Optimal student loans and graduate tax under moral hazard and adverse selection

We characterize the set of second‐best “menus” of student‐loan contracts in an economy with risky labor‐market outcomes, adverse selection, moral hazard, and risk aversion. We combine student loans with optimal income taxation. Second‐best optima provide incomplete insurance because of moral hazard. Optimal repayments must be income contingent, or the income tax must comprise a graduate tax. Individuals are ex ante unequal because of differing probabilities of success, and ex post unequal, because taxation trades off incentives and redistribution. In addition, second‐best optima exhibit an interim equalization property: the poststudy but prework expected utilities of newly graduated student types must be equal.     

Wealth distribution and output fluctuations

We explore the link between wealth inequality and output fluctuations in a general two-sector neoclassical growth model with endogenous labor and heterogeneous agents. When agents have homogeneous CRRA preferences and individual wealth is Pareto distributed, a sufficiently large rise in the Gini index typically leads to an increase in endogenous fluctuations of output. For general economies, we show that under plausible conditions on the fundamentals, wealth inequality is still a destabilizing factor.     

Fee-for-service payments and consultation length in general practice: a work–leisure trade-off model for French GPs

This article presents an adaptation of the labour supply model applied to the independent medical sector. First, we model simultaneous General Practitioner (GP) decisions on both the leisure time and the consultation length for two payment schemes: fixed fees and unregulated fees. The objective of this econometric study is to validate the theoretical prediction that doctors under unregulated fees may make choices about the length of patient consultations independent of their personal leisure decision. Indeed, according to our empirical results, the bidirectional link between leisure choice and consultation length – verified with fixed fees – does not hold any longer under unregulated fees. Our findings can be seen as a necessary but not a sufficient condition to legitimize unregulated fees in general practice.     

Aggregate instability under balanced-budget consumption taxes: A re-examination

We re-examine the destabilizing role of balanced-budget fiscal policy rules based on consumption taxation. Using a one-sector model with infinitely-lived households, we consider a specification of preferences derived from Jaimovich (2008) [14] and Jaimovich and Rebelo (2009) [15] which is flexible enough to encompass varying degrees of income effect. When the income effect is not too large, we show that there exists a Laffer curve, which explains the multiplicity of steady states, and that non-linear consumption taxation may destabilize the economy, promoting expectation-driven fluctuations, if the elasticity of intertemporal substitution in consumption is sufficiently larger than one and the tax rate is counter-cyclical with respect to consumption. Numerical illustrations also show that consumption taxation may be a source of instability for most OECD countries for a wide range of structural parameters? configurations. We finally prove the robustness of our conclusions if we consider a discrete-time setup.     

Consumer Goals in Vacation Decision Making

The primary purpose of this study is twofold: (a) to explore which decision goals are used the most when making tourism choices, and (b) to investigate how such goals vary across both product (generic, modal, specific) and social (group, household, individual) levels in consumers’ decision-making processes. Results help validate Bettman, Luce, and Payne’s (1998) decision goals’ typology. They further show that respondents are more likely to pursue self-confidence as a goal when making generic decisions while they will be more incline to minimize their cognitive efforts and to maximize the accuracy of their choices for specific decisions. In a social perspective, singles are more likely to minimize their cognitive efforts, whereas households and groups are keener on maximizing the ease of justifying the decision to their members.     

On the existence of a probability measure compatible with a total preorder on a Boolean algebra

If an economic agent's beliefs about the relative likelihood of events are characterized by a total preorder ? on the algebra $\text{A}$ of events, the problem arises to know under which conditions, ? is representable by a probability measure. Here we show that there exists a probability measure compatible with a total preorder on a Boolean algebra, if and only if, the Boolean algebra is well bounded, weakly Archimedean, and perfectly separable, this last condition substituting for Villegas' monotone condition used in Chateauneuf and Jaffray (1984); if σ-additivity is required. Villegas' monotone condition, must merely be added.     

The shrivelled USA: representing time–space in the context of metropolitanization and the development of high-speed transport

On the one hand the present globalisation process has only been made possible through a reduction in time–distances allowed by high-speed transport, and particularly through the development of air transport. On the other hand the metropolitanization process seen as the urban counterpart of globalisation is deeply associated with the development of air transport.Understanding distances between places is a fundamental task for the geographer, while the representation of distances constitutes one of the major functions of cartography.Among the types of maps invented to represent time–space, distorted projections were supplemented with time–space relief cartography in the 1990s. This paper proposes a representation of the time–space relief of the USA considering terrestrial and air modes. This constitutes a key innovation in this type of cartography, giving the possibility of creating a representation of global time–space. The metaphors associated with the images proposed are then discussed evoking the shrinking, the crumpling and finally the shrivelling of time–space. The shrivelling metaphor takes account of the complicated contraction/expansion movement that high-speed transport impacts on space and allows for a rich interpretation of the time–space relief map of the USA in the perspective of the processes of globalisation and metropolitanization.     

Intertemporal substitution in consumption, labor supply elasticity and sunspot fluctuations in continuous-time models

The aim of this paper is to discuss the roles of the elasticity of intertemporal substitution in consumption and the elasticity of the labor supply on the local determinacy properties of the steady state in a two-sector economy with constant elasticity of substitution technologies and sector-specific externalities. Our main results provide necessary and sufficient conditions for local indeterminacy. First, we show that the consumption good sector needs to be capital intensive at the private level and labor intensive at the social level. Second, we prove that under this capital intensity configuration, the existence of sunspot fluctuations is obtained if and only if the elasticity of intertemporal substitution in consumption is large enough but the elasticity of the labor supply is low enough. In particular, we will show on the one hand that when the labor supply is infinitely elastic, the steady state is always saddle-point stable, and on the other hand that when the elasticity of intertemporal substitution in consumption is infinite, labor does not have any influence on the local stability properties of the equilibrium path.     

COMMUNITY MEMBERSHIP ASPIRATIONS: THE LINK BETWEEN INEQUALITY AND REDISTRIBUTION REVISITED*

This article studies how distributional tensions can act in many different ways depending on the social affinity between the different economic classes and their prospect of upward or downward mobility. We consider that socioeconomic group membership through its implied social interactions and peer effects is an important determinant of an individual's outcome. Agents, while voting on a social contract, take into account the consequences of their choice over their ex post belonging to a particular community. Thus, the endogenous sorting of the population into clusters may lead to a nonmonotonic relationship between inequality and the pressure for redistributive policies.