Green national accounting for welfare and sustainability:A Taxonomy Of Assumptions And Results

This paper summarizes assumptions made and results obtained in parts of the literature on welfare and sustainability accounting. I consider five different assumptions that can be imposed independently of each other, producing 32 different combinations. This taxonomy is used to organize results in welfare and sustainability accounting. The analysis illustrates how stronger results require stronger assumptions and thereby impose harder informational requirements.     

Establishing preference functions for macroeconomic decision models: Some observations on Ragnar Frisch's contributions

The article reviews Ragnar Frisch's contributions to solving the problem of establishing preference functions for macroeconomic decision models, and compares Frisch's approach with other possible approaches to the problem. The article mainly considers linear and quadratic preference functions. In discussing the methodology attention is drawn to the analogy with problems in the analysis of consumer demand.     

The theory of public goods: Misplaced emphasis?

The note takes up for critical examination the tendency in the modern theory of public goods to emphasize the problem of correct revelation or concealment of preferences. It is argued that a strategy which consists in playing down one's preferences for a public good in order to get a lower share in the costs of providing the good is not likely to succed in an open political decision-making process involving elected representatives. This conclusion is supported by the fact that there seems to be little empirical evidence which shows the importance of the preference revelation issue.     

The New Knowledge Economics

The growth in importance of intangible assets is changing our perceptions of economics and challenging ingrained managerial and organisational wisdom.     

Optimal Feedback Controls: Comparative Evaluation of the Cod Fisheries in Denmark, Iceland, and Norway

The economic efficiencies of the Danish, Icelandic, and Norwegian cod fisheries are examined. For this purpose, nonlinear aggregate models of these fisheries are constructed. Comparing the calculated optimal harvest and biomass quantities with the actual fisheries provides a measure of the degree of efficiency in these fisheries. The comparisons confirm that the cod harvesting policies of these countries have been hugely inefficient in the past. It appears that inefficiency has been increasing over the last three to four decades, even after TAC regulations replaced open access, indicating that the management policies adopted by all three countries have failed to cure overfishing.     

Partial wage indexation with real shocks

This note analyzes wage indexation from a macroeconomic viewpoint. Its purpose is to examine when wage indexation should be partial in the presence of real shocks, and it shows how the conditions for this to be the case depend on the aggregate production function, the income velocity of money, and the labor supply.     

The Hartwick Rule: Myths and Facts

We shed light on the Hartwick rule for capital accumulation and resource depletion by providing semantic clarifications and investigating the implications and relevance of this rule. We extend earlier results by establishing that the Hartwick rule does not indicate sustainability and does not require substitutability between man-made and naturalcapital. We use a new class of simple counterexamples (i) to obtain the novel finding that a negative value of net investments need not entail that utility is unsustainable, and (ii) to point out deficiencies in the literature.     

R&D policies, trade and process innovation

We set up a simple trade model with two countries hosting one firm each. The firms invest in cost-reducing R&D, and each government may grant R&D subsidies to the domestic firm. We show that it is optimal for a government to provide higher R&D subsidies the lower the level of trade costs, even if the firms are independent monopolies. If firms produce imperfect substitutes, policy competition may become so fierce that only one of the firms survives. International policy harmonization eliminates policy competition and ensures a symmetric outcome. However, it is shown that harmonization is not necessarily welfare maximizing. The optimal coordinated policies may imply an asymmetric outcome with R&D subsidies to only one of the firms.