Sustainable markets with short sales

Market objectives can conflict with long-term goals. Behind the conflict is the impatience axiom introduced by T. Koopmans to describe choices over time. The conflict is resolved here by introducing a new concept, sustainable markets. These differ from Arrow-Debreu markets in that traders have sustainable preferences and no bounds on short sales. Sustainable preferences are sensitive to the basic needs of the present without sacrificing the needs of future generations and embody the essence of sustainable development (Chichilnisky in Soc Choice Welf 13(2):231–257, 1996a; Res Energy Econ 73(4):467–491, 1996b). Theorems 1 and 2 show that limited arbitrage is a necessary and sufficient condition describing diversity and ensuring the existence of a sustainable market equilibrium where the invisible hand delivers sustainable as well as efficient solutions (Chichilnisky in Econ Theory 95:79–108, 1995; Chichilnisky and Heal in Econ Theory 12:163–176, 1998). In sustainable markets prices have a new role: they reflect both the value of instantaneous consumption and the value of the long-run future. The latter are connected to the independence of the axiom of choice at the foundations of mathematics (Godel 1940).     

A new model of income distribution: the κ-generalized distribution

This paper proposes a three-parameter statistical model of income distribution by exploiting recent developments on the use of deformed exponential and logarithm functions as suggested by Kaniadakis (Phys A 296:405–425, 2001; Phys Rev E 66:056125, 2002; Phys Rev E 72:036108, 2005). Formulas for the shape, moments and standard tools for inequality measurement are given. The model is shown to fit remarkably well the personal income data for Great Britain, Germany and the United States in different years, and its empirical performance appears to be competitive with that of other existing distributions.     

Evolution of networks—an experimental analysis

It is the main aim of our paper to study network formation in experimental setups in discrete and continuous time. Our design is inspired by the theoretical model on network formation by Bala and Goyal (Econometrica, 68(5): 1181–1229, 2000) as well as the experiments by Callander and Plott (J. Public Econ., 89: 1469–1495, 2005) and Falk and Kosfeld (IEW Working Paper, University of Zürich, Zürich, Switzerland, No. 146, 2003). In particular, we analyze the role of star-shaped networks which are strict Nash-equilibria of the corresponding network formation game. Our experimental results show that strict Nash networks prove to be a good indicator for predicting network formation, particularly in continuous time. In explaining our results, it turns out that, among others, the complexity in coordinating on stars, the inequity aversion against unequal payoff distribution in the network, and the groups’ degrees of activity are the most important determinants for the formation of strict Nash networks.      

Moments of truncated <Emphasis Type="Italic">t</Emphasis> and <Emphasis Type="Italic">F</Emphasis> distributions

Truncated distributions commonly arise in economics and related areas, see, for example, Lee (Econ Lett 3:165–169, 1979), Lien (Econ Lett 19:243–247, 1985; Econ Lett 20:45–47, 1986), Burdett (Econ Lett 52:263–267, 1996), Sercu (Insur: Math and Econ 20:79–95, 1997), Abadir and Magdalinos (Econom Theory 18:1276–1287, 2002), and Horrace (J Econom 126:335–354, 2005). In this note, we consider the most commonly encountered truncated distributions with heavy tails: the truncated t distribution and the truncated F distribution. For each of these distributions, we derive explicit expressions for the moments and estimation procedures by the method of moments and the method of maximum likelihood. An application is illustrated to a popular data set in the econometric literature.      

"体验"与"表演":旅游者的文化表达

旅游活动从本质上说,是旅游者的一种精神和文化活动。除了传统意义上的文化享受和精神愉悦外,旅游活动也是旅游者的文化“体验”和“表演”,这种文化表达使旅游者的心理世界更为丰富。把握旅游活动的文化品质,是现代旅游业的发展方向。     

Conjectural variations and evolutionary stability in finite populations

Recently it has been shown that consistent conjectures are evolutionarily stable. In this note we show that this finding depends on the use of the infinite population ESS (Maynard-Smith, Evolution and the theory of games, Cambridge University Press, Cambridge, UK, 1982). When applying the finite-population ESS (Schaffer, J Theor Biol 132:469–478, 1988) we show that the conjectures surviving in the long run are not consistent.      

