Delays and equilibria with large and small information in social learning

The general model of social learning with irreversible investment and endogenous timing is analyzed for any distribution of private informations. Strategic complementarities and multiple equilibria appear which are generated solely by information externalities. Different equilibria generate strikingly different amounts of information. The impacts of various assumptions (bounded beliefs, large number of agents, discrete time and short periods) are examined carefully. The properties are robust to the introduction of observation noise with a continuum of agents.     

Public choice interpretations of distributional preference

This essay examines, from the perspective of both economics and ethics, the logical foundations of income transfers in a democratic society that allocates resources, in the large, through free markets. Such transfers, enacted through the public choice process, modify the market-determined distribution of income, as a reflection of the distributional preferences of the members of a society. Both constitutional and post-constitutional explanations of redistributions are considered. A discussion of recent experimental evidence of distributional preferences leads into a critique of simple equality, built on Michael Walzer's distinction between monopoly and dominance, as a criterion of distributive justice.     

Testing separability of public consumption in household decisions

In this paper we propose a sequential strategy, based on the microeconomic approach of the demand theory, in order to test for separability between private and public consumption. The aim of the present work is to verify, using a conditional almost ideal demand system, whether the different components of public consumption exert conditioning effects on the allocative structure of private spending. The empirical estimation of the model and the separability tests are developed for both a demand system in five functional categories of private spending, and for a demand system in six categories, where the private expenditures on those goods and services which can also be offered by the public sector are enclosed in a single functional category. The results of the separability tests, obtained using UK data for the 1974–2000 period, show that public individual consumption plays an important role in modifying consumer choices, while public collective consumption does not affect private consumption behaviours. The relationships between the different components of private spending and public individual consumption are both of substitutability and complementarity; in particular, we find that public individual consumption and the corresponding private expenditures on ‘Health, education, recreation and social protection’ are complements.     

岷江上游退耕还林的思考

岷江上游不仅是长江上游生态屏障障的重要组成部分，更是成都平原的重要生态屏障和水源生命线，该区拥有丰富的水、生物、旅游等可再生资源，但在退耕还林（草）生态建设中表现出退耕面积扩大化、国家补贴政策一刀切、经济林比重过大等问题。文章指出，应在克服上述问题基础上，通过调整农村产业内部结构、加大坡耕地改造、发展旅游业、水电业以及加强变通、通讯设施建设是实现经济可持续发展的最佳选择。     

我国的M1/M2(1978-2002):长期趋势、水平与周期波动

本对我国1978—2002年的M1／M2的长期趋势、水平和周期波动进行了研究，结果表明1978—1995年，中国的M1／M2呈急剧下降的态势，但是从1996至今则基本保持平稳。另外从国别比较来看，我国属于M1／M2比较高的国家(地区)之一，这表明我国的居民和企业由于支付制度、取款成本、规避税收等原因比美、日等国家的经济主体对M1的需求高很多。除开长期走势之外，中国的M1／M2还伴随着经济活动呈周期性的波动，实证分析结果表明1996年前的经济增长率是M1／M2周期波动的Granger原因，但1996年以后则必须由名义利率、通货膨胀率和股票市场交易量的变动才能说明M1／M2的波动。     

Long term dependence in stock returns

We show, using the modified rescaled range statistic, that none of the return series of indices of five European countries, the United States and Japan exhibits long term dependence. This statistic — introduced by Lo (1991) — correct Hurst's (1951) ‘classical’ rescaled range statistic for short term dependence. We also report the classical rescaled range statistic after adjusting the series for short term dependence. This procedure shows, for cases where the results of the modified rescaled range statistic are mixed, that no long term dependence can be found. Simulations indicate reasonable power of this adjustment procedure. Furthermore, we find that estimates of the Hurst exponent, a related measure of long term dependence, are also biased by short term dependence. Simulations show that this measure — that has recently attracted growing interest — cannot distinguish between models with or without long term dependence.     

Currency competition: A partial vindication of Hayek

This paper establishes the existence of equilibria for environments in which outside money is issued competitively. Such equilibria are typically believed not to exist because of a classic overissue problem: if money is valued in equilibrium, an issuer produces money until its value is driven to zero. By backward induction, money cannot have value in the first place. This paper shows that overissuance is not a problem if agents believe that if an issuer produces more than some threshold number of notes, then only those notes issued up to the threshold will be valued; additional notes will be worthless. This result is very general, applying to any monetary economy in which equilibria with and without valued money exist if the money supply is finite. The paper also compares the allocation achieved by a monopolist to that achieved with competitive issuance in both a search and an overlapping-generations environment. The results depend on the environment considered, but two general conclusions arise. First, it is ambiguous whether competitive issuers can achieve a more desirable allocation than a monopolist. Second, with competitive issuance, a licensing agency can always improve on pure laissez-faire and achieve the efficient allocation in the long run.     

The macroeconomic consequences of terrorism

We perform an empirical investigation of the macroeconomic consequences of international terrorism and interactions with alternative forms of collective violence. Our analysis is based on a rich unbalanced panel data set with annual observations on 177 countries from 1968 to 2000, which brings together information from the Penn World Table data set, the ITERATE data set for terrorist events, and data sets of external and internal conflict. We explore these data with cross-sectional and panel growth regression analysis and a structural VAR model. We find that, on average, the incidence of terrorism may have an economically significant negative effect on growth, albeit one that is considerably smaller and less persistent than that associated with either external wars or internal conflict. As well, terrorism is associated with a redirection of economic activity away from investment spending and towards government spending. However, our investigation also suggests important differences both regarding the incidence and the economic consequences of terrorism among different sets of countries. In OECD economies, in particular, terrorist incidents are considerably more frequent than in other nations, but the negative influence of these incidents on growth is smaller.     

Macroeconomic consequences of terror: theory and the case of Israel

This paper analyzes the effect of terror on the economy. Terror endangers life such that the value of the future relative to the present is reduced. Hence, due to a rise in terror activity, investment goes down, and in the long run income and consumption go down as well. Governments can offset terror by putting tax revenues into the production of security. Facing a tide in terror, a government that acts optimally increases the proportion of output spent on defense, but does not fully offset the tide. Thus, when terror peaks the long run equilibrium with an optimizing government is of lower output and welfare. Next, we show that this theory of terror and the economy, helps to understand changes in trend and business cycle of the Israeli economy. The estimates show that terror has a large impact on the aggregate economy. Continued terror, at the level of the death toll by about the same size as due to car accidents, is expected to decrease annual consumption per capita by about 5% in 2004. Had Israel not suffered from terror during the last 3 years, we estimate that the output per capita would have been 10% higher than it is today.     

Payment system disruptions and the federal reserve following September 11, 2001

The monetary and payment system consequences of the September 11, 2001, terrorist attacks and the Federal Reserve's response are reviewed. Interbank payment disruptions appear to be a central feature of many US banking crises, and interbank payment disruptions seem likely to recur. Federal Reserve credit extension following September 11 succeeded in massively increasing the supply of banks’ balances to satisfy the disruption-induced increase in demand and thereby ameliorate the effects of the shock. Relatively benign banking conditions helped make Fed credit policy manageable. An interbank payment disruption that coincided with less-favorable banking conditions could be more difficult to manage, given current daylight credit policies. Paying interest on reserves would facilitate improvements in daylight credit policy.