Information Acquisition and Government Interventon in Credit Markets

Market failure in the financing of risky projects is studied. Project risk includes idiosyncratic and aggregate components. Banks can investigate aggregate risk and can evaluate the idiosyncratic risk of each entrepreneur. They engage in Bertrand competition for entrepreneurs using interest rates. Information obtained by a bank on aggregate risk is fully revealed, and that on entrepreneur-specific risk is partly revealed. Banks will not investigate aggregate risk and will evaluate entrepreneurs too intensively. Efficiency can be improved by public acquisition of information on industry risk and by loan guarantees partially covering losses on projects that fail.     

Stationary and Non-stationary Simultaneous Switching Autoregressive Models with an Application to Financial Time Series

A common observation among economists on many economic time-series, including major financial time-series, is the asymmetrical movement between the downward phase and the upward phase of their sample paths. Since this feature of time irreversibility cannot be described by the Gaussian ARMA, ARIMA or ARCH time-series models, we propose stationary and non-stationary simultaneous switching autoregressive (SSAR) models, which are nonlinear switching time-series models. We discuss some properties of these time-series models and the estimation method for their unknown parameters. The asymmetrical conditional heteroscedasticity can be easily incorporated into the SSAR models. We also report a simple empirical result on Nikkei 225 Spot and Futures indices by using a non-stationary SSAR model.
JEL Classification Numbers: C22, C32.     

Optimal strategies in a developing economy

Zusammenfassung Optimale Strategien in einer sich entwickelnden Volkswirtschaft. — Der vorliegende Aufsatz untersucht optimale Strategien für Industrialisierung, Vollbesch?ftigung und ein sich selbst tragendes Wachstum in einem Entwicklungsland. Der Autor bemüht sich zu zeigen, da\ es zahlreiche nützliche wirtschaftspolitische Ma\nahmen zur F?rderung der wirtschaftlichen Entwicklung gibt. Im ersten Abschnitt der Abhandlung werden die verschiedenen wirtschaftspolitischen Ziele in einem Entwicklungsland analysiert. Der zweite Abschnitt enth?lt das grundlegende makro?konomische Entwicklungsmodell bei Annahme einer konstanten Wachstumsrate der Bev?lkerung. Im dritten Abschnitt wird eine Untersuchung der wichtigsten Voraussetzungen einer optimalen Entwicklung bei Verwendung des im zweiten Kapitel dargestellten Modells vorgenommen. Der vierte Abschnitt ist der Formulierung eines Modells gewidmet, das die Besch?ftigungs- und Bev?lkerungsprobleme in die Betrachtung einbezieht. In diesem Abschnitt werden optimale Strategien für Vollbesch?ftigung und ein sich selbst tragendes Wachstum untersucht. Einige komplizierte technische Berechnungen werden im Anhang vorgelegt.

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Résumé Stratégies optimales dans une économie en train de développement.— Dans cet article, on étudie les stratégies optimales pour l’industrialisation, le plein emploi et un accroissement économique qui se tient soi-même dans un pays en développement. L’auteur cherche à démontrer qu’il y a beaucoup de mesures de politiques économique utiles à avancer le développement. Dans la première section de l’article, sont analysés en général les différents buts d’une économie en développement. La seconde section présente le modèle fondamental de macro-développement sous un taux constant d’accroissement de la population. Dans la troisième section, on donne l’analyse principale d’un développement optimal, en utilisant le modèle de la seconde section. La quatrième section est consacrée à la formulation d’un modèle qui tient compte des problèmes de l’emploi et de la population. Dans cette section, on étudie les stratégies optimales pour un plein emploi et un accroissement économique qui se tient soi-même. Quelques calculs techniques compliqués sont donnés dans l’annexe.

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Resumen Estrategias óptimas en una economía en desarrollo.— En el presente artículo se analizan estrategias óptimas para la industrializatión, el pleno empleo y un crecimiento económico autónomo en un país en desarrollo. El autor trata de demostrar de que existen numerosas medidas político-económicas útiles para el fomento del desarrollo económico. En la primera parte del artículo se estudian las diversas metas político-económicas en un país en desarrollo. En la segunda parte se presenta un modelo macroeconómico de desarrollo bajo el supuesto de un crecimiento demográfico constante. Este modelo se aplica en la tercera parte para analizar los condicionantes de un desarrollo óptimo más importantes. En la cuarta parte se formula un modelo con la inclusión de los problemas de población y empleo. Ademàs se analizan estrategias óptimas para el pleno empleo y un crecimiento económico autónomo. El apéndice contiene algunos càlculos técnicos complicados.

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Riassunto Ottimali strategie in un’economia in sviluppo.— Il presente saggio esamina ottimali strategie per industrializzazione, piena occupazione ed una crescita che si sostiene da sé in un Paese in via di sviluppo. L’autore cerca di mostrare che ci sono numerosi provvedimenti per la promozione dello sviluppo industriale. Nella prima parte del saggio sono analizzate le diverse mete politico-economiche in un Paese in via di sviluppo. La seconda parte contiene il modello fondamentale macroeconomico di sviluppo basato sul presupposto di una costante rata di crescita della popolazione. Nella terza parte viene intrapreso un esame dei presupposti più importanti di uno sviluppo ottimale impiegando il modello rappresentato nel secondo capitolo. La quarta parte è dedicata alla formulazione di un modello che include nella considerazione i problemi dell’occupazione e della popolazione. In questa parte sono esaminate ottimali Strategie per piena occupazione ed una crescita che si sostiene da sé. Alcuni complicati calcoli tecnici vengono presentati in appendice.

     

A model of urban demography

This study develops an overlapping generations model that involves the endogenous determination of demographic and city structure to fully analyze the social and natural changes in city populations. We provide conditions under which the model exhibits the spatial features of demography observed in urban areas: city centres have a lower total fertility rate than suburbs and larger cities have a lower total fertility rate than smaller cities. Through calibration, we also show that spatial factors have a significant impact on demographic characteristics and city growth.     

Too big or too small? A synthetic view of the commitment problem of interregional transfers

There is a growing body of literature on the commitment problem of interregional transfers. The problem occurs because of an ex post bailout by a central government leading to ex ante adverse incentive consequences for a local government. However, different models have yielded different economic consequences. The local government may be too large, overspending and/or overborrowing, or it may be too small, raising less of its own revenue. In the presence of interregional spillovers, the equilibrium may yield a Pareto-efficient outcome. The present paper aims to synthesize these models, developing a simple decentralized leadership model. A critical question concerns what decision is made ex ante by the local government—namely public expenditure or tax collection—with the remaining policy instrument being residual adjusted by ex post transfers. We discuss how different scenarios affect the equilibrium outcome.     

Competing for capital when labor is heterogeneous

This paper investigates the impacts of capital mobility and tax competition in a setting with imperfect matching between firms and workers. The small country attracts less firms than the large one but accommodates a share of the industry that exceeds its capital share—a reverse home market effect. This allows the small country to be more aggressive and to set a higher tax rate than the large one, thus implying that tax competition reduces international inequalities. However, the large country always attains a higher utility than does the small country. Our model thus encapsulates both the “importance of being small” and the “importance of being large”. Last, tax harmonization benefits to the small country but is detrimental to the large one.