On Equilibrium Dynamics Under Externalities in a Model of Economic Development

This paper studies a discrete-time version of a model of economic development proposed by Lucas, in which the average stock of human capital produces a positive externality in the production of the physical capital good. It establishes the existence of equilibrium programmes from arbitrary initial conditions, and of an equilibrium steady-state programme. The principal results are concerned with the global dynamic behaviour of equilibrium programmes off the steady state. They show that the asymptotic growth rates of consumption, physical and human capital on any equilibrium programme will equal the growth rates of the respective variables along the equilibrium steady state
JEL Classification Numbers: C62, D90, O41     

Auditing regulations and bank shareholders’ wealth: An international analysis

This paper examines the ability of auditing regulation to protect bank shareholders’ wealth during the time of normal growth and during the 2007–2009 global financial crises. The study uses the bank regulation database available at the World Bank website. We select a sample of 2467 banks from 107 countries for the years 1999–2009. We perform multivariate regression analyses and find that while auditing regulations enhance bank equity prices in normal growth periods, there is no evidence that auditing regulations are associated with bank share prices during the period of financial crisis. We observe similar results for both developed and emerging countries and for the common and code law countries. Our results suggest an immediate need to strengthen audit regulations so that investor confidence is more likely to persist during periods of financial downturn.     

“My Country’s Future”: A Culture-Centered Interrogation of Corporate Social Responsibility in India

Companies operating and located in emerging economy nations routinely couch their corporate social responsibility (CSR) work in nation-building terms. In this article, I focus on the Indian context and critically examine mainstream CSR discourse from the perspective of the culture-centered approach (CCA). Accordingly, five main themes of CSR stand out: nation-building facade, underlying neoliberal logics, CSR as voluntary, CSR as synergetic, and a clear urban bias. Next, I outline a CCA-inspired CSR framework that allows corporate responsibility to be re-claimed and re-framed by subaltern communities of interest. I identify such resistive openings via interrogations of culture (I focus on oft-cited Gandhian ethics here), structure (State policy, organizational strategy, and global/local flows), and agency (subaltern reframing of institutional responsibility, engagement with alternative modes of agency, and deconstructive vigilance).     

On Lipschitz continuity of the iterated function system in a stochastic optimal growth model

This paper provides qualitative properties of the iterated function system (IFS) generated by the optimal policy function for a class of stochastic one-sector optimal growth models. We obtain, explicitly in terms of the primitives of the model (i) a compact interval (not including the zero stock) in which the support of the invariant distribution of output must lie, and (ii) a Lipschitz property of the iterated function system on this interval. As applications, we are able to present parameter configurations under which (a) the support of the invariant distribution of the IFS is a generalized Cantor set, and (b) the invariant distribution is singular.     

Extinction in common property resource models: an analytically tractable example

We discuss an analytically tractable discrete-time dynamic game in which a finite number of players extract a renewable resource. We characterize a symmetric Markov-perfect Nash equilibrium of this game and derive a necessary and sufficient condition under which the resource does not become extinct in equilibrium. This condition requires that the intrinsic growth rate of the resource exceeds a certain threshold value that depends on the number of players and on their time-preference rates.     

Can the built environment explain gender gap in cycling? An exploration of university students' travel behavior in Toronto,Canada

The benefits of cycling as a healthier and more sustainable transportation alternative to private automobile is emphasized in both literature and policy. One key policy challenge in improving cycling rates is the significant gender gap in cycling that exists across urban regions in North America. In this study, travel behavior of >10,000 students attending four universities in Toronto, Canada, was analyzed to explore gender-based differences in cycling uptake. The mode share for cycling was higher for non-commute trips (9%) when compared to commuting trips to universities (7.6%). In addition, men had higher cycling rates than women, for both commute and non-commute trips. Results from binomial logistic regression models indicate that the built environment-related correlates were different between male and female students, and between commute and non-commute trips. Access to bicycle lanes or cycle tracks was found to increase the odds of female commuter cycling. This effect, however, was moderate in the neighborhoods with higher land use mix. Further, high-speed traffic was a significant barrier to cycling among female commuters. Noticeably, our analysis did not find major gender-based differences in the coefficients relating to travel attitudes and preferences. The findings provide a Canadian comparison to the limited international research on this topic, as well as offer new insights particularly relating to cycling for non-commute trips. The results identify potential avenues for policy intervention regarding the promotion of healthy and sustainable travel behavior among post-secondary students, and more broadly, the millennial generation.     

Skilled–unskilled wage inequality and offshore outsourcing with asymmetric adjustment costs

We present a model that can capture the effects of offshore outsourcing on the wedge between the wages of skilled and unskilled workers when costs of adjustment are asymmetric. We identify conditions under which offshore outsourcing activities widen the skilled–unskilled wage inequality in the presence of asymmetric adjustment costs. We show how a higher cost of adjustment in the import-competing sector can magnify the offshore outsourcing induced gap between the wages of the skilled and unskilled workers. We also demonstrate the sensitivity of the effects of offshore outsourcing, on the skilled–unskilled wage gap, to asymmetries in the costs of adjustment.     

SCENARIO GENERATION FOR OPERATIONAL RISK

Operational risk is an increasingly important area of risk management. Scenarios are an important modelling tool in operational risk management as alternative viable methods may not exist. This can be due to challenging modelling, data and implementation issues, and other methods fail to take into account expert information. The use of scenarios has been recommended by regulators; however, scenarios can be unreliable, unrealistic and fail to take into account quantitative data. These problems have also been identified by regulators such as Basel, and presently little literature exists on addressing the problem of generating scenarios for operational risk. In this paper we propose a method for generating operational risk scenarios. We employ the method of cluster analysis to generate scenarios that enable one to combine expert opinion scenarios with quantitative operational risk data. We show that this scenario generation method leads to significantly improved scenarios and significant advantages for operational risk applications. In particular for operational risk modelling, our method leads to resolving the key problem of combining two sources of information without eliminating the information content gained from expert opinions, tractable computational implementation for operational risk modelling, improved stress testing, what‐if analyses and the ability to apply our method to a wide range of quantitative operational risk data (including multivariate distributions). We conduct numerical experiments on our method to demonstrate and validate its performance and compare it against scenarios generated from statistical property matching for comparison. Copyright © 2013 John Wiley & Sons, Ltd.     

On the Phelps–Koopmans theorem

We examine whether the Phelps–Koopmans theorem is valid in models with nonconvex production technologies. We argue that a nonstationary path that converges to a capital stock above the smallest golden rule may indeed be efficient. This finding has the important implication that “capital overaccumulation” need not always imply inefficiency. Under mild regularity and smoothness assumptions, we provide an almost-complete characterization of situations in which every path with limit in excess of the smallest golden rule must be inefficient, so that a version of the Phelps–Koopmans theorem can be recovered. Finally, we establish that a nonconvergent path with limiting capital stocks above (and bounded away from) the smallest golden rule can be efficient, even if the model admits a unique golden rule. Thus the Phelps–Koopmans theorem in its general form fails to be valid, and we argue that this failure is robust across nonconvex models of growth.