A model of growth with inherited tastes

This research aims at studying a general equilibrium closed economy with overlapping generations and inherited tastes (aspirations), as in de la Croix (Econ Lett 53(1):89–96, 1996). It shows that the interaction between the intensity of aspirations and the elasticity of substitution of effective consumption affects the qualitative and quantitative long-term dynamics from both local and global perspectives. The related literature is extended by showing that (1) the Neimark–Sacker bifurcation found by de la Croix (1996) does not necessarily give rise to fluctuations and (2) endogenous (long-lasting) fluctuations occur through the emergence of period-doubling bifurcations.     

Light fuel demand and public policies in Brazil, 2003–2013

The main objective of this article is to evaluate determinants of demand for light fuels in Brazil between 2003 and 2013. Through a vector autoregression analysis, an effort was made to identify and quantify the impact of different economic variables and public policy measures adopted during this period on the surprising increase in energy consumption by Brazil’s light-vehicle fleet. The results suggest that demand for energy by the light-vehicle fleet was influenced by an increase in income, by a decrease in fuel prices associated with a policy designed to prevent increases in the price of gasoline from pushing the inflation rate up, by a higher availability of credit for buying vehicles, and by a drop in the real price of those goods, with emphasis on countercyclical measures to waive the tax on industrialized products levied on new vehicles during economic downturns in the automotive industry.     

Growth maximizing government size,social capital,and corruption

Our paper intersects two topics in growth theory: the growth maximizing government size and the role of Social Capital in development. We modify a simple overlapping generations framework by introducing two key features: a production function à la Barro together with the possibility that public officials steal a fraction of public resources under their own control. As underlined by the literature on corruption, Social Capital affects public officials' accountability through many channels which also affect the probability of being caught for embezzlement and misappropriation of public resources. Therefore, in our endogenous growth model such probability is taken as a proxy of Social Capital. We find that maximum growth rates are compatible with Big Government size, measured both in terms of expenditures and public officials, when associated with high levels of Social Capital.     

A STRUCTURAL RISK‐NEUTRAL MODEL FOR PRICING AND HEDGING POWER DERIVATIVES

We develop a structural risk‐neutral model for energy market modifying along several directions the approach introduced in Aïd et al. In particular, a scarcity function is introduced to allow important deviations of the spot price from the marginal fuel price, producing price spikes. We focus on pricing and hedging electricity derivatives. The hedging instruments are forward contracts on fuels and electricity. The presence of production capacities and electricity demand makes such a market incomplete. We follow a local risk minimization approach to price and hedge energy derivatives. Despite the richness of information included in the spot model, we obtain closed‐form formulae for futures prices and semiexplicit formulae for spread options and European options on electricity forward contracts. An analysis of the electricity price risk premium is provided showing the contribution of demand and capacity to the futures prices. We show that when far from delivery, electricity futures behave like a basket of futures on fuels.     

A Note on Loadings and Deductibles: Can a Vicious Circle Arise?

In a recently reprinted paper Borch wonders whether an increase in insurance loadings, together with the consequent increase in customers' deductibles, may be the start of a vicious circle, in which higher deductibles produce higher loadings and vice versa, ad infinitum. This paper rules out the possibility of a vicious circle, in a model à la Borch. First of all, increases in costs of the type considered by Borch are not necessarily followed by increases in loadings. Second, increases in loadings are not necessarily followed by increases in deductibles, since in equilibrium insurance may be Giffen. Last but not least, loadings do not increase with deductibles, because the only viable equilibrium is a Stackelberg one.     

Child policy ineffectiveness in an overlapping generations small open economy with human capital accumulation and public education

Motivated by the recent decrease in the number of children experienced in several developed countries, in this paper we consider a small open economy model with overlapping generations, endogenous fertility and human capital formation through public education, and look at the role the government can play in affecting fertility through the widely used child allowance policy. Contrary to conventional view, we show that the public provision of child allowances is fertility-neutral in the long run, that is it is not effective as a pro-natalist policy, while also reducing human capital accumulation. In contrast, the financing of the public education system is beneficial to both fertility and human capital. These results hold in the cases of both fixed and time cost of children.     

The codetermined firm in a Cournot duopoly: A stability analysis

This paper aims to study the stability issue in a Cournot duopoly with codetermined firms. We show that when both firms codetermine employment together with decentralised employees' representatives, a rise in wages acts as an economic (de)stabiliser when the wage is fairly (high) low, while under profit maximisation a rise in wages always acts as a stabilising device because the parametric stability region monotonically increases with the wage in such a case. Moreover, a rise in the union's bargaining power has a de-stabilising effect, except when the wage is low and the firm power is already high. Therefore, under codetermination a change either in the wage or firm power in the Nash bargaining plays an ambiguous role on stability. We also show with numerical simulations that complex dynamics can also occur.     

Corporate Social Responsibility,Product Differentiation Strategy and Export Performance

This article examines why an organization might wish to manage workplace romance, and describes a number of alternative approaches to managing dating. At first sight the ethics of dating bans balances the need to protect female employees from harassment against employee rights to privacy and freedom of association – a rights versus rights issue. However, dating bans seem not to be directed at protecting female employees from harm, but rather protect employers from sexual harassment liability claims – an employer self-interest versus employee rights issue. This article advocates a consequentialist approach to the problem, via the factoring in of other harms caused by prohibiting workplace romance. Given that most workplace romances end up in marriage or long-term partnerships, a ban on workplace romance is argued to be antisocial. The incidence of sexual harassment is very low in comparison to the number of long-term relationships initiated in the workplace. This article concludes by citing examples of firms that encourage romance, showing that is feasible to manage any resulting problems within these firms’ existing conflict of interest and sexual harassment rules.     

Economic growth and stability with public pay-as-you-go pensions and private intra-family old-age insurance

This paper compares the steady-state and dynamic outcomes of two historical alternatives as a means of old-age insurance, namely, voluntary intra-family transfers from young to old members versus pay-as-you-go public pensions, in a general equilibrium overlapping generations model with children as a desirable good. We show that the shift from a private system of old-age support to public pensions increases the gross domestic product (GDP) per worker. Moreover, although in both cases the steady-state stock of capital, under myopic expectations, may be (globally) unstable depending on the size of the inter-generational transfer, we show that the existence of public pensions rather than private intra-family gifts considerably reduces the possibility of cyclical instability.