COMPLEX DYNAMICS IN A KEYNESIAN GROWTH MODEL

This paper develops a non-linear differential-delay model of the Keynesian system. The non-linearities derive from a non-linear relationship between capacity utilization and profitability, interacting with the effect of profitability on rates of investment. Local stability properties are established analytically, and numerical techniques indicate the possibility of chaotic behavior for some configurations of parameters. The results suggest that profitability and growth can interact to produce some of the apparently stochastic components of growth cycles.     

Cost of capital and public loan guarantees to small firms

In this paper, we study the determinants of the spread charged by banks under a UK policy intervention scheme, aimed at supporting access to the credit market for small firms through guarantee backed loans. We exploit a unique dataset containing data on 29,266 guarantee backed loans under the UK SFLG scheme over the period 2000 to 2005. Results suggest that lower spreads are offered for loans of larger amounts and higher durations, for service firms, for larger firms, and for those located in the most advanced regions. Higher spreads are applied to high-tech manufacturing firms and to loans issued for working capital purposes. We also find that the presence of other extant debt is associated with a relatively higher spread and that this effect is especially significant for the subset of firms that have reached a maximum debt capacity based on collateralized assets. Further, we also find that the higher the incidence of the publicly guaranteed debt over the total amount of outstanding loans, the lower, on average, the spread. However, an increase in the guaranteed coverage leads to a contraction in the spread only for loans aimed at covering working capital needs rather than investments.     

Optimal financial investments for non-concave utility functions

We prove a formula for the computation of optimal financial investments in an expected utility framework with arbitrary (not necessarily concave) utility functions. This extends classical results on optimal financial investments for strictly concave utility functions and is of importance particularly for applications of prospect theory where the utility function has a convex-concave shape.     

Investment and technological choice in a right-to-manage model

We analyze the interactions between investment and local wage bargaining in a putty-clay model where the investment decision commits the firm to a particular capital intensity. This technological precommitment is used strategically in order to manipulate the bargaining outcome. We show that this strategic behavior induces a nonmonotonic relationship between the capital and labor demands of the firm and most of its environmental parameters (e.g., the bargaining power of the union, its minimum wage requirement, the capital cost). The results we obtain in our putty-clay framework thus contradict several conclusions of the standard literature on wage bargaining and investment.     

Country asymmetry,trade agreements,and transfers

Using a standard 2 × 2 trade agreement model, I show that the welfare effects of a free trade agreement (FTA) depend on the asymmetry on supply and demand functions. When countries are sufficiently asymmetric with respect to the size or the demand functions, the small country tends to be better off, while the large country is worse off. Thus, the small country must compensate the large country for the FTA to be incentive‐compatible. However, in the presence of sufficient asymmetry in the supply functions, the small country is worse off, while the bigger is better off. In this case, the transfer must flow from the large to the small country. This last finding helps explain why some FTAs between rich and poor countries provide for adjustment transfers to the latter.     

Combining biodiversity modeling with political and economic development scenarios for 25 EU countries

In the EURURALIS project, a chain of models was used to predict the changes in sustainable development indicators for European human well-being, ecology and economy issues, for four alternative scenarios of the future socio-economic development. This paper describes the biodiversity analysis of the project. Models based on general relationships between environmental factors and biodiversity loss were combined with socio-economic, land-use and environmental models to derive data that were integrated into an interactive tool for policy makers. The biodiversity analysis takes into account the effects of land-use change, climate change, fragmentation by major roads, area of unfragmented patches, nitrogen deposition, forestry and disturbance. Results show that biodiversity is projected to decrease between now and 2030 in most countries for all scenarios, indicating that it is unlikely that the EU will be able to fulfill its commitment to stop biodiversity loss by 2010. This is mainly due to urbanization and increase in stress factors, and outweighs the area increase of nature arising from land abandonment. Merits, limitations and uncertainties of this approach to biodiversity assessment are discussed.     

ILLEGAL MIGRANTS, TOURISM AND WELFARE: A TRADE THEORETIC APPROACH

Abstract.  Many countries receive illegal migrants but are reluctant to accept them due to possible negative externalities. We provide a rationale for not policing illegal migration by linking it to the tourism industry. By paying illegal migrants less than local workers, the relative price of the non-traded goods is shown to be lower than it would be in the absence of such workers. An expansion in tourist trade, under certain intensity conditions, necessarily raises resident welfare and employment. This tourist boom necessarily lowers the welfare of the illegal migrants. It is established that an increase in tourism increases the supply of illegal migrants.     

The private value of plant variety protection and the impact of exemption rules

Plant Breeders Rights (PBRs) are sui generis IPRs intended to promote plant variety creation. Two characteristics distinguish PBRs from patents: the research and the farmers' exemptions. This article attempts to assess the impact of these exemption rules on the private value of PBRs. For this purpose, a microeconometric model of PBRs renewals is developed and estimated. This model extends previous models of patents renewals by allowing the use of PBRs-specific variables. It is argued that simple tests on the coefficients associated with key PBRs-specific variables can provide insights into the impact of the two exemption rules. Implementation to PBRs in France over the period 1973–2011 for six major crops suggests that neither the farmers' exemption nor the research exemption have a clear-cut effect on the private value of PBRs. We conclude that there is no evidence to argue in favor of a reform of PBRs.