<Emphasis Type="Italic">Resourceship</Emphasis>: An Austrian theory of mineral resources

Economists inside and outside of the Austrian-school tradition have formulated a subjectivist theory of mineral resources. While von Mises (1940) presented a rudimentary theory, institutionalist Zimmermann (1933 and after) provided an in-depth mind-centered approach distinct from the objective, neoclassical theory for minerals developed by Jevons (1865, 1866), Gray (1913), and Hotelling (1931). A full-fledged Austrian theory identifies the fixity/depletionism view of minerals as incompatible with entrepreneurship. Mineral resourceship, praxeologically akin to manufacturing, or the making of capital goods, demotes the distinction between depletable and nondepletable resources for the sciences of human action. Instead of nonreproducibility, the interplay of geography and institutions becomes the locus of mineral-resource theory, given the nonuniform distribution of deposits. An Austrian-institutional theory is more robust for explaining changes in mineral-resource scarcity than neoclassical depletionism, and offers a wide research agenda for current debates over resource production, usage, and future availability.

Common Trends and Common Cycles in Per Capita GDP: The Case of the G7 Countries, 1870–2001

In this paper we analyze per capita incomes of the G7 countries using the common cycles test developed by Vahid and Engle (Journal of Applied Econometrics, 8:341–360, 1993) and extended by Hecq et al. (Oxford Bulletin of Economics and Statistics, 62:511–532, 2000; Econometric Reviews, 21:273–307, 2002) and the common trend test developed by Johansen (Journal of Economic Dynamics and Control, 12:231–254, 1988). Our main contribution is that we impose the common cycle and common trend restrictions in decomposing the innovations into permanent and transitory components. Our main finding is permanent shocks explain the bulk of the variations in incomes for the G7 countries over short time horizons, and is in sharp contrast to the bulk of the recent literature. We attribute this to the greater forecasting accuracy achieved, which we later confirm through performing a post sample forecasting exercise, from the variance decomposition analysis.

Spatial Welfare Economics Versus Ecological Footprint: A Sensitivity Analysis Introducing Strong Sustainability

The aim of this paper is a sensitivity analysis with the core-periphery model of ‘new economic geography’ put forward in Grazi et al. (Environ Resour Econ 38:135–153, 2007). This model comprises interregional trade, agglomeration advantages and resource (land) use or environmental externalities. Grazi et al. (2007, GBR) compare a social welfare (SW) indicator with the ecological footprint (EF) indicator for measuring spatial sustainability of a set of land use configurations. Their main result is that the SW and the EF indicator can yield completely different rankings and only for extreme parameterizations of environmental externalities the rankings coincide. We adapt the model by interpreting total natural land as a resource constraint and differentiate between weak and strong sustainability. In a sensitivity analysis we show that the main results of GBR (2007) correspond to the case of weak sustainability in our adapted model version. In the case of strong sustainability our adapted model version shows the same welfare rankings for both indicators without the extreme parameterization that is necessary to obtain the same results in the original GBR (2007) model.     

Friedman meets Becker and Mulligan in a monetary neoclassical growth model

We study a neoclassical growth model with the time preference determined by resources spent on imagining future pleasures along the line of Becker and Mulligan (Q J Econ 112:729–758, 1997). We introduce money into the economy via a cash-in-advance constraint and study the effect of higher seignorage taxes or higher monetary growth rates on capital, consumption and welfare in the long run. We find that if the fraction of investment constrained by cash is smaller than a threshold, the negative-monetary-growth Friedman (The Optimum Quantity of Money and Other Essays, 1969) rule does not hold and the optimal inflation rate is positive. Calibrating our model yields a mild optimal inflation rate per annum with a switch from zero inflation to optimal inflation creating a sizable welfare gain in terms of consumption equivalence.     

Utilitarianism and the role of utility in Adam Smith

Abstract

In this paper we confront attempts to bring Smith closer to utilitarianism. We show that Smith's conception of utility is not utilitarian. While the pursuit of ‘pleasure’ could lie behind human behaviour, it is not the pleasure referred to by utilitarianism. Instead, utility, in its colloquial sense, plays a greater role that suggests a type of consideration which is foreign to utilitarianism and which also introduces a rationalist element to Smith's moral analysis. Thus, utility, in the utilitarian sense, is neither a guide to action nor a means for moral evaluation.     

