Abatement,R&D and growth with a pollution ceiling

The consequences of the 2 °C climate target and the implicitly imposed ceiling on CO₂ have been analyzed in several studies. We use an endogenous growth model with a ceiling and an abatement option to study the effect of the ceiling on the allocation of limited funds for R&D, abatement and capital accumulation. It is found that the advantagenousness of abatement rises with the cost advantage of fossil fuel versus backstop. If the cost advantage is sufficiently large at some point in time it outweighs the costs of abatement and the gains of R&D and capital accumulation. The reallocation of production towards abatement may cause an increase or decrease in long-run consumption. In the latter case, abatement allows an intertemporal consumption trade-off which may even justify the disregard of everlasting growth. In case of stock dependent fossil fuel costs, an abatement induced speed-up of technology development may cause an increase in fossil fuel stock left in situ.     

Age-dependent investing: Optimal funding and investment strategies in defined contribution pension plans when members are rational life cycle financial planners

A defined contribution pension plan allows consumption to be redistributed from the plan member's working life to retirement in a manner that is consistent with the member's personal preferences. The plan's optimal funding and investment strategies therefore depend on the desired profile of consumption over the lifetime of the member. We investigate these strategies under the assumption that the member is a rational life cycle financial planner and has an Epstein–Zin utility function, which allows a separation between risk aversion and the elasticity of intertemporal substitution. We also take into account the member's human capital during the accumulation phase of the plan and we allow the annuitisation decision to be endogenously determined during the decumulation phase.We show that the optimal funding strategy involves a contribution rate that is not constant over the life of the plan but is age-dependent and reflects the trade-off between the desire for current versus future consumption, the desire for stable consumption over time, the member's attitude to risk, and changes in the level of human capital over the life cycle. We also show that the optimal investment strategy during the accumulation phase of the plan is ‘stochastic lifestyling’, with an initial high weight in equity-type investments and a gradual switch into bond-type investments as the retirement date approaches in a way that depends on the realised outcomes for the stochastic processes driving the state variables. The optimal investment strategy during the decumulation phase of the plan is to exchange the bonds held at retirement for life annuities and then to gradually sell the remaining equities and buy more annuities, i.e., a strategy known as ‘phased annuitisation’.     

Reisman's Net Consumption, Net Investment Theory of Aggregate Profit

Abstract . This paper presents the essentials of George Reisman's net consumption, net investment theory of aggregate profit as discussed in Capitalism: A Treatise on Economics. The paper then relates Reisman's ideas to those of Austrian School economists Ludwig von Mises and Murray Rothbard. Delimiting time preference to determining the rate of net consumption, the primary determinant of aggregate profit, Reisman argues that under an invariable money, a one‐time increase in the rate of saving is sufficient to stimulate an increase in the supply of capital goods indefinitely. Reisman thereby rejects the claim that capital accumulation causes a falling rate of profit.     

Optimal Growth with Public Capital and Public Services

We characterize optimal economic growth in an endogenous growth model in which production requires public capital (a stock) and public services (a flow) in addition to private capital and labor. We analyze the comparative static effects of changes in the fundamental technological and preference parameters of the model on the optimal values of several variables, such as the optimal rate of growth and the optimal allocation of resources among consumption, the provision of public services, and investment in public and private capital. We show that the general optimal path converges in finite time to the balanced growth optimal path. We relate our paper to important contributions to the existing literature by obtaining them as special cases of our model.     

Environmental Management in Japan: Applications of Input–Output Analysis to the Emission of Global Warming Gases

Environmental management requires, among other things, the incorporation of environmentally friendly technologies into production processes of environmentally friendly technologies into production processes at the producer level and the adoption of energy consumption patterns which save energy use at the household level. The systemwide approach involving both technology choice and consumer preference seems particularly essential for controlling the total emission of global warming gases. CO₂ and other global warming gases, as well as certain pollution causing gases, are produced when fossil fuels are burnt; and the consumption of fossil fuels occurs in both the production and consumption of goods and services. In this paper we discuss how input–output analysis can be used to estimate the entire production and consumption of global warming gases conditional on production technology and consumer preferences. We also present estimation results and their application to some environmental management issues in Japan. © 1997 John Wiley & Sons, Ltd.     

社会地位对宏观经济变量的动态影响——基于两部门搜索均衡模型的研究

本文将失业理论的搜索模型与社会地位结合起来考察社会地位的动态影响。研究发现社会地位引入效用函数等价于代表性家庭时间偏好率的降低,利用对数效用函数,得到经济系统均衡状态存在的唯一性。在均衡状态下,更强的社会地位意识意味着更高的储蓄率和资本积累,以及提供更多的社会空闲职位、更高的工资、更高的就业率、更为宽松的劳动力市场和更低的利率。     

Can the Public's Desire for Future Benefits Be Deduced form Their Private Decisions?

