Optimal Monetary Policy, Taxes, and Public Debt in an Intertemporal Equilibrium

This article is devoted to a study of the optimal monetary and fiscal policies within the framework of an overlapping generations model with cash-in-advance constraints. We first characterize the intertemporal equilibrium. Then we show how to decentralize the optimal growth path using available policy instruments (i.e., labor income and capital taxes, public debt, money supply). Between the four instruments: wages and capital taxes, debt and monetary policy, one is redundant among the three last which implies that the Friedman Rule is only a special case.     

The Capital Structure of Swiss Companies: an Empirical Analysis Using Dynamic Panel Data

In this paper, we analyse the determinants of the capital structure for a panel of 104 Swiss companies listed in the Swiss stock exchange. Dynamic tests are performed for the period 1991–2000. It is found that the size of companies and the importance of tangible assets are positively related to leverage, while growth and profitability are negatively associated with leverage. The sign of these relations suggest that both the pecking order and trade‐off theories are at work in explaining the capital structure of Swiss companies, although more evidence exists to validate the latter theory. Our analysis also shows that Swiss firms adjust toward a target debt ratio, but the adjustment process is much slower than in most other countries. It is argued that reasons for this can be found in the institutional context.     

Gradualism in Bargaining and Contribution Games

This paper identifies a source of gradualism in bargaining and contribution games. In the bargaining games we examine, each party can opt out at any time, and the outside option outcome is assumed to depend on the offers made in the negotiation phase. Specifically, we assume that (1) making a concession in the negotiation phase increases the other party's outside option pay-off and (2) the outside option outcome induces an efficiency loss as compared with a negotiated agreement. The main finding is that the mere presence of such history-dependent outside options forces equilibrium concessions in the negotiation phase to be gradual, and the degree of gradualism is characterized. The model also applies to contribution games in which the outside option may be interpreted as the option to implement a partial project using the total contributions made so far.     

Harrodian and neoclassical paths in a constrained growth model

We provide a reformulation of disequilibrium growth theory, using the inverse optimum approach under rigidities. The long-run solutions are either Harrodian paths of warranted growth, with increasing unemployment, or inflationary long-run equilibria, with full employment.     

Do Upgradings and Downgradings Convey Information? An Event Study of the French Bond Market

This study has two purposes:

• 1 

  To present an alternative method for the study of events related to bond spreads applicable when only a small number of events is available;

       

Setting priorities in farm animal conservation choices--expert opinion and revealed policy preferences

We consider the choice of farm animal breeds for conservationprogrammes. An expert survey among breed societies and scientistsand the analysis of past decisions in EU member countries toenter breeds into conservation programmes show differences inthe valuation of breed characteristics. Whereas both sets ofactors value diversity aspects as well as cultural and economicaspects of breed conservation, policy makers, in comparisonwith experts, seem to be less concerned about true extinctionrisk. The results suggest broadening the discussion about theconservation of animal genetic resources to aspects preservingsocietal and cultural resources.     

Boundary behavior of supply: A continuity property of the maximizing correspondence

The normal cone correspondence, which assigns to each point of a convex set the cone of normal vectors to the set at this point, is well known not to be lower hemi-continuous. Sufficient 'conditions for a weaker approximability condition of some points in the graph of this correspondence are given. The result is applied to study the boundary behavior of supply functions of producers who maximize profit on a convex set.     

Factoring out the impossibility of logical aggregation

According to a theorem recently proved in the theory of logical aggregation, any nonconstant social judgment function that satisfies independence of irrelevant alternatives (IIA) is dictatorial. We show that the strong and not very plausible IIA condition can be replaced with a minimal independence assumption plus a Pareto-like condition. This new version of the impossibility theorem likens it to Arrow's and arguably enhances its paradoxical value.