bequests gifts and social security this paper analyses the very long run or stationary state impact of an unfunded social security system we use an overlapping generations model framework a key feature is that while parents care about their children and can leave non negative bequests to them children also care about their parents and can make non negative gifts to them we show that the possibility of negative net bequests may make social security less harmful to private wealth accumulation than would otherwise be the case a subsidiary finding is that risk loving behaviour may emerge for some households due to the nature of intergenerational transfers within family lines

intergenerational transfers and demographic transition abstract this paper presents an analysis of demographic transition based on the endogenous evolution of intergenerational transfers along an economy s endogenous path of development two period lived agents belonging to overlapping generations choose optimally their desired levels of consumption and fertility together with their desired sizes of transfers to both parents and children parents are more efficient than children in producing output but some parental time must be devoted to child rearing at low levels of development fertility is high and the flow of net intergenerational transfers is from the young to the old at high levels of development fertility is low and the flow of net transfers is from the old to the young these results accord strongly with empirical observations and the analysis may be seen as formalising for the first time a long standing and well respected hypothesis in the demographic transition literature

altruism and risk sharing in networks we provide the first analysis of the risk sharing implications of altruism networks agents are embedded in a fixed network and care about each other we study whether altruistic transfers help smooth consumption and how this depends on the shape of the network we identify two benchmarks where altruism networks generate efficient insurance for any shock when the network of perfect altruism is strongly connected and for any small shock when the network of transfers is weakly connected we show that the extent of informal insurance depends on the average path length of the altruism network and that small shocks are partially insured by endogenous risk sharing communities we uncover complex structural effects under iid incomes central agents tend to be better insured the consumption correlation between two agents is positive and tends to decrease with network distance and a new link can decrease or increase the consumption variance of indirect neighbors overall we show that altruism in networks has a first order impact on risk and generates specific patterns of consumption smoothing

social security public education and the growth inequality relationship abstract we study how the relationship between economic growth and inequality depends upon the levels of funding of two of the largest government programs public education and social security we do this in the context of an overlapping generations economy with heterogeneous agents where the government collects a tax on labor income to finance these programs we show that in our model an increase in government spending on social security reduces income inequality and can have a non monotonic effect on growth when the initial level of social security funding is low as is the case in most poor economies then its increase will enhance growth when its funding level is high as is typical for developed countries we show that its further increase can slow down growth while reducing income inequality these results obtain regardless of whether the increase in social security funding is financed by a tax increase or by cutting the public education budget we also find that the effects of increasing the level of public education expenditures or the overall size of the government budget holding the budget composition fixed are characterized by similar non monotonic growth inequality relationships

institutional investors and the qe portfolio balance channel the operation of the portfolio balance channel has been emphasized by monetary policy makers as a key channel through which quantitative easing qe policies work we assess whether the investment behavior of insurance companies and pension funds in the united kingdom during the global financial crisis was consistent with such an effect by analyzing both sectoral and institution level data our results suggest qe led to institutional investors shifting their portfolios away from government bonds towards corporate bonds but did not lead to a shift into equities

bequests and informal long term care evidence from hrs exit interviews informal long term caregiving for frail elderly individuals by their children may induce parents to compensate their children for their help to test this hypothesis i use the exit interview from the health and retirement study hrs my results show that the decision to care for one s parents has a significant positive impact on the incidence and amount of bequests received in addition increasing the amount of care relative to one s siblings significantly increases the proportion of bequest within a family furthermore i find that the positive nexus of caregiving and bequest requires a written will as a contract between the parent and the helping child

distributional effects of public education in an economy with public pensions we study how the allocation of government expenditures between two major outlays education and pay as you go social security affects human capital distribution in an economy with heterogeneous agents we consider an overlapping generations economy where the government maintains both programs and allocates tax revenues to finance them in our model human capital is one of the factors of production it is itself produced as a combined result of public inputs and private inputs parents decisions to invest time and material resources in education of their children are motivated by altruism heterogeneous in its strength across the population which leads to heterogeneity of incomes we investigate the effect of an increase in public funding for education on the human capital distribution we show that in this framework contrary to some earlier results increased spending on public education may lead to higher inequality our results depend crucially on the interaction of education funding with the social security budget and on the elasticity of substitution in the learning technology

