Intertemporal Equity and Efficient Allocation of Resources

Competitive paths which are efficient are shown to satisfy a terminal cost minimization condition, thereby providing a continuous-time counterpart to the discrete-time result due to Malinvaud. Using this result, competitive paths which are equitable and efficient are shown to satisfy Hartwick's investment rule, which states that the value of net investment is zero at each date. Our result indicates that Hartwick's rule can help to signal inefficiency of competitive equitable paths. Journal of Economic Literature Classification Numbers: C61, D90, O41.     

A theory of competitive industry dynamics with innovation and imitation

Empirical evidence on industry life-cycle reveals a pattern in which innovation rates remain fairly stable or are perhaps even higher at early stages, while patenting increases sharply as the industry matures. This increase in patenting in later stages is accompanied by net exit and lower rates of output growth and price decline. In this paper, we develop a dynamic model of a competitive industry with innovation and imitation that is consistent with these stylized facts. We derive an equilibrium growth path, along which leading firms invest in increasing the stock of technological knowledge and choose not to prevent imitation by other firms as long as the industry remains relatively small. As the industry expands including new entry, the leaders' optimal amount of investment gradually declines. We show that under some rather general conditions, there would exist a scale of the industry where innovating firms would choose to start preventing free imitation, bringing further expansion of the industry through new entry to a halt and causing net exit.     

A Sufficient Condition for Topological Chaos with an Application to a Model of Endogenous Growth

This paper provides an easily verifiable sufficient condition for topological chaos for unimodal maps which can be satisfied when the well-known Li–Yorke condition is not satisfied. It then shows how this result can be applied to a model of endogenous growth with externalities to establish the existence of chaotic equilibrium growth paths in that framework. Journal of Economic Literature Classification Numbers: C61, D90, O41.     

HUMAN CAPITAL: DETERIORATION AND NET INVESTMENT

The current practice in national accounting is to exclude from national product investment in schooling and on-the-job training, except for direct costs of schooling which are included in consumption. Foregone earnings, which form the major part of investment in human capital, go unrecorded.
Much is to be gained in consistency and analytical clarity by treating human capital like physical capital in national accounting. Estimating the amount of foregone earnings net of deterioration, that is, net investment, is a step in this direction.
Using the framework of the life-cycle hypothesis of earnings, and assuming declining-balance deterioration of human capital, estimates of deterioration rates in respect of American males by race and education level are computed for 1960. Every such d is, however, the minimum consistent with the respective costs and benefits profile. Hence an upper limit d is assumed. The model generates for each costs and benefits profile and in respect of either d , a year-by-year series of net investment in human capital. These are used to obtain two estimates (which turn out to be close to each other) of aggregate net investment in American white males in 1960. On the basis of these estimates, aggregate net investment in human capital is found to be about equal to net investment in physical assets (including consumers'durables).
It is also found that the Denison method of estimating the contribution of the increase in human capital to economic growth understates this contribution by a ratio approximately equal to net investment in on-the-job training to returns to human capital. This was about 16 percent in 1960.     

The role of public infrastructure and subsidies for firm location and international outsourcing

This paper presents a model in which final goods producers outsource intermediate input production. Intermediate inputs are differentiated and their production can be located at home or abroad. The model is used to examine competitive location policy in a (two-country) free trade area (FTA). It is shown that national public infrastructure investment has a positive effect on both the number of intermediate input producers and the return to the immobile factor in the home country. International outsourcing from home declines. Opposite effects are triggered in the partner country. In a welfare analysis we characterize national infrastructure policies that aim to maximize national income (net of tax costs) and compare the non-cooperative FTA-equilibrium with optimal policies from an integrated point of view. We show whether or not there is a need for policy coordination. Firm subsidies are discussed as an alternative to public infrastructure investment.     

Intertemporal Equity and Hartwick's Rule in an Exhaustible Resource Model*

In a standard exhaustible resource model, it is known that if, along a competitive path, investment in the augmentable capital good equals the rents on the exhaustible resource (known as Hartwick's rule), then the path is equitable in the sense that the consumption level is constant over time. In this paper, we show the converse of this result: if a competitive path is equitable, then it must satisfy Hartwick's rule.     

Solving optimal growth models with vintage capital: The dynamic programming approach

This paper deals with an endogenous growth model with vintage capital and, more precisely, with the AK model proposed in [R. Boucekkine, O. Licandro, L.A. Puch, F. del Rio, Vintage capital and the dynamics of the AK model, J. Econ. Theory 120 (1) (2005) 39-72]. In endogenous growth models the introduction of vintage capital allows to explain some growth facts but strongly increases the mathematical difficulties. So far, in this approach, the model is studied by the Maximum Principle; here we develop the Dynamic Programming approach to the same problem by obtaining sharper results and we provide more insight about the economic implications of the model. We explicitly find the value function, the closed loop formula that relates capital and investment, the optimal consumption paths and the long run equilibrium. The short run fluctuations of capital and investment and the relations with the standard AK model are analyzed. Finally the applicability to other models is also discussed.     

