The long-run determinants of inequality: What can we learn from top income data?

This paper studies determinants of income inequality using a newly assembled panel of 16 countries over the entire twentieth century. We focus on three groups of income earners: the rich (P99–100), the upper middle class (P90–99), and the rest of the population (P0–90). The results show that periods of high economic growth disproportionately increases the top percentile income share at the expense of the rest of the top decile. Financial development is also pro-rich and the outbreak of banking crises is associated with reduced income shares of the rich. Trade openness has no clear distributional impact (if anything openness reduces top shares). Government spending, however, is negative for the upper middle class and positive for the nine lowest deciles but does not seem to affect the rich. Finally, tax progressivity reduces top income shares and when accounting for real dynamic effects the impact can be important over time.     

Bioenergy Crop Production in the United States: Potential Quantities, Land Use Changes, and Economic Impacts on the Agricultural Sector

The U.S. Departments of Agriculture and Energyjointly analyzed the economic potential for,and impacts of, large-scale bioenergy cropproduction in the United States. Anagricultural sector model (POLYSYS) wasmodified to include three potential bioenergycrops (switchgrass, hybrid poplar, and willow). At farmgate prices of US $2.44/GJ, anestimated 17 million hectares of bioenergycrops, annually yielding 171 million dry Mg ofbiomass, could potentially be produced at aprofit greater than existing agricultural usesfor the land. The estimate assumes highproductivity management practices are permittedon Conservation Reserve Program lands. Traditional crops prices are estimated toincrease 9 to 14 percent above baseline pricesand farm income increases annually by US $6.0billion above baseline.At farmgate prices of US $1.83/GJ, anestimated 7.9 million hectares of bioenergycrops, annually yielding 55 million dry Mg ofbiomass, could potentially be produced at aprofit greater than existing agricultural usesfor the land. The estimate assumes managementpractices intended to achieve highenvironmental benefits on Conservation ReserveProgram lands. Traditional crops prices areestimated to increase 4 to 9 percent abovebaseline prices and farm income increasesannually by US $2.8 billion above baseline.     

Quasi-adiabatic shear zones in the lithosphere: numerical and experimental approaches

Continental breakup, or compressive lithosphere scale faulting, requires a physical mechanism for wholesale faulting of the lithosphere. We compared numerical and experimental models for the nucleation of quasi-adiabatic shear bands in polyvinylchloride (PVC) with those in an idealized viscoelastoplastic mantle with olivine rheology. In both materials fault nucleation is caused by elastic stress concentration on pre-existing imperfections, with localized yielding confined to its vicinity. Faulting occurs rapidly after the initial elastic energy in the system is charged sufficiently to cause wholesale yielding. Propagation of the fault, monitored by looking at the dissipation of plastic energy, reveals migration of a sharp, thermal-mechanical “crack”- like instability, which appears in the temperature field as a slightly diffused signal. The initial temperature rise in the crack is subtle but increases suddenly when the plate is severed. This autocatalytic behavior has also been described in ductile polymers, which can be used as mechanical analogues. We suggest that elastoplastic coupling in quasi-adiabatic shear banding is a key for fast (< 1 Ma) nucleation of shear zones. These nonlinear phenomena will be illustrated for both experimental and numerical results by nine movies     

A martingale characterization of equilibrium asset price processes

Summary. Bick (1987,1990) and He and Leland (1993) demonstrated that not every arbitrage-free Markovian diffusion price process is consistent with an equilibrium approach. We propose a unified framework for these results and we derive a new martingale characterization of equilibrium.