necessity as the mother of invention monetary policy after the crisis we examine recent changes in monetary policy due to the financial crisis and ask whether they are likely to be temporary or permanent we present evidence from two original surveys one of central bank governors the other of academic specialists we find that central banks in crisis countries are more likely to have resorted to new policies to have had discussions about changing mandates and to have communicated more extensively but thinking has changed more broadly for instance many central banks in non crisis countries also report implementing macro prudential measures looking forward we expect central banks to have broader mandates use macro prudential tools more widely and communicate more actively than before the crisis while there is no consensus yet about the usefulness of unconventional monetary policies we expect most of them will remain in central banks toolkits as governors who gain experience with a particular tool are more likely to assess that tool positively finally the relationship between central banks and their governments might well have changed with central banks crossing the line into the political realm more often than in the past

bequest motives a comparison of sweden and the united states this paper reviews four well known theoretical models of private bequest behavior notes their differing implications for public policy and discusses a way of empirically dis criminating among them then it implements the test with micro data from sweden lls and the u s psid the so called altruistic or dynastic model which among the four models has perhaps the most wide ranging implications for policy receives some support the sign pattern is as the model predicts while the magnitude is much smaller than the altruistic theory implies there is evidence of a potential complication due to a dependence of children s education on parents financial status in the case of the u s 2001 elsevier science b v all rights reserved

is everything neutral in his well known analysis of the national debt robert barro introduced the notion of a dynastic family this notion has since become a standard research tool particularly in the areas of public finance and macroeconomics in this paper we critique the assumptions on which the dynastic model is predicated and argue that this framework is not a suitable abstraction in contexts in which the objective is to analyze the effects of public policies we reach this conclusion by formally considering a world in which each generation consists of a large number of distinct individuals as opposed to one representative individual we point out that family linkages form complex networks in which each individual may belong to many dynastic groupings the resulting proliferation of linkages between families gives rise to a host of neutrality results including the irrelevance of all public redistributions distortionary taxes and prices since these results are not at all descriptive of the real world we conclude

managing inventory systems of slow moving items abstract slow moving demand patterns frequently occur with spare parts as well as items in decentralized retail supply chains with large assortments these patterns are commonly called lumpy since they exhibit comparably high demand variation and a high fraction of zero demand events in this paper we examine two distribution based approaches to model lumpy demand processes for inventory control i a generalized hurdle negative binomial model and ii a worst case non parametric model that is derived using a test based approach considering a base stock inventory policy we examine a set of lumpy time series from the industry to exemplify the suitability and benefit of the proposed approaches for managing inventory systems of slow moving items

growth effects of an unfunded social security system when there is altruism and human capital abstract we investigate the relationship between growth and an unfunded social security system in an overlapping generations model with joy of giving altruism where endogenous growth is driven by the accumulation of human capital we show that an unfunded social security system financed with a tax on labor income can increase growth

the macroeconomic effects of large scale asset purchase programmes the effects of asset purchase programs on macroeconomic variables are likely to be moderate we reach this conclusion after simulating the impact of the federal reserve s second large scale asset purchase program lsap ii in a dsge model enriched with a preferred habitat framework and estimated on u s data our simulations suggest that such a program increases gdp growth by less than half a percentage point although the effect on the level of gdp is very persistent the program s marginal contribution to infl ation is very small one key reason for our fi ndings is that we estimate a small degree of fi nancial market segmentation if we enrich the set of observables with a measure of long term debt the semi elasticity of the risk premium to the amount of debt in privatesector hands is substantially smaller than that reported in the recent empirical literature in this case our baseline estimates of the effects of lsap ii on the macroeconomy decrease by at least a factor of two throughout the analysis a commitment to an extended period at the zero lower bound for nominal interest rates increases the effects of asset purchase programs on gdp growth and infl ation

ricardian equivalence revisited deficits gifts and bequests barro 1974 shows that operative altruistic transfer motives are key for ricardian equivalence to hold this paper evaluates the importance of this mechanism quantitatively by studying deficit financed tax cut experiments i use a heterogeneous agents overlapping generations economy with endogenously operative transfer motives to capture the fact that empirically transfers occur in some but not in all families altruism is calibrated to match aggregate transfer statistics i find that the response of aggregate consumption to a tax cut is in the ballpark of a standard overlapping generations economy that is an economy without altruistic family links welfare implications of this economy however move closer to a dynastic economy