On not doing due diligence: Bagus and Howden on free banking

In their recent article in the Quarterly Journal of Austrian Economics, Bagus and Howden (2010) present “quibbles” with fractional-reserve free banking. Specifically, they raise what they call “unaddressed issues” in this system, with a particular emphasis on Selgin (1988). We deem their arguments to be more substantial than “quibbles” and see them as part of a longstanding debate about fundamental aspects of monetary theory. We respond to their objections and attempt to specify how debate between the two sides might proceed more productively.     

Farsightedness in a Coalitional Great Fish War

We explore the implications of the farsightedness assumption on the conjectures of players in a coalitional Great Fish War model with symmetric players, derived from the seminal model of Levhari and Mirman (Bell J Econ 11:649–661, 1980). The farsightedness assumption for players in a coalitional game acknowledges the fact that a deviation from a single player will lead to the formation of a new coalition structure as the result of possibly successive moves of her rivals in order to improve their payoffs. It departs from mainstream game theory in that it relies on the so-called rational conjectures, as opposed to the traditional Nash conjectures formed by players on the behavior of their rivals. For values of the biological parameter and the discount factor more plausible than the ones used in the current literature, the farsightedness assumption predicts a wide scope for cooperation in non-trivial coalitions, sustained by credible threats of successive deviations that defeat the shortsighted payoff of any prospective deviator. Compliance or deterrence of deviations may also be addressed by acknowledging that information on the fish stock or on the catch policies actually implemented may be available only with a delay (dynamic farsightedness). In that case, the requirements are stronger and the sizes and number of possible farsighted stable coalitions are different. In the sequential move version, which could mimic some characteristics of fishery models, the results are not less appealing, even if the dominant player or dominant coalition with first move advantage assumption provides a case for cooperation with the traditional Nash conjectures.     

Specialists and citizens all: A reply to Boettke,Koppl, and Holcombe

Peter Boettke (2007) argues that economists need not act pluralistically in order for pluralism to thrive in the marketplace of economic ideas. From a market process perspective, Boettke sees intellectual diversity and openness as catallactic outputs, not inputs—emergent by-products of academic specialization and trade. To expect individual scholars to behave in a pluralistic manner is unnecessary and “completely inappropriate” since it detracts from their central task: “to commit themselves to an approach and pursue it doggedly, even in the face of great doubt and resistance by one’s peers” (Boettke 2007). This paper proposes a Smithian revision of Boettke’s position. The author argues that scholarly pluralism is best understood as a constitutional rule of academic life—a virtue ethic that promotes learning and intellectual freedom by mitigating tyranny and autarky in the republic of science. Drawing from the writings of Adam Smith, Friedrich Hayek, Deirdre McCloskey, Bruce Caldwell, James Buchanan, Don Lavoie, and Boettke himself, the author argues that scholarly pluralism has been, and continues to be, a necessary condition for the flourishing of Austrian economists as free, responsible, efficacious thinkers.     

Optimal simple rules and the lower bound on the nominal interest rate in the Christiano–Eichenbaum–Evans model of the US business cycle

Schmitt-Grohé and Uribe (NBER wp 10724, 2004b) analyzes the optimal, simple and implementable monetary policy rules in a medium-scale macromodel, as the one proposed by Christiano et al. (J Polit Econ 113:1–45, 2005). In doing so, they use a sensible, but somewhat arbitrary constraint to account for the lower bound condition on the nominal interest rate. In this work, we check the robustness of their main results to such a criteria. We find that the optimal policies are actually absolutely robust to the easing of this criterion for all the different cases considered.

Imagination and society. The affective side of institutions

Since the contributions by D. North [(1990). Institutions, institutional change, and economic performance. New York: CUP] and his Nobel Prize lecture [(1994). Economic performance through time, Nobel Prize Lecture. The American Economic Review, 84(3), 359–368], the relationship between mind and institutions has been increasingly investigated by economists. Mantzavinos, North, and Shariq [(2004). Learning, institutions, and economic performance. Perspectives on Politics, 2(1), 75–84] introduced the expression cognitive institutionalism in order to define this stream of research. In the first part of the paper we discuss some recent findings of the cognitive approach to institutions and its roots in the history of economic ideas. We also claim that in such an approach, no place has yet been found for a crucial faculty of the human mind, imagination. We then explore the concept of radical imaginary developed by Cornelius Castoriadis in his book The Imaginary Institution of Society (1975; 1987). From the perspective of cognitive economics, and on the grounds of Castoriadis’ legacy, we aim at highlighting some basic mechanisms of interaction between imagination, affectivity and institutions.

