Implementing a Stochastic Bioeconomic Model for the North-East Arctic Cod Fishery

In this paper, we study how a stochastic model can be used to determine optimal levels of exploitation of the North-East Arctic Cod (NEAC, Gadus morhua). A non-critical depensation growth model is developed for this species in order to examine both deterministic and stochastic cases. Estimation of the biological and the noise term parameters in the stochastic biomass dynamics is based on simulation and use of empirical NEAC data sets for the years 1985–2001. The Kolmogorov– Smirnov criterion-based method is used to estimate both drift and diffusion parameters simultaneously. The estimates turn out to be reasonable and the model is able to capture the salient features of the NEAC dynamics. The model is used to derive optimal levels of exploitation with different diffusion functions in the stochastic case and various discount rates in the deterministic case. Optimal catches are compared to the historical catch records. A striking feature of our modeling results is that these records fit surprisingly well with the infinite discounting tracks, i.e., the bliss solution. Our general results indicate that over fishing has resulted from lack of long-term planning as well as inadequate response to uncertainty.     

Cannibalism and the Optimal Sharing of the North-East Atlantic Cod Stock: a Bioeconomic Model

This paper shows how intra-stock relations such as cannibalism and growth enhancement, determine the economically optimal sharing of a fish resource between heterogeneous harvesting agents. The sharing of resources between different vessel groups is often left for political decision making. Nonetheless, such decisions may have both biological and economic consequences. This becomes quite clear when different harvesting groups exploit different sections (age groups) of a stock that has intra-stock interactions in the form of cannibalism. A two-agent bioeconomic model with cannibalism is developed and used to determine (i) optimal annual harvest sizes (TACs) for cod, and (ii) the optimal proportion of the TAC that should be harvested by the different vessel groups in the fishery. Applying biological and economic data in a numerical procedure, and comparing the results obtained to previous studies, it is shown that intra-stock interactions such as the presence of cannibalism has a significant impact on who should take what proportion of the TAC, and hence, the standing stock size and discounted economic rent achievable. In contrast to other studies, we find that the optimal harvest requires that both trawlers and coastal vessels should harvest the fish resource. In addition, the results indicate that, from a bioeconomic perspective, the existing trawler fleet’s harvest share in the cod fishery is too high. This revised version was published online in August 2006 with corrections to the Cover Date.     

Optimal Management Under Institutional Constraints: Determining a Total Allowable Catch for Different Fleet Segments in the Northeast Arctic Cod Fishery

Many real world fisheries have an individual vessel quota system with restrictions on transferability of quota or entrance of new vessels into the fishery. While the standard economic reasoning is that these institutional constraints lead to welfare losses, the size of those losses and optimal second-best policies are usually unknown. We develop a dynamic bioeconomic model, in which a scientific body provides an optimal TAC given restrictions on (i) transferability between vessel segments and (ii) entrance of new vessels. Further, we also quantify welfare losses arising from not maximizing economic welfare, but physical yield—which is actually the case in many fisheries. We apply the model to the Northeast Arctic cod fishery, and estimate not only the cost and harvesting functions of the various vessel types, but also the parameters of the biological model as well as those of the demand function. This allows us to determine optimal second-best policies and quantify corresponding welfare effects for our case study fishery.     

On the Flexibility of Optimal Policies for Green Design

Several recent papers show that different combinations of taxes and subsidies can achieve the social optimum for green design and household waste management when there are various market failures. This note shows that such policy flexibility exists only if all relevant actions by individual agents can be properly targeted by economic instruments. If the household can make a private effort to reduce waste, then an optimal policy is shown to be a unique combination of given economic instruments.     

Expectations and the Stability Problem for Optimal Monetary Policies

A fundamentals based monetary policy rule, which would be the optimal monetary policy without commitment when private agents have perfectly rational expectations, is unstable if in fact these agents follow standard adaptive learning rules. This problem can be overcome if private expectations are observed and suitably incorporated into the policy maker's optimal rule. These strong results extend to the case in which there is simultaneous learning by the policy maker and the private agents. Our findings show the importance of conditioning policy appropriately, not just on fundamentals, but also directly on observed household and firm expectations.     

Balanced-Budget Rules: Welfare Loss and Optimal Policies

Most economic models do not suggest an optimal fiscal policy in which the government's budget is balanced each period. Conventional wisdom suggests that the government run surpluses and deficits to smooth taxes. In this paper, I use an approach which brings together real business cycle theory and the theory of public finance to evaluate the effects of a balanced-budget restriction. Four fiscal policies are investigated in a model with growth. All models are solved numerically using a multidimensional collocation parameterized expectations algorithm. The welfare consequences of each policy are measured, and the optimal Ramsey policies are characterized. Journal of Economic Literature Classification Number: E62.     

Optimal Intervention Policies for a Small Monetary Economy

We analyze the gains from trade for a small cash-in-advance economy with endogenous labor supply and learning-by-doing in the accumulation of human capital. Contrary to previous findings, we show that free trade is not optimal independently of the relative amount of cash required for the purchase of each good. Furthermore, a monetary rule à la Friedman can eliminate distortions deriving from the cash-in-advance constraint only under segmented financial markets; in any case, it cannot restore the economic optimum. Finally, we identify government intervention policies, such as wage and export subsidies, that can be welfare improving.     