Abstract . How should benefits and costs occurring at different times be evaluated to decide whether to undertake tax financed public projects? What interest rate should be used? If public decisions were based on people's willingness to pay for future private income, they still could not be based on market interest rates. The benefits of public projects (except in the cases of private land values or affected fixed private capital investments) are not marketable. However, among other things, market interest rates do represent the opportunity costs of public investments. Still, many citizens are concerned about the welfare of future generations; they may have a lower time preference rate. Human capital investments are directly analogous to public investment to produce non marketable public goods. Both are illiquid; both yield returns higher than market rates. This indicates the private rates of time preference for most citizens are high.     

The consumption–investment decision of a prospect theory household: A two-period model

This study extends the literature on portfolio choice under prospect theory preferences by introducing a two-period life cycle model, where the sufficiently loss averse household decides on optimal consumption and investment in a portfolio with one risk-free and one risky asset. The optimal solution depends primarily on whether the household’s present value of the consumption reference levels is below, equal to, or above the present value of its endowment income. Reference levels below the endowment income are associated with the self-enhancement motive. In this case, the household avoids relative losses in consumption in any present or future state of nature (good or bad). As a result the degree of loss aversion does not directly affect optimal consumption and risk taking activity. Reference levels equal to the endowment income are associated with the belonging motive. An example would be a household comparing to others that belong to the same social class. In this case the household’s optimal consumption is the reference consumption and the household will not invest in the risky asset. Finally, reference levels above the endowment income are associated with the self-improvement motive (or high aspirations). For such high reference levels, households cannot avoid experiencing a relative loss in consumption, either now or in the future. As a result, loss aversion directly affects consumption and risky investment.     

On time preference,rational addiction and utility satiation

A basic consumer problem with a unique good is considered, current consumption of this good influencing in a positive manner consumer intertemporal utility, while past consumption exerts a negative influence. Moreover, in the line of Fisher, a specification of preferences is retained so that the rate of time preference, assumes a long-run value – this means for a stationary consumption-path – that is non-monotonic as a function of consumption: impatience increases for low level of consumptions but decreases for higher ones. Such a framework allows for an integrated appraisal of addiction, satiation and the rate of time preference. It is shown that the emergence of an addiction phenomenon in the neighbourhood of an unsatiated long-run position exactly corresponds to letting the rate of time preference be an increasing function of past consumption habits. When addiction becomes sufficiently strong, the unsatiated stationary state becomes unstable and the satiated steady state becomes the only admissible stationary position.     

Competitive equilibrium cycles with endogenous labor

In this paper, we study a two-sector optimal growth model with elastic labor supply. We show that the modified golden rule is saddle-point stable when the investment good is capital intensive. To characterize stability with a capital intensive consumption good, we focus on either additively separable or homothetic preferences. In the first specification, we show that optimal oscillations require the elasticity of intertemporal substitution in consumption to be high enough while the elasticity of labor needs to be low enough. At the same time, we prove that with a linear utility in leisure the modified golden rule is always saddle-point stable. In the second specification for preferences, we show that the local dynamic properties of the optimal path depend instead on the shares of consumption and leisure into total utility. We prove that endogenous fluctuations are even more likely with homothetic preferences.     

Technology Transfer with Capital Constraints and Environmental Protections: Models and Applications to the Philippines

An efficient technology transfer from advanced to developing countries is explored by extending dynamic input-output optimization models. We include capital investments for the transferred technologies that affect the structural change and the welfare streams of consumption and the environmental state in the developing country. This technology transfer model is then linearized to solve larger problems. The linearized model was estimated and applied to assess the optimal technology transfer schedule from Japan to the Philippines.     

Optimal investment with vintage capital: Equilibrium distributions

The paper concerns the study of equilibrium points, or steady states, of economic systems arising in modeling optimal investment with vintage capital, namely, systems where all key variables (capitals, investments, prices) are indexed not only by time but also by age. Capital accumulation is hence described as a partial differential equation (briefly, PDE), and equilibrium points are in fact equilibrium distributions in the variable of ages. A general method is developed to compute and study equilibrium points of a wide range of infinite dimensional, infinite horizon, optimal control problems. We apply the method to optimal investment with vintage capital, for a variety of data, deriving existence and uniqueness of equilibrium distribution, as well as analytic formulas for optimal controls and trajectories in the long run. The examples suggest that the same method can be applied to other economic problems displaying heterogeneity. This shows how effective the theoretical machinery of optimal control in infinite dimension is in computing explicitly equilibrium distributions. To this extent, the results of this work constitute a first crucial step towards a thorough understanding of the behavior of optimal paths in the long run.     

Intellectual Capital Profiles: An Examination of Investments and Returns*

ABSTRACT Using data collected from executives in 208 organizations, this study takes a configurational approach to examine how human, social, and organizational capital coexist to form distinct intellectual capital profiles across organizations. We then examine how investments in human resource management (HRM), information technology (IT), and research and development (R&D) differ across these intellectual capital profiles and investigate differences in financial returns and Tobin's q between the profiles. Results indicate that a relatively small group of superior performing organizations exhibit high levels of human, social, and organizational capital. Most firms, however, tend to focus primarily on only one form of intellectual capital, and a small group of underperforming organizations have very low levels of all three types of intellectual capital. At a general level, HRM and IT investments appear to influence intellectual capital development more than R&D investments. More specifically, HRM investments tend to be higher in firms with profiles high in human and social capital, while IT investments are stronger in firms with profiles high in social capital. Further, HRM, IT, and R&D investments are all very high in the group of superior performing organizations that have high levels of human, social, and organizational capital.     

