The microfoundations of business cycles: an evolutionary, multi-agent model

This work presents an evolutionary model of output and investment dynamics yielding endogenous business cycles. The model describes an economy composed of firms and consumers/workers. Firms belong to two industries. The first one performs R&D and produces heterogeneous machine tools. Firms in the second industry invest in new machines and produce a homogenous consumption good. Consumers sell their labor and fully consume their income. In line with the empirical literature on investment patterns, we assume that firms’ investment decisions are lumpy and constrained by their financial structure. Simulation results show that the model is able to deliver self-sustaining patterns of growth characterized by the presence of endogenous business cycles. The model can also replicate the most important stylized facts concerning micro- and macro-economic dynamics.     

Waves in consumption with interdependence among consumers

Abstract. In this paper we model the development of consumption when there are interactions between consumers. The consumer recognizes three reference groups: peer, distinction, and aspiration. The interplay of aspiration and distinction can lead to ‘waves’ in consumption; for example, the avant‐garde consumption of up‐market pioneers is copied by other types of consumer. As the latter aspire to emulate the former, the former seek distinction by varying their consumption. A consumption activity may start up market, then gradually descend the social spectrum. More complex patterns with continuing cycles in consumption can also be found. JEL classification D11,D62     

Intertemporal propensity to consume

Cross-sectionally estimated Engel curves tend to exhibit shapes that imply ultimately decreasing marginal propensities to consume as income rises. This suggests at first sight a tendency to slow down in private consumption. This tendency has to be reconsidered taking into account the fact that Engel curves usually shift significantly over time. We introduce the notion of “intertemporal propensity to consume” to shed more light on the drivers and patterns of the evolution of Engel curves. Using this notion, we are able to identify and measure the direction of the expansion path of consumption as time goes by, while controlling for household characteristics and price levels. Using German household data, we show that, over time, the intertemporal propensity to consume systematically offsets the consumption paths implied by the marginal propensity to consume that is derived cross-sectionally at one point in time. We claim that this difference between marginal and intertemporal propensity to consume should be ascribed to variations in the socioeconomic structures that occur over time and that may be linked both to the supply side (innovation and technical change) and the demand side (learning dynamics of consumers). We also show that changes in relative prices play a minor role in the evolution of Engel curves.     

Economic Stabilization and Inflation

The climate change issue imposes us not only to change the way we produce and convert energy but also to modify current energy consumption patterns. A substantial body of literature has shown that our behavior is often guided by habits. The existence of habits - not fully conscious forms of behavior - is important as it contradicts rational choice theory. Their presence thus calls for the setting of new instruments as it is difficult to expect consumers to be capable of exercising control over their consumption of energy in reaction to given incentives. This is further increased in our perspective where the current carbon-based Socio-Technical System constrains and shapes consumers' choices through structural, cultural, social and institutional forces. Habits being potentially "counterintentional," can be considered as a form of behavioral lock-in that may explain continued increase of energy consumption. Policies should thus specifically address the performance context of habits.     

Consumer well-being in a future of accelerating novelty

Novel goods and ideas are introduced to today’s consumers with increasing frequency. This phenomenon is perhaps most notable in the apparel industry, which in recent decades has seen the rise of “fast fashion” and an accelerating rate of novel style introductions from semi-annual to semi-weekly. In this paper I study the potential for this type of accelerating novelty to have a negative impact on consumer well-being. I analyze a simple theoretical model of consumer behavior in which consumers with a preference for novelty decide how fast to replace their fashion goods before and after an innovation which accelerates the rate at which new goods become available. In the basic model, where consumers update their goods based on their intrinsic preference for novelty, the novelty-accelerating innovation is not welfare-decreasing. However, when the model is extended in realistic ways, I find that there are at least three conditions under which the innovation may decrease welfare by increasing the extent of sub-optimal replacement: if there are external costs of updating to a newer good; if the consumers are boundedly rational and exhibit present bias; or if consumers’ replacement decisions reflect an arms race for social status. My results in these model extensions provide an economic foundation for rising popular concern about undesirable social effects of “fast fashion.” I also discuss the implications of these results for future patterns of consumption, which are likely to reflect still more accelerated novelty and possibly the expansion of fashion behavior to a broader range of consumption settings.     

Giving the consumer the choice: A methodology for Product Ecological Footprint calculation

As global consumption increases we are faced with a major threat; exceeding the Earth's capacity to create new resources and absorb waste. In the present study we develop a self-improving, market-driven process of ecological footprinting of products, proposed as a means to give consumers a real choice in actively monitoring and reducing their ecological impact. We conduct a small scale case study to illustrate first stage calculations. A wider market application of higher accuracy second or third stage calculations changes market information dynamics, as ecological information is internalized for consumers. Potential impacts on purchasing behavior, demand and eco-technological innovation are discussed.     