Optimal Border Policies for Invasive Species Under Asymmetric Information

This paper analyzes the problem faced by a border protection agency if endogenous exporter abatement activities affect invasive species risk, allowing for unobservable differences in abatement cost. We show how the optimal inspection/penalty regime differs from the symmetric information case. Departing from previous literature, we allow for technical assistance, a policy instrument specifically permitted and commonly employed under Article 9 of the World Trade Organization Sanitary and Phytosanitary Agreement. We find the information asymmetry can make it optimal for the importing country to provide technical assistance grants for exporter risk abatement, even if it would otherwise be inefficient. Further, we show that fungibility of technical assistance with inputs in other sectors of the exporting economy affects the qualitative nature of optimal policy. If technical assistance has no outside value in the exporter’s country, optimal policy is characterized by a menu of contracts balancing higher tariffs with lower penalties for being caught with an invasive. If technical assistance can be used in other sectors of the exporter’s economy, it can introduce countervailing incentives making a uniform tariff/penalty combination optimal.     

Assimilation of Time Series Data into a Dynamic Bioeconomic Fisheries Model: An Application to the North East Arctic Cod Stock

This paper combines the elegant technique of Data Assimilation and a Monte Carlo procedure to analyze time series data for the North East Arctic Cod stock (NEACs). A simple nonlinear dynamic resource model is calibrated to time series data using the variational adjoint parameter estimation method and the Monte Carlo technique. By exploring the efficient features of the variational adjoint technique coupled with the Monte Carlo method, optimal or best parameter estimates with their error statistics are obtained. Thereafter, the weak constraint formulation resulting in a stochastic ordinary differential equation (SODE) is used to find an improved estimate of the dynamical variable, i.e. the stock. Empirical results show that the average fishing mortality imposed on the NEACs is about 16% more than the intrinsic growth rate of the biological species.     

Optimal Urban Employment Policies: Notes on Calvo and Quibria

We show that Quibria's insightful observation on the efficacy of urban policy in a model with an urban trade union and an urban informal sector holds, but with a revenue-neutral employment tax-subsidy combination levied on the urban employer. We also draw the relevance of the generalized Harris–Todaro model in providing intuition for the validity of this surprising result.     

On the Design of Optimal Insurance Policies Under Manipulation of Audit Cost

This article characterizes optimal insurance policies under deterministic auditing in a situation where the policyholders can misrepresent their losses. Under exogenous audit cost, a straight deductible is optimal when the policyholders can inflate their claims by intentionally increasing the damages. If policyholders can manipulate the audit cost and the insurer is unable to observe the cost incurred by his or her auditor, then the auditor should receive contingent fees. When the auditor is risk-averse, the optimal insurance policy involves some degree of coinsurance. An upper limit on coverage is optimal when the auditor is infinitely risk-averse.     

灾难冲击与我国最优财政货币政策选择

本文通过引入政府生产性支出拓展了包含灾难冲击的新凯恩斯DSGE模型,数值分析表明,相对于不含政府生产性支出的灾难冲击模型,该模型能够更好地拟合中国宏观经济波动等基本特征。在此基础上,本文分别在规则行事与相机抉择两种情形下对比分析了我国面对灾难冲击时的最优财政货币政策选择问题,研究发现:(1)应对灾难冲击时,相对于相机抉择,规则行事造成的经济福利损失较低;(2)政府生产性支出可以在一定程度上降低灾难冲击对消费和产出等宏观经济变量的影响,但同时会弱化债务对灾难冲击的吸收作用;(3)引入通货膨胀惩罚(或厌恶)后政府可以更多地倚重于债务发行来吸收外部不利冲击,从而缓解相机抉择下的时间不一致性问题,减少经济福利损失。     

Biodiversity and Optimal Policies Towards R&D and the Growth of Genetically Modified Crops

In this paper we provide a simple model illustrating the possible nature ofgovernment policy with regards to genetic modification, taking into accountits impact on the environment. We show that it is necessary not only tointervene in the growing of crops, but also to intervene in R&D througha tax on the adoption of new GM technology. Without intervention at bothlevels, both the cultivation of GM crops and the rate of innovation in GM willexceed their socially optimal levels.     

On the Time Inconsistency of Optimal Monetary and Fiscal Policies with Many Consumer Goods*

In this paper, we study the time consistency of optimal policies in an environment where agents use cash to purchase many consumer goods and where those goods might be taxed at differential rates. Our main result is that optimal monetary and fiscal policies are, in general, time‐inconsistent, because the number of bond instruments is insufficient to influence all future fiscal decisions. However, there is one special case where optimal policies are time‐consistent, which is when differential tax rates across cash goods are optimally zero.     

中国与东北亚各国和地区农业资源整合前景

处于发展更低阶段的中国 ,与高收入东北亚国家和地区整合农业资源 ,实行区域经济一体化 ,是各方的根本利益所在。各国和地区农业与非农产业间的水平分工 ,农业的垂直分工 ,是现阶段农业资源整合的具体形式。这需要各方、主要是高收入国家和地区的农业集团克服短视 ,推动贸易—投资自由化。