Asymptotic behavior and optimal properties of a consumption-investment model with variable time preference

This paper analyzes the convergence properties and the determination of an optimal consumption path in the consumption-investment model of Uzawa (1968). Sufficient conditions for the existence and uniqueness of the optimal path are presented. Components of the utility functional are recovered when the optimal path is piecewise affine. The model is applied to the determination of the interest rate and income distribution under time preference differentials.     

A sensitivity analysis on optimal economic growth

A model of capital accumulation is considered and the relation between the optimal path and the initial capital stock is analyzed. Mathematically speaking, the model is a convex model of infinite horizon in continuous time. The existence of optimal paths of capital accumulation is proved. By using the continuity of the value function, it is proved that the optimal path of capital accumulation is a continuous function of the initial capital stock. The analysis is so general that neither the smoothness of the model nor the interiority of the optimal path are made.     

Sooner or Later? – Paradoxical Investment Effects of Capital Gains Taxation under Simultaneous Investment and Abandonment Flexibility

This paper analyzes the impact of capital gains taxation on investment timing decisions for risky investment projects with entry and exit flexibility under differential tax rates for ordinary income and capital gains. We investigate whether capital gains taxation influences immediate and delayed investments asymmetrically, given the optimal abandonment decision. If capital gains taxation induces a lock-in effect, this effect is anticipated in the investment timing decision. In contrast to prior research, our numerical simulations show that this lock-in effect of capital gains taxation can induce normal as well as paradoxical effects on investment timing under simultaneous entry and exit flexibility. A paradoxical timing effect, i.e., investment accelerated by capital gains taxation, especially emerges for high liquidation proceeds or, more conservative tax accounting, low interest rates, and low volatilities. In these cases, capital gains taxation reduces the value of the option to invest and hereby increases the propensity to invest immediately. As a second paradoxical tax effect, capital gains taxation may favor delayed real investment over financial investment. Facing these results, tax legislators should not use capital gains taxation as a short-term tax policy instrument to influence investors' timing decisions.     

离心式逆止托辊的特性研究

离心式逆止托辊是利用离心力的原理实现托辊单向旋转的新结构,它逆止性能可靠、承载力大、易于加工制造,适用于大倾角带式输送机。本文主要介绍了离心式逆止托辊的结构特点以及工作原理,并简要推导了离心式逆止托辊的工作过程。     

Sequence of techniques

This paper analyzes the sequence of techniques in an explicitly dynamic version of the Dobb-Sen choice of techniques model. It is proven that when the modern (capital intensive) technique dominates in an optimal full employment steady state, traditional capital accumulation is characteristic of an optimal path in the labor surplus phase when: (1) traditional capital has the higher maximal growth rate and (2) the initial capital stock is sufficiently poor. The switch date from traditional to modern capital accumulation is shown to be a function of the maximal growth rate and steady shadow price of labor for each technique and the optimal phasing out of traditional capital is characterized. These results are placed in the context of the choice of techniques controversy between Dobb, Sen and Kalecki and its relevance to early Soviet economic development.     

The business cycle human capital accumulation nexus and its effect on hours worked volatility

This paper studies hours worked volatility and the cyclicality of human capital investments by embedding a Ben-Porath life-cycle model of human capital accumulation into an RBC setting. Agents differ across two dimensions: age and productivity in learning. Our results show that individuals invest more in human capital during economic downturns. However, human capital accumulation is more counter-cyclical for young and low-productivity individuals because they face a lower opportunity cost of education and a higher marginal product of human capital. These results are confirmed empirically using US data from the Current Population Survey and the American Time Use Survey. In addition, the paper contributes to the RBC literature by showing that the model׳s business cycle properties, in particular hours worked volatility, are sensitive to assumptions of heterogeneity. Introducing heterogeneity in productivity increases the volatility of aggregate hours worked and changes the life-cycle profile for hours volatility to better match the data.     

An optimal-incentive contract for managers with exponential utility

This paper examines the manager–investor relationship in the case of exponential utility when the manager of investments in real or financial assets has an endowment which can be invested in the risky assets for which he has private information. We obtain a relationship showing trade-offs or hedging behavior among the investments the manager can choose for himself and the principal. Even with the hedging ability of the manager, the well-known first-best solution with ‘no moral hazard’ risk-sharing is obtained among these possible solutions to the manager's problem by specifying a ‘no conflict of interest’, zero investment by the manager of his own endowment in those risky assets for which he has private information. Thus, the agent imputes no disutility to the assignment of the principal's investments and the investor is assured of an investment strategy that he would make if he had access to the manager's private information.