property rights and efficiency in olg models with endogenous fertility is there an economic rationale for pronatalist policies we propose and analyze a particular market failure that leads to inefficiently low fertility in equilibrium the friction is caused by the lack of ownership of children if parents have no claim on their children s income the private benefit from producing a child can be smaller than the social benefit we analyze an overlapping generations model with fertility choice and parental altruism ownership is modeled as a minimum constraint on transfers from parents to children using the efficiency concepts proposed in golosov jones and tertilt 2007 we find that whenever the transfer floor is binding fertility choices are inefficient second we show that the usual conditions for efficiency are not sufficient in this context third in contrast to settings with exogenous fertility a payg social security system cannot be used to implement efficient allocations to achieve an efficient outcome government transfers need to be tied to fertility choice

long run equilibria with borrowing constraints and altruism this paper adapts a nonstochastic overlapping generations model to include liquidity constraints and intergenerational altruism existing work indicates the importance of both but often considers them separately this paper studies their interactions first it shows that they tend to conflict the model only admits stationary equilibria with dynastic wealth accumulation but no binding liquidity constraints or wity binding constraints but no dynastic accumulation second it examines the latter type of equilibrium closely if liquidity constraints bind quantitative examples imply that consequent utility losses may be small and that economywide wealth accumulation tends to be unrealistically low

estate taxes consumption externalities and altruism we study how the introduction of consumption externalities affects the efficiency of the dynamic equilibrium in an economy displaying dynastic altruism when the bequest motive is inoperative consumption externalities affect the intertemporal margin between young and old consumption and thus modify the intertemporal path of consumption and capital the optimal tax policy that solves this intertemporal inefficiency consists of a tax on capital income and a pay as yougo social security system the later solves the overaccumulation of capital due to the inoperativeness of the bequest motive and the former solves the inefficient allocation of consumption due to consumption externalities when the bequest motive is operative consumption externalities only cause an intratemporal inefficiency that affects the allocation of consumption between the generations living in the same period but do not affect the optimality of the capital stock level this suboptimal allocation of consumption implies in turn that the path of bequest is also suboptimal the optimal tax policy in this case consists of an estate tax and a capital income tax the estate tax corrects the intratemporal inefficiency but generates an intertemporal inefficiency which is corrected by means of an appropriate capital income tax

dynamic efficiency in the gifts economy abstract in the standard analysis of overlapping generations economies with gifts from children to parents each generation takes the actions of other generations as given the resulting equilibrium is dynamically inefficient in reality however parents realize that children will respond to higher parental saving by reducing gifts for a broad class of gift economies this implicit tax on saving pushes the equilibrium to dynamic efficiency this result reestablishes the potential relevance of the gift model to the us economy renders moot an important part of the ricardian equivalence debate and provides a motivation for a type of social security system

social security reform with impure intergenerational altruism abstract this paper studies the long run aggregate and welfare effects of eliminating social security in a quantitative dynamic general equilibrium life cycle model where parents and their children are linked by voluntary and accidental bequests social security in this model with impure altruism has a smaller effect on capital accumulation than in a pure life cycle model a bigger effect than in a model with two sided altruism the welfare gain of eliminating social security system under impure altruism is smaller than that in a pure life cycle model and bigger than that in a model with two sided altruism

the continuing muddles of monetary theory a steadfast refusal to face facts lionel robbins was concerned about the methodology of economic science when he discussed the relationship between theory and reality two of the examples of inappropriate relationships were taken from monetary economics such shortcomings continue among the worst are 1 is lm whereby the monetary authorities set the monetary base and the interest rate is market determined 2 the monetary base multiplier of bank deposits and the role of reserve ratios 3 the current three equation neoclassical consensus assuming perfect creditworthiness and hence no need for banks 4 the analysis of the evolution of money

tobin s imperfect asset substitution in optimizing general equilibrium in this paper we present a dynamic optimizing model that allows explicitly for imperfect substitutability between different financial assets this is specified in a manner which captures tobin s 1969 view that an expansion of one asset s supply affects both the yield on that asset and the spread or risk premium between returns on that asset and alternative assets our estimates of this model on u s data confirm that some of the observed deviations of long term rates from the expectations theory of the term structure can be traced to movements in the relative stocks of financial assets the richer aggregate demand and asset specifications imply that there exists an additional channel of monetary policy our results suggest that central bank operations exercise a modest influence on the relative prices of alternative financial securities and so exert an extra effect on long term yields and aggregate demand separate from their effect on the expected path of short term rates

