Temptation and social security in a dynastic framework

We investigate welfare and aggregate implications of a pay-as-you-go (PAYG) social security system in a dynastic framework in which individuals have self-control problems. The presence of self-control problems induces individuals to save less because of their urge for temptation towards current consumption. Individuals' efforts to balance between the short-term urge for temptation and the long-term commitment for consumption smoothing result in self-control costs. In this environment PAYG social security works as a self-control cost reducing device. In contrast, the presence of altruism induces individuals to save more. This in turn mitigates the adverse effects of self-control problems and PAYG social security on savings but magnifies the self-control costs. We find that in our environment the adverse welfare effects of a PAYG system are further mitigated relative to the environments that incorporate altruism and self control issues separately. However, the level of mitigation is quite modest.     

Housing prices and transaction volume

We use annual, quarterly and monthly data from the US to show that the correlation between housing prices and transaction volume (number of existing houses sold) differs across different frequencies. While the correlation is high at the low frequencies it declines to the levels close to zero at high frequencies. Granger causality tests for different frequencies show that the way of causality in housing market changes from region to region. Our findings provide a litmus test for the existing theories that are proposed to explain the positive correlation between transaction volume and housing prices.     

Strategic interaction and dynamics under endogenous time preference

This paper presents a strategic growth model with endogenous time preference. Due to the potential lack of concavity and the differentiability of the value functions associated with each agent’s problem, we employ the theory of monotone comparative statics and supermodular games based on order and monotonicity properties on lattices. In particular, we provide the sufficient conditions of supermodularity for dynamic games with open-loop strategies based on two fundamental elements: the ability to order elements in the strategy space of the agents and the strategic complementarity which implies upward sloping best responses. The supermodular game structure of the model lets us provide the existence and the monotonicity results on the greatest and the least equilibria. We sharpen these results by showing the differentiability of the value function and the uniqueness of the best response correspondences almost everywhere and show that the stationary state Nash equilibria tend to be symmetric. Finally, we numerically analyze to what extent the strategic complementarity inherent in agents’ strategies can alter the convergence results that could have emerged under a single agent optimal growth model. In particular, we show that the initially rich can pull the poor out of the poverty trap even when sustaining a higher level of steady state capital stock for itself.     

Inflation Target Credibility: Do the Financial Markets Find the Targets Believable?

We investigate the credibility of inflation targeting (IT) central banks (CBs) by estimating perceived inflation targets of the financial markets. We calculate financial markets’ beliefs about the inflation targets of 24 IT countries. Then, we analyse whether the financial markets’ beliefs about inflation targets match the announced targets. We conclude that the perceived upper bound of the inflation target is significantly higher than the announced one in many countries. Additionally, the perceived target band is narrower and asymmetric around the mid‐point of the target for most CBs. We examine the implications of these findings and find that IT CBs are more likely to miss their targets when the perceptions of the financial markets are higher than the announced IT targets. These results indicate that IT CBs should pay attention to the perceptions of the announced targets when implementing policy actions.     

The Development Problem under Embodiment

This paper studies technology adoption in an optimal growth model with embodied technical change. The economy consists of the final good sector, the capital sector, and the technology sector which role is the imitation of exogenous innovations. Scarce labor resources are allocated to the technology and final good sectors. The final good is allocated to consumption and to the capital sector. The authors analytically characterize the long run optimal allocations. Using a calibrated version of the model, they find that an acceleration in the rate of embodied technical change should not be responded by an immediate and strong adoption effort. Instead, adoption labor should decrease in the short run, and the optimal technological gap is shown to increase either in the short or in the long run. The state of the institutions and policies around the technology sector is key in the design of the optimal adoption timing.     

Taboo on TV: gender,religion, and sexual taboos in transnationally marketed Turkish soap operas

ABSTRACT

This study illuminates the ways in which men and women consume soap operas as a means of reflecting on and discussing sociocultural taboos. Through interpretive research we examine the ways in which religion, sexuality and gender relations are depicted in popular Turkish soap operas and how these depictions are consumed in the Balkans and the Middle East. This study challenges the assumption that consumption of taboo discourses leads to active identity modification or public defiance. Instead, in-depth interviews and online ethnography reveal that consumption of soap operas that challenge local religious and gender norms provide a liminal space for discussing taboo topics. Firstly, the findings indicate that talking about taboo topics seen in soap operas enables consumers to speak about what they expect gender and religious norms to be. Secondly, consumers get their mediated understandings of what religion is through soap operas. Thus, rather than simply offering escape, soap opera consumption facilitates the discussion of taboo topics.     

Talking Fashion in Female Friendship Groups: Negotiating the Necessary Marketplace Skills and Knowledge

This study revisits contexts of consumer socialization by focusing on fashion consumption among female teenagers. Focus groups and interviews have been utilized to collect data from 12- to 16-year-old female adolescents. The findings indicate that the adolescents cultivate both rational and symbolic skills within their friendship groups through friendship talk. The paper contributes to consumer socialization studies by examining the role of social relationships in and the accounts of the actual uses of fashion products. By doing so, it extends scholars’, policy makers’, schools’, and families’ understanding of the dynamics involved in the building of young people’s consumer identities and what type of issues they face as young consumers. Thus, the study provides policy makers with information regarding how consumer skills and knowledge are cultivated and the role of the friendship group in cultivating them, which can be used in formulating future policy aimed at consumer education, literacy programmes and social marketing aimed at adolescents.     

CAPITAL MAINTENANCE AS A KEY DEVELOPMENT TOOL

We construct optimal growth models where labor resources can be allocated either to production, technology adoption or capital maintenance. We first characterize the balanced growth paths of a benchmark model without maintenance. Then we introduce maintenance activity via the depreciation rate of capital. We characterize the optimal allocation of labor across the three activities. Although maintenance deepens the technological gap by diverting labor resources from adoption, we show that it generally increases the long run output level. Moreover, we find that equilibrium maintenance and adoption efforts respond in opposite directions to policy or technology shocks. Finally, we find that the long‐term output response to policy shocks is slightly higher in the presence of maintenance.     

Optimal Capital Income Taxation with Means‐tested Benefits

This paper studies the interaction between capital income taxation and a means‐tested age pension. Our results document that the existence of a social insurance program financed from general revenue puts an upward pressure on the optimal tax rate. We also show that there is a negative relation between taper (benefit‐reduction) and optimal capital income tax rates. The potential welfare gain from optimizing capital taxation in the presence of a universal retirement transfer system is relatively higher. However, when the transfer is substantially means tested, the gain is lower, because the means test effectively operates as a tax on retirement capital.