Indeterminate Balanced Growth under Habit Persistence and Fiscal Policies

This paper studies a dynamic general equilibrium model with habit persistence in preferences and fiscal policies of taxation and expenditures. Preference takes a subtractive form of habits (the marginal rate of substitution between the agent's own consumption and habit stocks is constant), and technology is linear in aggregate capital (the economy grows without a limit in the long run). We find a continuum of competitive equilibrium paths in conjunction with a unique balanced growth path in the growing economy, in which habits represent both envy/jealousy and altruism/admiration. In addition, in the social optimum under second-best fiscal policies, we show the existence of indeterminacy in transitional allocations along with a unique balanced growth path. Thus, we find that the introduction of habits influences the patterns of the transitional paths but has no impact on the balanced growth path in either competitive or social optimum allocations. The second-best fiscal policy, therefore, restores the socially optimal balanced growth rate but fails to select the unique transitional path among multiple competitive equilibrium paths in the imperfectly competitive economy.     

A note on value maximization for consumption sets in l

A new technique is provided for showing the necessity of the transversality condition in a class of models for which all consumption paths are summable.     

Social Security Reform and National Wealth

Recent trends in common stock prices suggest a distinction between increases in national net worth and flows of physical investment. In this paper we present a simple overlapping generations model in which such differences can arise: technological progress occurs exogenously, yet firms own new technologies for a time. We examine possible consequences for social security reform. Reform which increases private saving depletes part of its force raising the (capitalized) price of proprietary technologies. A calibrated example suggests an increase in physical capital one-third smaller than without inelastic factors. Both steady states and transition paths are considered.     

A model with endogenously determined cycles, discounting and growth

Summary. This article reexamines the role of consumption in growth and emphasises the external effects of aggregate consumption, viewed as consumption standards, as an additional impediment in the growth process. These external effects raise the productivity of the individuals and are positively related to their valuation of the future. Conditions are established under which this results in a marginal value of wealth that is an increasing function of consumption. This brings new types of multiple steady states, local indeterminacies and cyclical motions. Imposing extra homogeneity restrictions, balanced growth solutions with endogenous impatience emerge. The possibility of multiple convergent paths is univocally related to endogenous discount effects. A comparison with a benchmark planning economy indicates an excessive value for the rate of time preference and emphasises its insufficient adaptation to future utility in a stationary setting. Discrepancies along the transition path that rest on endogenous impatience versus fixed discount appear in a non-stationary environment when the competitive balanced growth solution is indeterminate. Received: May 5, 1996; revised version: May 19, 1997     

Intersectoral Externalities and Indeterminacy

We consider a two-sector economy with positive intersectoral external effects and nonincreasing social returns. We show that if the discount factor ρ is close to 1 then local indeterminacy may be obtained with mild market imperfections. Moreover, with additional conditions, when ρ is made smaller the steady state becomes totally unstable and quasi-periodic cycles, along which equilibrium paths are indeterminate, may appear through a Hopf bifurcation. This will be proved even if the investment good is capital intensive at the private level while this condition guarantees local determinacy in the sector specific case. Journal of Economic Literature Classification Numbers: C62, E32, O41.     

A simple proof of the necessity of the transversality condition

Summary. This note provides a simple proof of the necessity of the transversality condition for the differentiable reduced-form model. The proof uses only an elementary perturbation argument without relying on dynamic programming. The proof makes it clear that, contrary to common belief, the necessity of the transversality condition can be shown in a straightforward way. Received: January 22, 2001; revised version: April 2, 2001     

政府权力、营利性扩张与通货膨胀

本文从政府权力视角,设立分权制度下中央、地方两级政府的目标函数,分别在大政府范畴的预算约束条件下求解其最优选择和长期稳态路径。本文的结论是,长期稳态价格水平不仅取决于中央、地方两级政府的债务规模、税收与支出,而且还受到国有企业投资的影响;中央政府的投资、债务、利润与货币增长之间相互推进,地方政府为扩大投资竞争融资来源具有强烈的货币增长需求,这倒逼货币供给增加;通货膨胀主要原因之一就是政府权力软约束下的营利性投资扩张。因此,治理通货膨胀的必要条件是,设计一种政府与治理通货膨胀具有共融利益的制度,减少政府营利性的准公共投资,增加事关国计民生的纯公共支出。     