multiple items procurement under stochastic nonstationary demands abstract in the consumer goods wholesaling and retailing industry a large number of stock keeping units must be managed on a regular basis the items are typically purchased in families each family being associated with a specific external vendor and usually there are some constraints on family order quantities and there are frequent opportunities to buy at a temporary low price the demand for an item is often stochastic and not stationary in this paper by computing procurement plans over rolling planning horizons we transform this difficult sequential decision problem into a multi period static decision problem under risk the problem is initially formulated as a stochastic program with simple recourse and a branch and bound algorithm is designed to solve an equivalent deterministic program a piecewise concave approximation is proposed to reduce this program to a linear program with one 0 1 variable per planning period the performances of the algorithms are studied in two simulation experiments the simulations show that when planning over a rolling horizon the approach proposed yields excellent results

random earnings differences lifetime liquidity constraints and altruistic intergenerational transfers abstract this paper develops a model of private savings behavior in which households care about their descendants cannot have negative net worth and have lifetime earnings depending on random draws from an exogenous distribution of abilities the elements interact very lucky parents are likely to leave large estates constrained children are unusually likely to receive intergenerational transfers the paper proves the existence of a stationary cross sectional distribution of wealth endogenously determines where liquidity constraints will bind and shows that the long term interest rate must be such that ricardian neutrality fails its last section generates several illustrative numerical simulations

qe a successful start may be running into diminishing returns existing studies may have underestimated the impact of qe1 on uk gdp because they did not take full account of the beneficial effect on credit risk spreads and on the exchange rate however all such effects were also influenced by the roughly simultaneous introduction of similar easing in the usa which complicates the analysis another area where qe has been positive is in reducing public sector borrowing costs where qe1 and subsequent rounds have disappointed is in their inability to stimulate a recovery in credit and monetary growth amid an increased desire among banks to hold far more of their reserves at the central bank moreover there is growing evidence of significant diminishing returns in qe2 as gilt rates have already fallen to historically low levels and the risk is that if policy makers fail to resuscitate the bank lending channel further rounds of qe could potentially have negative returns

the coordinated replenishment dynamic lot sizing problem with quantity discounts abstract in the classical coordinated replenishment dynamic lot sizing problem the primary motivation for coordination is in the presence of the major and minor setup costs in this paper a separate element of coordination made possible by the offer of quantity discounts is considered a mathematical programming formulation for the extended problem under the all units discount price structure and the incremental discount price structure is provided then using variable redefinitions tighter formulations are presented in order to obtain tight lower bounds for reasonable size problems more significantly as the problem is np hard we present an effective polynomial time heuristic procedure for the incremental discount version of the problem that is capable of solving reasonably large size problems computational results for the heuristic procedure are reported in the paper

international transmission channels of u s quantitative easing evidence from canada en reaction a la grande recession la reserve federale americaine a reduit son taux directeur a sa valeur plancher afin d accentuer la detente monetaire la banque centrale americaine a par la suite mis en oeuvre des achats massifs d actifs ce qui a eu pour effet de quadrupler la taille de son bilan

social security and private saving new time series evidence in an important article in the journal of political economy martin feldstein 1974 estimated that the introduction of the social security system had reduced personal saving by 50 percent with serious consequences for capital formation and output his conclusion was based on a consumer expenditure function estimated with u s time series data and incorporating a social security wealth variable of his construction this paper presents new evidence that casts considerable doubt on feldstein s conclusion first the social security wealth variable used by feldstein was seriously flawed as a result of a computer programming error simply correcting this error substantially changes the estimated effect of social security on saving second the statistical evidence depends upon assumptions which are embedded in the construction of the social security wealth variable assumptions that are not demonstrably preferable and are in some cases inferior to alternative assumptions these assumptions relate first to how individuals form their expectations about the social security benefits they expect to receive and the social security taxes they expect to pay and second to estimates of the number of workers dependent wives and surviving

multi product lot sizing with a transportation capacity reservation contract abstract although transportation costs can form more than 50 of the total logistics costs of a product they are often neglected in lot sizing research and modelling nonetheless the body of research that does take transportation costs into account is gradually growing the bulk of this type of research however assumes that freight rates decrease as shipping weights and or volumes increase inspired by the situation with a large european manufacturing company we study a multi product lot sizing model where in any period any portion of a reserved transportation capacity can be used in exchange for a guaranteed price if the capacity is insufficient then the shipper needs to contract additional transportation capacity on the spot market where the prevailing price is higher accordingly the freight rates are piece wise linearly increasing in our model we prove that the problem of determining transportation lot sizes so as to meet warehouse demand with no backlogging allowed and to minimize total costs that is the sum of inventory carrying ordering and transportation costs is np hard in the strong sense furthermore we present a lagrangean relaxation algorithm to compute lower and upper bounds of which comprehensive computational experiments show the compelling performance in terms of quality and speed

