT FROM AUTHOR]

This paper uses a general equilibrium model with collateralized borrowing to show that increases in risk can have ambiguous effects on leverage, loan margins, loan amounts, and asset prices. Increasing risk about future payoffs and endowments can lead to riskier loans with larger balances and lower spreads even when lenders are risk averse and borrowers can default. As well, increasing the covariance of either agents' endowments with the asset payoff can have ambiguous consequences for equilibrium. Though the effects are ambiguous, key determinants of how increased risk translates into changes in prices and allocations are the covariance of agents' endowments with the asset payoff, agents' risk aversion, and the location of increased risk in the distribution of future states. Some restricted changes in the borrower's or lender's endowments can have unambiguous but asymmetric effects on equilibrium. [ABSTRACT FROM AUTHOR]

In a partition model, we show that each maximin individually rational and ex ante maximin efficient allocation of a single good economy is implementable as a maximin equilibrium. When there are more than one good, we introduce three conditions. If none of the three conditions is satisfied, then a maximin individually rational and ex ante maximin efficient allocation may not be implementable. However, as long as one of the three conditions is satisfied, each maximin individually rational and ex ante maximin efficient allocation is implementable. Our work generalizes and extends the recent paper of de Castro et al. (Games Econ Behav 2015. doi:). [ABSTRACT FROM AUTHOR]

This paper provides sufficient conditions for comparing the choices of different players in games of strategic complements. The main results require a weak ordering relation on the best responses of players in the game and their constraint sets. Under additional restrictions, we can also compare their relative payoffs. We offer three applications of our idea to industrial organization and new models of behavioral economics. Specifically, we study horizontal mergers in oligopolies, competition among firms with differentiated demands and costs of production, and a model of biased perceptions. [ABSTRACT FROM AUTHOR]

We provide a direct proof of the existence of perfect equilibria in finite normal form games and extensive games with perfect recall. It is done by constructing a correspondence whose fixed points are precisely the perfect equilibria of a given finite game. Existence of a fixed point is secured by a generalization of Kakutani theorem, which is proved in this paper. This work offers a new approach to perfect equilibria, which would hopefully facilitate further study on this topic. We also hope our direct proof would be the first step toward building an algorithm to find the set of all perfect equilibria of a strategic game. [ABSTRACT FROM AUTHOR]

The paper embeds the canonical rational expectations competitive storage model into a general equilibrium framework thereby allowing the nonlinear commodity price dynamics implied by the competitive storage model to interact with the broader macroeconomy. The paper's main result is that the endogenous movement in interest rates implied under general equilibrium enhances the effects of competitive storage on commodity prices. Compared with a model in which the real interest rate is fixed, the paper finds that storage in general equilibrium leads to more persistence in commodity prices and to a lower frequency of stockouts. A key mechanism driving this result is a link between the ability of the household to smooth consumption over time and the level of storage in the stochastic equilibrium. Finally, the model is used to examine the macroeconomic effects of biofuel subsidies for ethanol producers. [ABSTRACT FROM AUTHOR]

This paper considers a Ramsey model of linear capital and labor income taxation in which a benevolent government cannot commit ex-ante to a sequence of policies for the future. In this setup, if the government is forced to keep budget balance in every period, then it may not be able to sustain zero capital taxes in the long run, as shown in Benhabib and Rustichini (J Econ Theory 77:231-259, ) and Phelan and Stachetti (Econometrica 69:1491-1518, ). However, (Dominguez in J Econ Theory 135:159-170, ) shows that if the government is allowed to borrow and lend to households, the optimal capital income tax still converges to zero in the long run, as long as the value of defaulting is independent of the level of government debt. This paper provides a game theoretic setup with government debt where the value of the worst equilibrium only depends on the initial level of capital and can be determined in advance. This implies that under our assumptions the best sustainable equilibrium has zero capital taxes in the long run, even in the absence of government commitment. [ABSTRACT FROM AUTHOR]