Malthus to Solow

"A unified growth theory is developed that accounts for the roughly constant living standards displayed by world economies prior to 1800 as well as the growing living standards exhibited by modern industrial economies. Our theory also explains the industrial revolution, which is the transition from an era when per capita incomes are stagnant to one with sustained growth.... [The authors] use a standard growth model with...[several] technologies. The first, denoted the 'Malthus' technology, requires land, labor and reproducible capital as inputs. The second, denoted the 'Solow' technology, does not require land. [The authors] show that in the early stages of development, only the Malthus technology is used and, due to population growth, living standards are stagnant despite technological progress. Eventually, technological progress causes the Solow technology to become profitable and both technologies are employed. At this point, living standards improve since population growth has less influence on per capita income growth. In the limit, the economy behaves like a standard Solow growth model."     

A method for identifying and assessing key customer group needs

This paper presents a methodology for identifying and weighing the importance of product attributes used by a key customer group of a company. A central feature of the technique is the introduction of a new concept: competition factors (CF). These factors address the influence of substitute products in the specific product attributes that a customer group considers. A better knowledge of substitute products can surface previously hidden or latent customer needs. CF allow dealing with this problem, providing a powerful tool for market-oriented businesses that seek to understand customers' expressed and latent needs. The wood products industry and architects are used to illustrate the technique.     

Immigration and income redistribution in welfare states

This paper sets out a political economy model where median voters who benefit from local income redistribution are affected by the fiscal burden of welfare payments to immigrants. The median voters also have cultural preferences. Immigrants are influenced in their relocation decision by welfare benefits in host countries. Uncoordinated, coordinated and leader–follower domestic welfare policies are compared. In the last case, the median voter in the follower country is better off than the median voter in the leader country because of a less generous welfare system and hence fewer immigrants.     

Cost effectiveness and impact on quality of life of abobotulinumtoxinA and onabotulinumtoxinA in the treatment of children with lower limb spasticity in Canada

Abstract

Background: Injectable botulinum neurotoxins are a mainstay of treatment for pediatric spasticity. AbobotulinumtoxinA and onabotulinumtoxinA are both injectable toxin therapies used to treat pediatric lower limb (PLL) spasticity in Canada. The objective of this study was to assess the cost-effectiveness of abobotulinumtoxinA vs. onabotulinumtoxinA in the treatment of PLL spasticity in Canada.

Methods: A probabilistic Markov cohort model with a 2-year time horizon was developed, with health states defined by response to therapy, as characterized by the goal attainment scale (GAS). Based on randomized controlled trial evidence, response to therapy was similar or higher for abobotulinumtoxinA relative to onabotulinumtoxinA; uncertainty was incorporated into model parameters, however, as the two therapies have not been compared head-to-head. Canadian resource use and cost data were incorporated.

Results: In the base case, abobotulinumtoxinA generated 1.48 quality-adjusted life years over the model time horizon, compared to 1.47 for onabotulinumtoxinA. AbobotulinumtoxinA was associated with cost savings of $123 CAD, reflecting lower costs in both medication acquisition and health services. The estimated improvement to quality of life and reduced costs result in an estimate of economic dominance for abobotulinumtoxinA over onabotulinumtoxinA. This dominant result persisted across probabilistic and scenario analyses.

• Key points for decision makers

• Based on a review of available clinical evidence, abobotulinumtoxinA was found to have significant and/or numerical efficacy benefits to onabotulinumtoxinA on functional outcomes (Goal Attainment Scale) and tone (Modified Ashworth Scale) and in the treatment of pediatric lower limb spasticity

• In this cost-effectiveness analysis, abobotulinumtoxinA was found to be associated with greater quality-adjusted life years and lower costs than onabotulinumtoxinA (economically dominant)

• A limitation of this analysis was the uncertainty around key parameters. Specifically, the lack of head-to-head comparison data for the two therapies, and variable data regarding likely onabotulinumtoxinA dosing in PLL in clinical practice. However, across a range of plausible scenarios, the economic dominant result remained.

     

Why have business cycle fluctuations become less volatile?

This paper shows that a standard Real Business Cycle model driven by productivity shocks can successfully account for the 50% decline in cyclical volatility of output, its components, and labor input that has occurred since 1983. The model is successful because the volatility of productivity shocks has also declined significantly over the same time period. We then investigate whether the decline in the volatility of the Solow Residual is due to changes in the volatility of some other shock operating through a channel that is absent in the standard model. We therefore develop a model with variable capacity and labor utilization. We investigate whether government spending shocks, shocks that affect the household’s first order condition for labor, and shocks that affect the household’s first order condition for saving can plausibly account for the change in TFP volatility and in the volatility of output, its components, and labor. We find that none of these shocks are able to do this. This suggests that successfully accounting for the post-1983 decline in business cycle volatility requires a change in the volatility of a productivity-like shock operating within a standard growth model. We thank Stephen Parente, Ed Prescott, John Taylor, and two anonymous referees for helpful comments and suggestions.     

Will the Market Get it Right? The Placing of New Power Plants in Germany

This paper applies ELMOD, an economic-engineering model of the European electricity market to the issue of optimal investment placing of generation capacity in Germany under different market integration scenarios. The model is formulated as cost minimization approach. We conduct a scenario analysis comparing different rules for power plant placing in a national, a market-coupling and an integrated EU market approach. We find that there are great benefits for consumers and producers if taking into account network conditions and cross border congestion in generation location planning. Moreover a change from national planning to an integrated market planner perspective shows even more improvements in prices and network utilization.