properties of lot sizing rules under lumpy demand when a lot sizing problem is viewed from a context of buyer supplier relationships an important phenomenon frequently encountered by the supplier is a so called lumpy demand however there has been very little attention devoted to study the behaviour and performances of lot sizing rules under the situation of lumpy demand this paper presents both analytical and experimental studies of lot sizing rules for lumpy demand situations the analytical study is based on the assumption that constant demand occurs for every fixed number of periods in the experimental study both the quantity of and the time between demands are allowed to vary the studies show that analytical results provide good insights in understanding the behaviour and performances of lot sizing rules when more realistic situations are addressed in the experimental study the paper also confirms that the results of lot sizing studies under the situation of non lumpy demand cannot be entirely generalised to the situation with lumpy demand r 2002 elsevier science b v all rights reserved

analyzing federal reserve asset purchases from whom does the fed buy abstract asset purchases have become an important monetary policy tool of the federal reserve in recent years to date most studies of the federal reserve s asset purchases have tried to measure the interest rate effects of the purchases and several provide evidence that these purchases do have important effects on longer term market interest rates the theory of how asset purchases work however is less well developed some of the empirical studies point to preferred habitat models in which investors do not have the same objectives and therefore prefer to hold different types and maturities of securities to study this more closely we exploit flow of funds data to assess the types of investors that are selling to the federal reserve and their portfolio adjustment after these sales which could provide a view to the plausibility of preferred habitat models and the transmission of unconventional monetary policy across asset markets we find that the federal reserve is ultimately buying from only a handful of investor types primarily households which includes hedge funds with a different reaction to changes in federal reserve holdings of longer term versus shorter term assets although not evident for all investors the key participants are shown to rebalance their portfolios toward more risky assets during this period these results can be interpreted as supporting at least in part the preferred habit theory and the view that the monetary policy transmission is working across asset markets

education social security and growth abstract we study the role of government s allocation of tax revenues between two outlays public investment in education a transfer to the young generation and social security benefits to the older generation in an overlapping generations economy with pay as you go social security and altruistically motivated transfers from parents to children we analyze how the allocation of the tax revenues between the two outlays affects growth and welfare in competitive equilibria a we obtain comparative dynamics results for nonstationary equilibria subject to a change in the allocation profile b for stationary equilibria we show that for a given allocation profile of the tax revenues educational subsidies can either increase the growth rate or decrease it depending on the parameters of the model preferences production function and the tax rate c if government seeks to allocate funds in a way that maximizes the growth rate we demonstrate that under some plausible conditions it is not optimal to maintain pay as you go social security however if parents preferences combine strong concern for their retirement with significant degree of altruism towards their children then pay as you go social security system does enhance growth and welfare

the stochastic dynamic production inventory lot sizing problem with service level constraints abstract this paper addresses the multi period single item inventory lot sizing problem with stochastic demands under the static dynamic uncertainty strategy of bookbinder and tan manage sci 34 1988 1096 in the static dynamic uncertainty strategy the replenishment periods are fixed at the beginning of the planning horizon but the actual orders are determined only at those replenishment periods and will depend upon the demand that is realised their solution heuristic was a two stage process of firstly fixing the replenishment periods and then secondly determining what adjustments should be made to the planned orders as demand was realised we present a mixed integer programming formulation that determines both in a single step giving the optimal solution for the static dynamic uncertainty strategy the total expected inventory holding ordering and direct item costs during the planning horizon are minimised under the constraint that the probability that the closing inventory in each time period will not be negative is set to at least a certain value this formulation includes the effect of a unit variable purchase production cost which was excluded by the two stage bookbinder tan heuristic an evaluation of the accuracy of the heuristic against the optimal solution for the case of a zero unit purchase production cost is made for a wide variety of demand patterns coefficients of demand variability and relative holding cost to ordering cost ratios the practical constraint of non negative orders and the existence of the unit variable cost mean that the replenishment cycles cannot be treated independently and so the problem cannot be solved as a stochastic form of the wagner whitin problem applying the shortest route algorithm

