TRUST AND VIRTUAL DISTRICTS: EVIDENCE FROM THE MILAN INTERNET EXCHANGE

Peering decisions between Internet Service Providers (ISPs) contain substantial non‐measurable aspects requiring trust and informal cooperation among peering partners. We study whether virtual districts are observed between Internet peers. Our empirical analysis of the bilateral peering decisions at the Milan Internet Exchange confirms that these decisions are significantly influenced by: travel time either between ISPs' headquarters or towards the exchange—a proxy for distance, bandwidth—a proxy for size, and European connectivity. Proximity still plays a role in reducing the transaction costs of monitoring and punishing deviant behavior within an industry where trust is essential for Internet universal connectivity.     

The limits to growth — Malthus revived

The publication of “The Limits to Growth — A Report for the Club of Rome’s Project on the Predicament of Mankind” has resulted in a world-wide discussion of this vital issue. The following article reviews different aspects of the study.     

Considering Market-Based Instruments for Consumer Protection in Higher Education

Based on the economics of consumer protection and contributions from the economics of education, this article presents an analytical framework to deal with the problem of consumer protection in the higher education sector. It is demonstrated that there are not only governmental mechanisms (information provision, quality regulation) but also market-based mechanisms (seller signalling, private certification, private information intermediaries, student screening) to mitigate the informational asymmetry between buyers and sellers of educational services. This informational asymmetry, called students’ ex ante quality uncertainty, provides the central economic rationale for thinking about student protection, quality assurance and consumer information in the higher education marketplace. The basic argument of this paper is that governmental quality assurance is unnecessary in higher education if the market participants themselves, with the help of private third parties (i.e., certifiers and information intermediaries), are able to cope with market failure due to asymmetric information.     

U.S. tax policy and health insurance demand: Can a regressive policy improve welfare?

The U.S. tax policy on health insurance is regressive because it subsidizes only those offered group insurance through their employers, who also tend to have a relatively high income. Moreover, the subsidy takes the form of deductions from the progressive income tax system giving high income earners a larger subsidy. To understand the effect of the policy, we construct a dynamic general equilibrium model with heterogenous agents and an endogenous demand for health insurance. A complete removal of the subsidy may lead to a partial collapse of the group insurance market, reduce the insurance coverage and deteriorate welfare. There is, however, room for improving the coverage and welfare by extending a refundable credit to the individual insurance market.     

标识点位——LED辐射特性和统一的标识照明

尽管LED有缺点,但LED却比其他光源更广泛地运用在标识照明上,因为他们总是被大范围地宣传推广,有时这种做法甚至是错误的。然而,大多数的LED照明标志,安装后,会产生也会产生“不稳定“或“拼凑“的感觉,而非一个统一的照明外观。为什么会这样呢?设计标识的公司很可能没有考虑到LED的“辐射特性“,本专栏将对此进行解释。     

Currency devaluations,aggregate demand,and debt dynamics in economies with foreign currency liabilities

The article uses a post Kaleckian model to analyze how currency devaluations affect aggregate demand and capital accumulation in an economy with foreign currency liabilities in the short-run. In benchmark post Kaleckian open economy models, currency devaluations have two effects. First, they change international price competitiveness and thus affect net exports. Second, devaluations change income distribution and thereby affect consumption and investment demand. The overall effect on aggregate demand and investment is ambiguous and depends on parameter values. Existing models, however, disregard balance sheet effects that arise from foreign currency-denominated external debt. The article develops a novel post Kaleckian open economy model that introduces foreign currency-denominated external debt and balance sheet effects to examine the demand-effects of devaluations. Furthermore, the article models the dynamics of external and domestic corporate debt. It discusses how an economy may end up in a vicious cycle of foreign-currency indebtedness and derives the conditions under which indebtedness becomes stable or unstable. It shows that the existence of foreign currency-denominated debt means that contractionary devaluations are more likely, and that foreign interest rate hikes, and high illiquidity and risk premia compromise debt sustainability. Devaluations only stabilize debt ratios if they succeed in boosting domestic capital accumulation.     

Productivity,energy prices and the great moderation: A new link

We build upon recent research that attributes the moderation of output volatility since the 1980s to the reduced volatility of the Total Factor Productivity (TFP) by investigating the linkage between energy price fluctuations and the stochastic process for TFP. First, we estimate a joint stochastic process for the energy price and TFP and establish that until around 1982, energy prices negatively affected TFP. This spillover has since disappeared. Second, we show that within the framework of a Dynamic Stochastic General Equilibrium (DSGE) model, the disappearance of this energy-productivity spillover accounts for close to 68 percent of the moderation in output volatility.