国家自主创新示范区产业转型升级的影响因素与路径选择——基于fsQCA方法的实证分析

国家自主创新示范区作为产业转型升级先行先试、探索经验的先进区域,承担着推动产业转型升级的示范引领重任,如何有效实现产业转型升级是新发展阶段亟待解决的难题,探析国家自主创新示范区产业转型升级的影响因素、识别有效的组态路径是有待回答的重要问题。以21个国家自主创新示范区产业数据为研究样本,运用fsQCA方法探究国家自主创新示范区实现产业转型升级的条件组态和多元路径。结果表明,高研发创新投入和高创新效率是国家自主创新示范区实现产业转型升级的核心条件,其中研发创新投入是基础,创新效率是关键;存在两种影响因素条件组态可以产生高产业转型升级路径,即研发创新投入—效率协同型和研发创新投入—效率—创新驱动能力支撑型;非高产业转型升级路径有4条,均存在创新效率条件要素缺失。最后,从发挥政策引导作用、加强创新要素协同、明确园区产业定位等方面提出推动国家自主创新示范区产业转型升级的建议。     

Testing for Long Run Purchasing Power Parity: An Examination of Korean Won

My small-scale macroeconomic model of the Taiwanese economy contains behavioral equations to explain saving, investment, the rate of economic growth, export demand, export supply, and import demand. Exploiting the two definitions of the current account (national saving ? omestic investment and export + net factor income from abroad ? imports), the in-sample dynamic simulation tracks the current account remarkably well. If the Taiwanese government pursued deliberate policies to reduce the current account surplus, this model indicates that the effects on the economy would depend critically on whether the current account surplus was eliminated by reducing national saving or by raising domestic investment. [430]     

全球价值链嵌入、技术路径选择与制造业高质量发展

基于全球价值链嵌入视角，探究后发国家制造业高质量发展的技术路径选择。通过分析梳理全球价值链嵌入对技术路径选择的影响及作用机理，明确后发国家制造业适宜技术路径选择依据。在此基础上，通过匹配WIOT数据和中国制造业行业数据，对中国制造业高质量发展的适宜技术路径进行实证检验。研究表明，参与全球价值链分工在为后发国家提供技术溢出机会的同时，通过低端锁定和竞争效应倒逼后发国家制造业在技术路径选择中加大自主研发投入；随着全球价值链嵌入程度加深，自主研发对制造业高质量发展的积极作用正逐渐显现；由于考察期内自身要素禀赋不足，引进模仿技术路径相比于自主研发对制造业生产效率提升更有利。在新型国际分工与贸易背景下，及时调整技术路径，加大研发投入，对推动我国制造业向价值链高端攀升进而实现高质量发展具有重要意义。     

Recursive utility and optimal capital accumulation II: sensitivity and duality theory

Summary This paper provides sensitivity and duality results for continuous-time optimal capital accumulation models where preferences belong to a class of recursive objectives. We combine the topology used by Becker, Boyd and Sung (1989) with a controllability condition to demonstrate that optimal paths are continuous with respect to changes in both the initial capital stock, and the rate of time preference. Under convexity and an interiority condition, we find the value function is differentiable, and derive a multiplier equation for the supporting prices. Finally, under some mild additional conditions, we show that supporting prices obeying the transversality and multiplier equations are both necessary and sufficient for an optimum.Robert Becker acknowledges the research support of National Science Foundation Grant SES 85-20180. We also thank Gerhard Sorger and the participants at the Northwestern Summer Workshop in Capital Theory and Monetary Economics for their helpful comments and suggestions.     

Is fiscal austerity really self-defeating?

This paper analyzes local and global equilibrium dynamics in an optimizing endogenous growth model under expenditure-based fiscal austerity feedback policies expressed relative to the private capital stock—prescribing spending cuts in reaction to public debt accumulation. Because the present value of equilibrium primary surpluses turns to be a nonlinear function of debt, two steady state equilibria are shown to emerge, one exhibiting low debt and high growth, one exhibiting high debt and low growth. Local analysis reveals that the low-debt/high-growth steady state is saddle-path stable while the high-debt/low-growth steady state is unstable—the latter thus indicating the possibility of self-defeating austerity, characterized by off-equilibrium upward spirals in debt because of persistent policy-induced adverse effects on growth dividends and fiscal revenues. However, when global nonlinear dynamics are taken into account, it is demonstrated that the two steady states are endogenously connected. In particular, global analysis reveals that even if the high-debt/low-growth steady state is locally unstable, there exists a unique and possibly nonmonotonic saddle connection making the economy converge to the low-debt/high-growth steady state. The existence of the saddle connection guarantees global determinacy of perfect foresight equilibrium should the high-debt/low-growth steady state be a node, ruling out multiple explosive paths incompatible with the government's intertemporal budget constraint and the private agents' transversality condition. The foregoing results are robust with respect to the adoption of an output-based—rather than a capital-based—policy function as long as the rule is nonlinear and sufficiently reactive to debt changes.