altruism in networks we provide the first analysis of altruism in networks agents are embedded in a fixed network and care about the well being of their network neighbors depending on incomes they may provide financial support to their poorer friends we study the nash equilibria of the resulting game of transfers we show that equilibria maximize a concave potential function we establish existence uniqueness of equilibrium consumption and generic uniqueness of equilibrium transfers we characterize the geometry of the network of transfers and highlight the key role played by transfer intermediaries we then study comparative statics a positive income shock to an individual benefits all for small changes in incomes agents in a component of the network of transfers act as if they were organized in an income pooling community a decrease in income inequality or expansion of the altruism network may increase consumption inequality

altruism the samaritan s dilemma and government transfer policy this paper shows that altruism provides an efficiency rationale for public provision of insurance to the poor the framework is one in which there are rich altruists and risk averse poor who face some possibility of loss the government represents the rich and makes transfers on their behalf with unconditional transfers the poor may forgo insurance and rely on private charity to bail them out in the event of loss this reliance on private charity has adverse efficiency effects these may be avoided if the government makes in kind transfers of insurance copyright 1995 by american economic association

unconventional monetary policy the assessment the uncon ventional monetary policy measures adopted by the major central banks in the period since 2008 are discussed in this paper we highlight some important differences between quan titative easing and conventional monetary policy and then evaluate the mechanisms through which quantitative easing may propagate to financial markets and the real economy drawing on perspec tives from monetarist and new keynesian theory additional measures intended to supplement or strengthen the effects of pure quantitative easing often termed unconventional unconventional monet ary policy are also assessed in our discussion we relate the various articles in this issue to some of the key research questions posed in relation to unconventional monetary policy

asset substitutability and monetary policy an alternative characterization abstract a distance function is defined for a simple portfolio choice problem and then used to express the impact on asset prices of a change in an asset stock as the sum of a substitution and a wealth effect substitutes and complements are defined with reference to qualtity rather than price changes this method of characterizing asset substitutability leads to simpler and more easily interpreted results when analyzing monetary policy that does the standard approach which expresses asset price changes in terms of the price elasticities of the asset demand functions

equilibrium existence in an overlapping generations model with altruistic preferences abstract we prove the existence of a competitive equilibrium in an overlapping generations model with altruistic preferences and nonnegative bequests in equilibrium some sequences of agents of successive generations may be continually linked by positive bequests and act as infinitely lived agents other sequences of agents may not be so linked and therefore behave as sequences of finite lived agents thus this paper adds to the literature on competitive equilibrium in dynamic models by endogenising the mix of finite and infinitely lived agents we also discuss optimality and provide some examples which exhibit interesting equilibria

quantitative easing is not as unconventional as it seems policy interest rates do not have to be short the means by which monetary authorities influence prices and quantities can differ but the obstacles to altering one rather than the other are not insuperable inflation is sluggish and expectations of future interest rates long and short nominal and real are diverse and uncertain these factors determine the limited power that monetary authorities enjoy when they conduct quantitative easing but this policy is not as unconventional as some have claimed and indeed can be viewed as broadly similar to conventional monetary measures the impact of quantitative easing however could be very different depending on the underlying structure of the economy and the fiscal authorities responses finally we note some important caveats that must be borne in mind when trying to evaluate the impact of quantitative easing particularly given the fact that the world s main financial markets are closely linked copyright 2012 oxford university press

parental altruism and inter vivos transfers theory and evidence this paper uses psid data on the extended family to test whether inter vivos transfers from parents to children are motivated by altruism specifically the paper tests whether an increase by one dollar in the income of parents actively making transfers to a child coupled with a one dollar reduction in that child s income results in the parents increasing their transfer to the child by one dollar this restriction on parental and child transfer income derivatives is derived for the standard altruism model augmented to include uncertainty and liquidity constraints these additional elements pin down the timing of inter vivos transfers the method used to estimate income transfer derivatives takes into account unobserved heterogeneity across families in the degree of altruism the findings strongly reject the altruism hypothesis redistributing one dollar from a recipient child to donor parents leads to less than a 13 cent increase in the parents transfer to the child far less than the one dollar increas

