Equilibrium Determinacy under Monetary and Fiscal Policies in an Overlapping Generations Model

This paper studies the issue of equilibrium determinacy under monetary and fiscal policy feedback rules in an optimizing general equilibrium model with overlapping generations and flexible prices. It is shown that equilibria may be determinate also when monetary and fiscal policies are both 'passive'. In particular, under passive monetary rules, equilibrium uniqueness is more likely to be verified when fiscal policies are less committed to public debt stabilization.     

VRP revisited: The impact of behavioural costs in balancing standardisation and variety

The objective of this paper is to bring a new element to the academic (and industrial) debate concerning the optimum level of variety in component design in mass production companies. Many authors have explored the trade-off between functional and variety costs, and this could be considered as a well-acknowledged management issue, at least from an engineering perspective. Nevertheless, while defining the theoretically optimal level of component variety, there are other elements, more related to operators’ attitude or to operative conditions, which may intervene and prevent effective exploitation of the existing variety. These elements have been given scant attention in literature, while they may play a relevant role in real organisations.In this paper, we will present a case study and an analytic model for these “behavioural costs” in manufacturing environments, so as to show how the theoretically optimal amount of variety changes if one takes into account these aspects. Researchers (and practitioners) might leverage on this contribution in order to rejuvenate the Variety Reduction paradigm, and to increase their awareness in designing and managing mass production manufacturing processes.     

Deposit guarantee evaluation and incentives analysis in a mutual guarantee system

This paper analyzes how the deposit guarantee value affects the risk incentives in a mutual guarantee system. We liken the guarantee’s value to that of a European-style contingent claims portfolio. The main feature emerging from our model is that a mutual guarantee system would give banks an adverse incentive to increase riskiness. To mitigate this incentive, we introduce a regulatory provision modelled using a path-dependent contingent claim. By comparing the mutual guarantee system with a non-mutual one, we show that the former is less expensive, but implies higher adverse incentives for the banks, especially for undercapitalized institutions.     

New firm formation in Italian industry: 1985–89

This paper deals with the process of new firm formation in Italian manufacturing industry during the second half of the 1980s. For this purpose we use the data base made available by the National Institute of Social Security, which provides information on both newly and already established firms with at least one employee. Two birth rates are computed and analysed for the relevant industries: the first one is the ratio between new enterprises and already established firms and the second is the share of new enterprises on industry employees. We show that Italian industries are characterized by marked differences in terms of birth rates but also that the ranking of industries is different by using the first or the second index of new firm formation. Looking at the determinants of this process, we found that industry growth affects positively both birth rates; small firm presence is effective only when the second index of new firm formation is used while inter-industry differences in profitability are always not significant. These results seem peculiar to the Italian case in which the size of newly established firms is very small in comparison with the size of previously existing firms.     

Food fraud: economic insights into the dark side of incentives

In this review, we contextualise the articles in this special issue, relating them to existing food fraud research, and identify food fraud research trends, challenges and priorities for the near term. We accomplish these aims through a comprehensive review of research by food scientists, economists, other social scientists, legal experts, government research groups and international trade organisations. Existing food fraud research is heavily weighted towards food science, packaging and labelling, and legal areas of knowledge discovery. Moving forward, research is needed pertaining to general economic welfare outcomes from food fraud incidences, economic incentives to deter frauds, economic spillovers from fraud incidences to other food products and markets (domestic and international) and further delineation of the effect of different types of food fraud on consumer and producer welfare. The articles in this special issue make significant contributions to understanding of the role of food fraud in consumer decisions, measuring consumer welfare losses from fraud, food fraud spillover effects to other markets and new frameworks for fraud analysis.     

Ambiguity of measured WTP for quality improvements when quantity is unconstrained: a note

This paper addresses the issue of how to estimate by contingentvaluation methods the maximum price consumers are willing topay when a new quality is available for a market good for whichquantity adjustments are possible. We argue that current practice,which typically does not specify a quantity when asking consumersthe price they are willing to pay for a new quality product,fails to identify prospective consumers' behaviour when theyare free to adjust the quantity purchased. Theoretical modelsare discussed for assessing the maximum price consumers arewilling to pay in these cases, and econometric approaches toaddress these situations are discussed.     

Modelling Deforestation and Land‐Use Change: Sparse Data Environments

Land‐use change in developing countries is of great interest to policy‐makers and researchers with diverse interests. Concerns about consequences of deforestation for global climate change and biodiversity have received the most publicity, but loss of wetlands, declining land productivity and watershed management are also problems facing developing countries. Analyses of these problems are especially constrained by lack of data. This article reviews modelling approaches for data‐constrained environments that involve discrete choice methods including neural nets and dynamic programming, and research results that link individual household survey data with satellite images using geographic positioning systems.     

Short-memory equilibrium in stochastic overlapping generations economies

In stochastic OLG exchange economies, we show that short-memory equilibria—the natural extension from deterministic economies of steady states, low-order cycles, or finite state-space stationary sunspots equilibria—fail to exist generically in utilities. As a result, even with independent and identically distributed exogenous shocks there is serial correlation in endogenous economic variables in equilibrium. This arises even if utilities are time-separable, some goods inferior, and there are no technological lags. Hence, the origins of economic fluctuations can be traced only to the demographic structure of a heterogeneous agent, multiple-good economy.     

Trade networks and economic fluctuations in Asian countries

The paper presents a new methodology, based on tensor decomposition, to map dynamic trade networks and to assess its strength in forecasting economic fluctuations at different periods of time in Asia. Using the monthly merchandise import and export data across 33 Asian economies, together with the US, EU and UK, we detect the community structure of the evolving network and we identify clusters and central nodes inside each of them. Our findings show that data are well represented by two communities, in which People's Republic of China and Japan play the major role. We then analyze the synchronisation between GDP growth and trade. Furthermore we apply our model to the prediction of economic fluctuations. Our findings show that the model leads to an increase in predictive accuracy, as higher order interactions between countries are taken into account.