On the Ramsey equilibrium with heterogeneous consumers and endogenous labor supply

In this paper, we address the stability issue, stressing the role of labor supply, in a Ramsey model with heterogeneous households subject to borrowing constraints. Making labor supply endogenous leads us to prove the existence of two kinds of steady state: the one where everybody supplies labor, the other where only the most patient agent refrains from working. Going beyond models with inelastic labor supply, we show how preferences of impatient agents affect the saddle-path stability of each type of steady state and the occurrence of endogenous cycles. When their elasticity of intertemporal substitution in consumption exceeds one, instability and cycles are less likely, requiring lower degrees of capital-labor substitution. Conversely, elasticity values below one promote the emergence of fluctuations. We end the paper by showing the existence of the intertemporal equilibrium under market incompleteness, using a local approach based on the first-order conditions.     

General existence of competitive equilibrium in the growth model with an endogenous labor–leisure choice

We prove the existence of competitive equilibrium in the canonical optimal growth model with elastic labor supply under general conditions. In this model, strong conditions to rule out corner solutions are often not well justified. We show using a separation argument that there exist Lagrange multipliers that can be viewed as a system of competitive prices. Neither Inada conditions, nor strict concavity, nor homogeneity, nor differentiability are required for existence of a competitive equilibrium. Thus, we cover important specifications used in the macroeconomics literature for which existence of a competitive equilibrium is not well understood. We give examples to illustrate the violation of the conditions used in earlier existence results but where a competitive equilibrium can be shown to exist following the approach in this paper.     

Diverging patterns with endogenous labor migration.

"The standard neoclassical model cannot explain persistent migration flows and lack of cross-country convergence when capital and labor are mobile. Here we present a model where both phenomena may take place.... Our model is based on the Arrow-Romer approach to endogenous growth theory. We single out the importance of a (however weak) scale effect from the size of the workforce.... The main conclusion of this simple model is that lack of convergence, or even divergence, among countries is possible, even with perfect capital mobility and labor mobility."     

On-the-job search equilibrium with endogenous unemployment benefits

This paper develops an on-the-job search model with wage posting where unemployment benefits are proportional to past wages. We emphasize that this contributes to increasing the reservation wages of unemployed workers and introduces a feedback effect of the distribution of wages on the distribution of unemployment benefits. We show that the model predictions are consistent with some stylized French facts and quantify the impact of inefficient rejections of low-wage offers by the unemployed. We find that, by reducing the indexing of unemployment benefits to previous earnings and increasing lump-sum transfers, it is possible to increase both employment and welfare.     

On existence in equilibrium models with endogenous default

The equilibrium concept defined by Dubey et al. ,  and  generates equilibria such that asset buyers could raise expected returns by paying more for the assets that they purchase. A simple example shows that, in fact, all equilibria may be return-dominated in that sense. Universal existence in the DGS model thus depends critically on the assumption that lenders are unable to exploit an obvious profit opportunity.     

多归属纵向差异化双边市场下竞争均衡

双边市场作为产业组织理论研究的热点问题,涉及平台纵向差异化的研究还很少,本文依照现实中普遍存在的双边的多归属和平台之间差异化的情况,构造了网络外部性参数不对称的多归属差异化Hoteling模型,并考察了新均衡下双边平台的定价、市场势力和利润情况。我们发现,单归属均衡受平台质量差别程度影响,多归属均衡受相异平台质量影响较大;网络外部性参数的不对称是双边市场与单边市场均衡差别的主要原因;其次与单归属均衡结果相比,多归属差异化均衡时拉大了两平台间上下游定价、市场份额和利润差额。     

Competitive market equilibrium under asymmetric information

This paper studies the existence of a competitive market equilibrium under asymmetric information. There are two agents involved in the trading of the risky assets: an “informed” trader and an “ordinary” trader. The market is competitive and the ordinary agent can infer the insider information from the price dynamics of the risky assets. The insider information is considered to be the total supply of the risky assets. The definition of market equilibrium is based on the law of supply-demand as described by a rational expectations equilibrium of the Grossman and Stiglitz (Am Econ Rev 70:393–408, 1980) model. We show that equilibrium can be attained by linear dynamics of an admissible price process of the risky assets for a given linear supply dynamics.      

A general equilibrium urban location model with regional labor mobility

The model determines labor supply, land area, exports, imports, and land use intensity for an urban area. The rest-of-the-world is represented by summary supply and demand equations. General solution for first-degree homogeneous housing, export, and preference functions is given. Numerical solutions CES functions are presented.     

Competitive equilibrium fraud in markets for credence-goods

This is a study of the nature and prevalence of persistent fraud in a competitive market for credence-quality goods. We model the market as a stochastic game of incomplete information in which the players are customers and suppliers and analyze their equilibrium behavior. Customers characteristics, idiosyncratic search cost and discount rate, are private information. Customers do not possess the expertise necessary to assess the service they need either ex ante or ex post. We show that there exists no fraud-free equilibrium in the markets for credence-quality goods and that fraud is a prevalent and persistent equilibrium phenomenon.     

Indeterminacy in discrete-time infinite-horizon models with non-linear utility and endogenous labor

We consider a discrete-time two-sector model with sector specific externalities in which the technologies are given by CES functions with asymmetric elasticities of capital–labor substitution, and the preferences of the representative agent are given by a CES additively separable utility function defined over consumption and leisure. We first show that when the labor supply is infinitely elastic, the steady state is always saddle-point stable, no matter what the elasticity of intertemporal substitution in consumption and the size of externalities are. We then prove that when the elasticity of intertemporal substitution in consumption is sufficiently large, local indeterminacy requires a low enough elasticity of the labor supply.     

