On the existence of rational expectations equilibrium

We prove a theorem on the existence of rational expectations general economic equilibrium when agents condition on prices as well as on private information, and maximize the expectation of a state-dependent utility function. The key to the result is a new idealization of what it means for a set of empirical distributions to support agents' expectations. This idealization depends on the notion that agents compare their expectations with continuous versions of the random empirical distributions that are generated by the workings of the economy. The existence theorem covers all strictly concave utility functions, arbitrary distributions of the state variable, and situations in which the dimension of the state variable is large relative to the number of commodities.     

Family income and children's education: Using the Norwegian oil boom as a natural experiment

Parental income is positively correlated with children's educational attainment. This paper addresses the causality of this observed link. We have a unique data set for Norwegians born in the period 1967–1969, with a measure of permanent family income in the children's adolescence. This enables us to examine the long-term effect of family income on children's educational attainment. The Norwegian oil shock in the 1970s is used as an instrument, because this – in some regions but not in others – implied a general increase in income unrelated to parents' abilities. This variation in income is used to estimate the causal effect of family income on children's educational attainment. We find no such causal relationship. This result is robust with respect to different specification tests.     

Supply and marginal firms in general equilibrium

For economies with a large number of small firms, price induced changes in supply are decomposed into substitution and entry effects. Marginal firms (those earning zero profit) play a significant role in the determination of the slope of aggregate supply.     

Walrasian equilibria as limits of noncooperative equilibria. Part II: Pure strategies

We examine the connection between Walrasian equilibria of a limit economy (with infinitesimal firms) and noncooperative (Cournot) equilibria of approximating finite economies (with significant firms). Nonconvex production sets, decreasing returns in the aggregate, and endogenous determination of the number of active firms are allowed. A Walrasian equilibrium is a limit of pure strategy noncooperative equilibria only if a condition (loosely analogous to downward sloping demand in the partial equilibrium constant returns to scale case) holds. The condition is also sufficient to guarantee the existence of a robust sequence of pure strategy noncooperative equilibria which converges to the Walrasian equilibrium.     

Rybczynski's Theorem in the Heckscher-Ohlin World — Anything Goes

We demonstrate that Rybczynski's classic comparative statics can be reversed in a Heckscher-Ohlin world when preferences in each country favor the exported commodity. This taste bias has empirical support. An increase in the endowment of a factor of production can lead to an absolute curtailment in the production of the commodity using that factor intensively, and an absolute expansion of the commodity using relatively little of the same factor. This outcome - which we call “Reverse Rybczynski” - implies immiserizing factor growth. We present a simple analytical example that delivers this result with unique pre- and post-growth equilibria. In this example, production occurs within the cone of diversification, such that factor price equalization holds. We also provide general conditions that determine the sign of Rybczynski's comparative statics.     

Local democracy implications for coastal zone management—A case study in southern Norway

Stakeholder participation is frequently recommended to ensure that public values are taken into account in the decision-making processes. However, few attempts have been made to analyse the extent to which increasing stakeholder participation actually leads to better representation of the public values. The main aim of this study is to obtain more insights about reasons why the most frequently applied form of stakeholder participation, i.e. the public hearings, may fail in representing the general public views and values when applied at a local level. A case study was conducted on policy formulations and decision-making in the coastal zone on the island Flekkerøy in southern Norway. Local- and regional-public authorities contributed in in-depth interviews and with written documentation to inform about a comprehensive stakeholder participation process that took place in the early 1990s. The main findings include that landowner interests, and not public views and values, were legitimised during the participatory process because of: (1) the landowner's strong local social power among inhabitants, (2) the design of the participatory processes favouring the landowner interests, (3) the personal relations between local landowners and public managers, and (4) the low representation of public views and values due to a problem of scale, i.e. the NIMBY syndrome. Based on our experience, we recommend improving representation of public views by changing the frequently applied participatory processes to also include citizens in addition to interest groups and experts.     

Energy Informatics

Due to the increasing importance of producing and consuming energy more sustainably, Energy Informatics (EI) has evolved into a thriving research area within the CS/IS community. The article attempts to characterize this young and dynamic field of research by describing current EI research topics and methods and provides an outlook of how the field might evolve in the future. It is shown that two general research questions have received the most attention so far and are likely to dominate the EI research agenda in the coming years: How to leverage information and communication technology (ICT) to (1) improve energy efficiency, and (2) to integrate decentralized renewable energy sources into the power grid. Selected EI streams are reviewed, highlighting how the respective research questions are broken down into specific research projects and how EI researchers have made contributions based on their individual academic background.     

Economic Effects of Workfare Reforms for Single Mothers: Benefit Substitution and Labour Supply Responses*

We analyse the economic effects of nationwide Norwegian reforms on the state benefit programme targeting single mothers. Our results show that for each reduction of 100 Norwegian kroner (NOK) in benefit payments from the programme, single mothers replaced 65 NOK through benefit substitution. Their labour supply and disposable income also increased in the short term. However, the reforms doubled the poverty rate among single mothers in the long term. The reforms led to a total net gain to public expenditure of 3.6 billion NOK (449 million euros) during the 1998–2008 period, corresponding to a 14 percent decrease in total benefit payments to single mothers.