the effectiveness of alternative monetary policy tools in a zero lower bound environment this paper reviews alternative options for monetary policy when the shortterm interest rate is at the zero lower bound and develops new empirical estimates of the effects of the maturity structure of publicly held debt on the term structure of interest rates we use a model of risk averse arbitrageurs to develop measures of how the maturity structure of debt held by the public might affect the pricing of level slope and curvature term structure risk we find that these treasury factors historically were quite helpful for predicting both yields and excess returns over 1990 2007 the historical correlations are consistent with the claim that if in december 2006 the fed were to have sold off all its treasury holdings of less than 1 year maturity about 400 billion and use the proceeds to retire treasury debt from the long end this might have resulted in a 14 basis point drop in the 10 year rate and an 11 basis point increase in the 6 month rate we also develop a description of how the dynamic behavior of the term structure of interest rates changed after hitting the zero lower bound in 2009 our estimates imply that at the zero lower bound such a maturity swap would have the same effects as buying 400 billion in long term maturities outright with newly created reserves and could reduce the 10 year rate by 13 basis points without raising short term yields

the federal reserve s large scale asset purchase programmes rationale and effects we provide empirical estimates of the effect of large scale asset purchases lsaps on longer term us treasury yields within a framework that allows for several transmission channels including the scarcity channel associated with the preferred habitat literature and the duration channel associated with interest rate risk we also clarify lsaps role in the broader context of historical monetary policy strategy results indicate that lsap style operations mainly impact longer term rates via the nominal term premium within that premium the response is predominantly embodied in the real term premium the scarcity and duration channels both seem to be of considerable importance

calculating can order policies for the joint replenishment problem by the compensation approach abstract in this paper we consider the stochastic joint replenishment problem we coordinate the replenishment of an inventory with several items where the fixed cost of a replenishment consists of a major order cost for each order and a minor order cost for each item participating in the order the literature has focused on two kinds of policies can order policies and periodic replenishment policies generally speaking the can order policy performs better when the major ordering cost is relatively low and the periodic replenishment policies better when the major ordering cost is relatively high we present a new method for calculating can order policies which dominates existing methods on examples where the can order policy performs better than the periodic replenishment policies the method is based on a compensation approach where an item placing an order receives a compensation from other items benefitting from the order opportunity

an approach to evaluate the impact of interaction between demand forecasting method and stock control policy on the inventory system performances abstract usually in stock control studies demand data are considered as an input to the model without explicitly considering that they are the results of a demand forecasting system stock control system is examined independently of the demand forecasting system and it is assumed that demand data or forecast errors have been properly modelled however the interactions that may exist between demand forecasting methods and stock control systems in terms of their effects on global system performances are not considered in the paper an approach for evaluating these interactions based on a comparative simulation test of global system costs using historical data is presented the approach is explained through a real case the replenishment from different suppliers of a central depot of tinned food which supplies more than 700 items to warehouses at the lower echelon results of the simulation study show that traditional measures of forecast errors cannot be taken as sole indicators for the choice among different demand forecasting methods these methods on the contrary have to be evaluated on the basis of total costs and service level of the global inventory control system

forecasting method for noisy demand abstract exponential smoothing methods are very commonly used for forecasting demand regarding the process of forecasting demand the main approach towards the selection and optimisation of alternative methods relates to the minimisation of forecast error measures such as the mean square error mse with regard to pegels classification of usage of proper forecasting methods hw methods additive and multiplicative are appropriate for demand with trend and seasonality which corresponds to b 2 and b 3 but hw methods are not accurate enough for demand with large noise that is often a property of real data in this paper we present improved an hw method for demand with noise and we demonstrate that a reduction in forecast error mse can be reached from the results we prove that the proposed method is more accurate than the existing ones and that it is the proper choice for forecasting noisy demand furthermore we show that essential reduction of supply chain costs can be achieved if we use improved the hw method for joined optimisation

aspirations habit formation and bequest motive we analyze how the presence of endogenous preferences affects the altruistic bequest motive from parents to children we will show that the existence of habits raises the threshold value of the intergenerational discount factor above which altruistic bequests are positive while aspiration formation could push this value down therefore the dynamic inefficiency of the economy with no altruism is not sufficient to prevent the bequest motive from being operative under aspiration formation we also discuss the implications of public debt when the bequest motive is inoperative and preferences exhibit habit and aspiration formation

joint optimisation of demand forecasting and stock control parameters abstract exponential smoothing methods are very commonly used for forecasting demand in a supply chain context when estimating the parameters used in these methods a common practice is to optimise only the smoothing constants and not the initial parameter values in this paper we show that if we treat initial values as well as smoothing constants as decision variables a considerable reduction in forecast error can be achieved additionally the optimisation of the forecasting method should not be treated separately from the production or inventory model in which forecasts are used the case of a centralised supply chain with an order up to inventory policy shows that calculated forecasts of demand determined by minimising mean absolute error mae or mean squared error mse are not optimal finally a method for simultaneous optimisation of demand forecasting and a stock control policy is described initial and smoothing parameters in the forecasting methods can be determined to minimise the total costs