Is the monetary policy rule responsive to exchange rate changes? The case of Indonesia,Malaysia, the Philippines,and Thailand

Extending Obstfeld and Rogoff (J Econ Perspect 9:73–96, 1995), Ball (Monetary policy rules, University of Chicago Press, pp. 127–144, 1999), Svensson (J Int Econ 50: 155–183, 2000), Taylor (Am Econ Rev 91: 263–267, 2001), Gali and Gertler (J Econ Perspect 21:25–46, 2007), and others, this paper finds that central banks in the Philippines and Thailand respond negatively to the current real exchange rate and positively to the lagged real exchange rate whereas central banks in Indonesia and Malaysia do not react to the current or lagged real exchange rate. For the Philippines and Thailand, the null hypothesis that the sum of the coefficients of the current and lagged real exchange rates is zero cannot be rejected at the 5% level. Central banks in these four countries respond positively to the inflation rate and the output gap, suggesting that the concept of a simple or an extended Taylor rule would apply to these countries. Monetary policy reaction functions for Indonesia and Thailand are steeper than those for Malaysia and the Philippines and would be more responsive to a change in the inflation rate.      

Evolution of Walrasian equilibrium in an exchange economy

We study the stochastic stability of a dynamic trading process in an exchange economy. We use a simplified version of a trading model à la Shapley and Shubik (J Polit Econ 85:937–968, 1977). Two types of agents equipped with Leontief preferences trade goods in markets by offering endowments, and actual trades occur at market clearing prices. Better behavior tends to spread through the same type of agents by imitation, and agents also make mistakes occasionally. We provide a sufficient condition for the perturbed dynamic process to have a unique stochastically stable state that is a Walrasian equilibrium allocation. In this sense, we give a rationale for Walrasian behavior.     

The role of ethics and product personality in the intention to purchase organic food products: a structural equation modeling approach

The aim of the present study is to examine the role of ethical dimensions and product personality in the purchasing intention of organic food products. The Prospect method (Caprara et al. in Test Psicomet Metodol 7(3–4):113–128, 2000), which integrates the Five factors model of personality (cf. Digman in Annu Rev Psychol 41(1):417–440, 1990) and the Theory of planned behavior (Ajzen in Organ Behav Hum Decis Process, 50(2):179–211, 1991) extended to an ethical dimension, was employed, by using a Structural Equation Modeling approach. Results showed that moral norms—i.e., personal beliefs regarding what is right or wrong (Parker et al. in Br J Soc Psychol, 34(2):127–137, 1995)—can be considered the main motivator of purchasing intention, and they are, in turn, affected by subjective norms and product personality traits of Naturalness and Authenticity. Marketing implications for firms operating in the organic food industry are discussed, in their intent to shift from a “niche” market to a broader diffusion of these products.     

Optimal pricing of a two-sided monopoly platform with a one-sided congestion effect

This paper studies the optimal pricing of a two-sided monopoly platform when one side is affected by congestion. We show that the divide-and-conquer pricing strategy (or skewed pricing) depends not only on the relative magnitude of the sides’ price elasticities of demand but it also depends on the marginal congestion cost that an agent imposes on the others. Compared with the no-congestion case, this pricing strategy gives rise to some interesting features that violate the results of Rochet and Tirole (J Eur Econ Assoc 1:990–1029 in 2003, Rand J Econ 37:645–667 in 2006). In the case of equal price elasticities of demand, the no-congested side is charged the highest price. On the other hand, in the case of different price elasticities, the platform congestion pricing depends on a certain threshold of the marginal congestion cost. We show, under some conditions, that the divide-and-conquer pricing strategy is reversed. In the social context, the Rochet and Tirole’s (J Eur Econ Assoc 1:990–1029 in 2003) cost allocation condition is modified by the congestion cost. We show that the congestion does not only affect the buyers’ contribution to the sellers’ surplus, but it also affects the sellers’ contribution to the buyers’.