What is it consumers really want, and how can their preferences be influenced? The case of fat in milk

In this paper we investigate preferences for fat in milk through a structural characteristics model. The data includes information about daily purchases and social and demographic characteristics of more than 1,100 households. We find that consumers who prefer milk with a high fat content do not react to information about health effects, but can be influenced by prices, while consumers who prefer milk with a low share of fat are influenced by information, but are less price sensitive. Therefore, when attempting to decrease consumption of fat from milk, prices are more efficient than information.     

Social security and unsecured debt

In this paper, we use a calibrated life-cycle model to explore quantitatively ways of reducing the burden of social security in a world populated by both optimizing and rule-of-thumb consumers. Social security contributions force young households with upward-sloping income profiles to save a sizeable portion of their income for retirement, when their optimal consumption plan would likely have them either saving little or borrowing. We first use household data to document that young households have accumulated social security contributions that are large relative to debt holdings. Then, using a calibrated life-cycle model, we show that both allowing households to use social security wealth to pay off their debt and exempting young households from social security contributions (but in both cases requiring higher contributions later) mitigate many of the inefficiencies of social security from the perspective of life-cycle financial planning. Specifically, in our preferred experiment, which exempts households whose heads are under 30 from making social security contributions, we find that certainty-equivalent consumption increases by 3.4% for optimizing households and by 3.3% for rule-of-thumb households.     

The impact of smart meters on residential water consumption: Evidence from a natural experiment in the Canary Islands

Smart meters can promote behavioral changes and water conservation by improving information and providing feedback about water consumption to households. In this paper, we evaluate a large-scale programme implemented by the municipal water company of La Laguna (Tenerife). Exploiting quasi-experimental variation brought about program, we estimate the effect of water meter replacement on measured water consumption and the behavioral effect of the installation of the smart metering technology allowing households to access daily water consumption and real-time feedback through an online portal. Our main empirical analysis employs a difference in differences identification strategy and uses annual consumption data from 51,674 households observed over 10 years. We find a positive effect of water meter replacement on measured water consumption. Our main finding is that providing access to the smart metering technology induces households to reduce consumption by around 2% on average. Our results point to consumers’ engagement with the information portal as the main mechanism behind the observed behavioral response.     

中国儿童消费行为分析及营销策略

儿童消费市场蕴含着巨大的商机。儿童在现代家庭的消费结构中有着举足轻重的地位。本文针对儿童消费行为的特点,提出了相应的营销策略。使企业能够更好的做好符合儿童消费市场特点的营销工作,从而取得良好的经济效益和社会效益。     

Implementing optimal monetary policy: Objectives and rules

The inconsistency of optimal policy comes from inconsistency between the social loss function and the economic structure. Accordingly, this paper designs a central bank loss function, which proves consistent with the economic structure. Under the designed central bank loss function discretionary policy proves optimal for social welfare. Optimal discretionary policy emerges because the implied behavioral equation is identical with that under commitment to the social loss function. Consequently, this paper also designs policy rules. To some extent, policy rules appear more basic, flexible, and operational than social and central bank loss functions, but the social loss function serves as an ultimate objective and the central bank loss function explicitly identifies the attainable targets and appropriate weight to achieve the social optimum.     

The debt brake: business cycle and welfare consequences of Germany’s new fiscal policy rule

In a New Keynesian DSGE model with non-Ricardian consumers, we show that automatic stabilization according to a countercyclical spending rule following the idea of the debt brake is well suited both to steer the economy and in terms of welfare. In particular, the adjustment account set up to record public deficits and surpluses serves well to keep the level of government debt stable. However, it is essential to design its feedback to government spending correctly, where discretionary lapses should be corrected faster than lapses due to estimation errors.     

Human capital use,innovation, patent protection,and economic growth in multiple regions

We provide the first theoretical analysis of the effects of human capital use, innovative activity, and patent protection, on economic growth in a model with many regions. In each region, consumers have constant relative risk-aversion preferences, there is no human capital growth, and there are three kinds of manufacturing activities involving the production of blueprints for inputs (machines), the inputs themselves, and a single final consumption good. Our analysis generates four results. For any given region, we first describe the balanced growth path (BGP) equilibrium and show that the BGP growth rate depends negatively on the rate at which patents expire. Second, we characterize the transitional dynamics in our model. Third, we determine the value of the patent expiry rate that maximizes the equilibrium growth rate of a region. Finally, we show that a policy of offering perpetual patent protection does not necessarily maximize social welfare in a region.     