dynamic version of the economic lot size model this article originally appeared in management science october 1958 volume 5 number 1 pp 89 96 published by the institute of management sciences a forward algorithm for a solution to the following dynamic version of the economic lot size model is given allowing the possibility of demands for a single item inventory holding charges and setup costs to vary over n periods we desire a minimum total cost inventory management scheme which satisfies known demand in every period disjoint planning horizons are shown to be possible which eliminate the necessity of having data for the full n periods

government financing decisions and asset returns abstract this paper presents an empirical investigation of the relation between government financing decisions and asset returns in particular the focus is on whether a substitution of debt financing for tax financing of a given level of expenditures is associated with an increase in interest rates the paper brings a different perspective to empirical investigations of government fiscal policies by examining the response of asset prices in an efficient capital market to such policies rather than focusing on aggregate consumption behavior the results are consistent with the idea that asset prices are unrelated to how the government finances its expenditures the results however also indicate that the capital market is not indifferent with respect to the level of government expenditures as higher interest rates are associated with increases in government purchases

the effects of asset purchases and normalization of u s monetary policy this paper examines changes in the effects of unconventional monetary policies in the united states to this end we estimate a markov switching var model with absorbing regimes to capture possible structural changes our results detect regime changes around the beginning of 2011 and the middle of 2013 before 2011 the u s large scale asset purchases lsaps had relatively large impacts on the real economy and prices but after the middle of 2013 their effects were weaker and less persistent in addition after the middle of 2013 which includes the monetary policy normalization period the asset purchase or balance sheet shocks had slightly weaker effects than during the early stage of the lsaps but stronger effects than during the late stage of the lsaps while interest rate shocks had insignificant effects on the real economy and prices finally our results suggest that the positive responses of durables and capital goods expenditures to interest rate shocks weakened the negative impacts of interest rate hikes after the middle of 2013 including the period of monetary policy normalization jel c32 e21 e52

sovereign debt the assessment this article serves as an introduction to two issues of the oxford review of economic policy one entitled sovereign debt understanding bond markets during the eurozone crisis and the second sovereign debt lessons from the past reforms for the future we begin by documenting recent trends in advanced country sovereign indebtedness and reviewing events that preceded the sovereign debt crisis in the eurozone the mechanisms through which rising sovereign debt may impact bond yields economic growth and inflation are discussed and the evidence for such effects is reviewed our discussion highlights that there is no unique threshold beyond which sovereign debt exerts adverse macroeconomic effects and that in order to understand the consequences of a given debt load one must analyse its structure in terms of internal and external creditors currency denomination the time to maturity of the bonds and the legal code governing debt issuance as well as various economic and political constraints measuring the fiscal space of the sovereign we then turn our attention to episodes in which sovereign debt proves excessive and default occurs we review explanations for the protracted and inefficient nature of defaults and describe some lessons from historical studies examining default outcomes in the final part of the paper we discuss proposals for averting future debt crises including jointly issued bonds such as eurobonds contingent convertible bonds and elements of a sovereign debt restructuring mechanism in the course of our discussion we draw on each of the 11 articles included in the two issues of this journal devoted to sovereign debt copyright 2013 oxford university press

social security intergenerational transfers and endogenous growth in this paper the effects of social security in a simple model of endogenous growth with alternative motives of having children are analyzed it shows how the effects of social security depend on the size of the social security tax the motive to have children and the pattern of intergenerational transfers the pattern of intergenerational transfers itself however is shown to change with the social security tax rate when the social security tax is not too high social security increases per capita income growth and tends to enhance welfare

have we underestimated the likelihood and severity of zero lower bound events prior to the financial crisis most economists probably did not view the zero lower bound zlb as a major problem for central banks using a range of structural and statistical models we find that previous research understated the zlb threat by ignoring uncertainty about model parameters and latent variables focusing too much on the great moderation experience and relying on structural models whose dynamics cannot generate sustained zlb episodes our analysis also suggests that the federal reserve s asset purchases while materially improving macroeconomic conditions did not prevent the zlb constraint from having first order adverse effects on real activity and inflation