Riskiness,endogenous productivity dispersion and business cycles

In the data, cross-sectional productivity dispersion is countercyclical at both the plant level and the firm level, see e.g. Bloom (2009). I incorporate a firm׳s choice of risk level into a model of firm dynamics with real business cycle features to explain this empirical finding both qualitatively and quantitatively. In the model, in every period, each firm chooses the investment amount and the risk level associated with a production project every period. All projects available to each firm have the same expected flow return, determined by the aggregate and idiosyncratic shocks to the firm׳s productivity, and differ from one another only in their risk. The endogenous option of exiting the market and the limited funding for new investment jointly play an important role in motivating firms׳ risk-taking behavior. The model predicts that, in each period, relatively small firms are more likely to take risk and hence exhibit a higher exit rate, and that the cross-sectional productivity dispersion, measured as the standard deviation of the realized individual component of productivity, is larger in recessions.     

Capital–labor substitution and equilibrium indeterminacy

This paper examines the quantitative relationship between the elasticity of capital–labor substitution in production and the conditions needed for equilibrium indeterminacy (and belief-driven fluctuations) in a one-sector growth model. With variable capital utilization, the substitution elasticity has little quantitative impact on the minimum degree of increasing returns needed for indeterminacy. However, when capital utilization is constant, a below-unity substitution elasticity sharply raises the minimum degree of increasing returns because it imposes a higher effective adjustment cost on labor hours. Overall, our results show that empirically-plausible departures from the Cobb–Douglas production specification can make indeterminacy more difficult to achieve.     

A closed-form solution for the continuous-time consumption model with endogenous labor income

In this paper, we study the consumption, labor supply, and portfolio decisions of an infinitely lived individual who receives a certain wage rate and income from investment into a risky asset and a risk-free bond. Uncertainty about labor income arises endogenously, because labor supply evolves randomly over time in response to changes in financial wealth. We derive closed-form solutions for optimal consumption, labor supply and investment strategy. We find that deferring the retirement age stimulates optimal consumption over time and discourages optimal labor supply during the working life. We also find explicitly that optimal portfolio allocation becomes more ‘conservative’ when the individual approaches his prescribed retirement age. The effects of risk-aversion coefficients on optimal decisions are examined.     

Do labor market institutions matter for business cycles?

Using panel data of 19 OECD countries observed over 40 years and data on specific labor market reform episodes we conclude that labor market institutions matter for business cycle fluctuations. Spearman partial rank correlations reveal that more flexible institutions are associated with lower business cycle volatility. Turning to the analysis of reform episodes, wage bargaining reforms increase the correlation of the real wage with labor productivity and the volatility of unemployment. Employment protection reforms increase the volatility of employment and decrease the correlation of the real wage with labor productivity. Reforms reducing replacement rates make labor productivity more procyclical.     

Urban agglomeration,capital augmenting technology,and labor market equilibrium

The objective of this paper is to measure urban productivity using Japanese city-based cross-sectional data of 1980. The results of a labor-demand OLS regression analysis suggest two kinds of possible model specifications: capital augmenting and demand-supply equilibrium. Each model type is considered, and the average effect of population density on labor productivity is shown to be 4.3% in the capital augmenting model and 8.0% in the equilibrium model.     

Socially optimal and equilibrium distributions of office activity: Models with exogenous and endogenous contacts

Two models of the location of office activities within a city are developed. In the first model, the pattern of interoffice contacts is specified exogenously as has been traditional in the literature. In the second model the contact patterns as well as the distribution of firms are endogenous. For both models, the market equilibrium distribution of office activities is not socially optimal. Two sources for this market failure are identified in these models: (1) agglomeration economies and (2) transactional externalities arising from firm interdependence and mobility.     

A portfolio approach to endogenous growth: equilibrium and optimal policy

This paper develops a portfolio approach to modeling endogenous growth in continuous time that is especially suitable for addressing fiscal and financial issues in policy design. The analysis focuses on the equilibrium relationship between fiscal and financial policy, rates of return and wealth allocation. We analyze two models. The first is based on the Arrow-Romer model with increasing returns and an external effect of capital on labor productivity. The second draws on Barro's analysis of government spending and endogenous growth. In both models, we study the equilibrium allocation and discuss the optimal fiscal and financial policy.     

A mixed behaviour equilibrium model with mode choice and its application to the endogenous demand of automated vehicles

This study develops a mixed behavioural equilibrium model with explicit consideration of mode choice (MBE-MC) in a transportation system where fully automated vehicles (AV) coexist with conventional human-driven vehicles (HV). For the mode choice, travellers select among three options, following a logit modal split: driving their private HV, or taking an AV mobility service provided by either a firm or the government. For the route choice, the HV drivers follow the random utility maximisation principle while central agents route the AV passengers following the Cournot Nash (firm agent) or Social Optimal (government agent) principles. We consider two types of travel costs (i.e. travel time and monetary travel cost) to characterise the new features (e.g. expanded link capacity and reduced value of time) of the mixed AV–HV transportation system. We model the MBE-MC problem in a combined mode–route choice framework and formulate it as a route-based variational inequality (VI) problem. We show the equivalence between the VI formulation and the MBE-MC problem, and the existence of a solution to the MBE-MC problem. Then, we modify a partial linearisation algorithm for solving the proposed model. Numerical results validate the equilibrium conditions and show the efficacy of the new model in capturing the features of the mixed AV–HV transportation system. The impact patterns of different parameters on (1) the network performance in terms of AV share and system cost and (2) on the solution efficiency are analysed.