THE DISSAVING OF ANNUITY WEALTH AND MARKETABLE WEALTH IN RETIREMENT

This paper compares the automatic dissaving of annuity wealth with the discretionary dissaving of marketable wealth that would result from life-cycle consumption behavior by retired persons. In simulations of a life-cycle model based on the isoelastic utility function and realistic parameter values, we find that marketable wealth normally would be dissaved more rapidly than annuity wealth. This suggests that empirical findings that show the opposite relation-slow dissaving of marketable wealth being accompanied by faster dissaving of annuity wealth (or total wealth)-should not be interpreted as evidence that supports the life-cycle theory.     

Social structure and consumption: on the diffusion of consumer good innovation

This paper presents a simple evolutionary model to study the diffusion patterns of product innovations for consumer goods. Following a Veblenian theme, we interpret consumption as a social activity constrained by social norms and class structure. Societies that allow for more behavioral variety will experience faster adoption of new consumer goods. We also find that the speed of diffusion as well as the saturation levels reached depend greatly on the structure of a society. Combining these two effects, we conclude that a social structure displaying behavioral variety and an even class structure fares better than any other social set-up in terms of the speed of adoption of product innovations and product variety. JEL Classification: D11, O31 This paper has benefited from comments by Robin Cowan and seminar participants at the University of Economics in Vienna, the Maastricht Economic Research Institute on Innovation and Technology (MERIT), University of Maastricht, participants of the EMAEE 2003 Conference in Augsburg, Germany as well as the Schumpeter Conference 2004 in Milan, Italy. We also would like to thank two anonymous referees for their constructive criticism and suggestions. The usual disclaimers apply. Correspondence to: A. Reinstaller     

我国个人消费信贷的主要障碍和对策

本文从经济学角度，对个人消费信贷业务涉及的银行，消费者，商家，政府行为模式进行理性思考，从收益性和风险性的配比关系角度，分析银行，消费者，商家，政府等相关主体如何在收益性和风险性达到某一合适配比水平时，达成“多赢”局面，形成个人消费信贷业务价值链，从而促进国内个人消费信贷业务发展。     

The dynamics of inequality and social security in general equilibrium

This paper analyzes the dynamic politico-economic equilibrium of a model where repeated voting on social security and the evolution of household characteristics in general equilibrium are mutually affected over time. In particular, we incorporate within-cohort heterogeneity in a two-period Overlapping-Generation model to capture the intra-generational redistributive effect of social security transfers. Political decision-making is represented by a probabilistic voting à la Lindbeck and Weibull (1987). We analytically characterize the Markov perfect equilibrium, in which social security tax rates are shown to be increasing in wealth inequality. A dynamic interaction between inequality and social security leads to larger social security programs. In a model calibrated to the U.S. economy, the dynamic interaction is shown to be quantitatively important: It accounts for more than half of the social security growth in the dynamics. We also perform some normative analysis, showing that the politico-economic equilibrium outcomes can be fundamentally different from the Ramsey allocation.     

新生代农民工“二元化”消费方式与身份认同研究--基于2010年上海市外来农民工的调查

利用"2010年上海市外来务工人员情况"问卷调查数据,建立多分类因变量Lostic模型,从消费社会学角度,对新生代农民工消费方式转型与身份认同困境进行了实证研究。研究表明,新生代农民工在消费行为和身份认同上具有自我的、个体化特征;他们试图讲上海话、和上海人交朋友、模仿上海市民的消费方式,不断加强和建构对自身"新上海人"身份的认同;由于受到经济、社会因素的影响,他们的消费方式呈现农村与城市特征并存的"二元化"状态,这种情况抑制了他们对自身的新市民身份认同。提出了对策建议。     

Unemployment compensation and aggregate fluctuations

This paper focuses on a theoretical and empirical analysis of the effects of discretionary changes of unemployment compensation payments on aggregate fluctuations. By means of a dynamic stochastic general equilibrium model, it is shown that unemployment compensation can stabilize consumption on the one hand; however, on the other one, it has adverse effects on unemployment and output. These theoretical results are confirmed by the empirical structural vector autoregressive model. Moreover, the results highlight the importance of real wages in transmitting unemployment benefit shocks on to the macroeconomy. In particular, discretionary changes lead to an increase in real wages, unemployment and consumption while inducing a small decline in output.     

Can sustainable consumption be learned? A model of cultural evolution

This paper shows how sustainable consumption patterns can spread within a population via processes of social learning even though a strong individual learning bias may favor environmentally harmful products. We present a model depicting how the biased transmission of different behaviors via individual and social learning influences agents' consumption behavior. The underlying learning biases can be traced back to evolved cognitive dispositions. Challenging the vision of a permanent transition toward sustainability, we argue that “green” consumption patterns are not self-reinforcing and cannot be “locked in” permanently.