pushing the boundaries of climate economics critical issues to consider in climate policy analysis abstract climate policy choices are influenced by the economics literature which analyses the costs and benefits of alternative strategies for climate action this literature in turn rests on a series of choices about the values and assumptions underlying the economic analysis the methodologies for treating dynamics technological change risk and uncertainty and the assumed interactions between economic systems society and the environment including institutional constraints on climate policy we identify and discuss such critical issues pushing at the boundaries of current climate economics research new thinking in this area is gathering pace in response to the limitations of traditional economic approaches and their assumptions on economic behaviour ecological properties and socio technical responses we place a particular emphasis on the role of induced technological change and institutional setups in shaping cost effective climate action that also promotes economic development and the alleviation of poverty

public health spending old age productivity and economic growth chaotic cycles under perfect foresight abstract this paper analyses the dynamics of a double cobb douglas economy with overlapping generations and public health investments that affect the supply of efficient labour of the old aged it is shown that the positive steady state of the economy is unique moreover we provide necessary and sufficient conditions for the emergence of endogenous deterministic complex cycles when individuals are perfectly foresighted interestingly i the equilibrium dynamics shows rather complicated phenomena such as a multiplicity of bubblings depending on the size of the public health system and ii the higher the degree of thriftiness the likelier an economy is exposed to endogenous fluctuations because the need to save when young to support consumption when old is reduced

the inverted pyramid a neo ricardian view on the economy environment relationship abstract in ecological economics natural resources which may contribute only a small amount to gdp are viewed as fundamental to the functioning of the economy they are sometimes pictured as sitting at the base of an inverted pyramid with the rest of the economy balanced on top of them in this paper we show that when prices are set by markup a standard heterodox assumption then the inverted pyramid picture of the economy emerges naturally in a neo ricardian model we demonstrate the use of the model with brief applications to biophysical economics the paper is one of a growing number that use heterodox macroeconomics to address questions in ecological economics

a characterization of erratic dynamics in the overlapping generations model abstract in this paper we characterize and give examples o wide classes of utility functions which generate erratic dynamics in the standard deterministic overlapping generations model erratic dynamics refers to feasible trajectories which are bounded but which do not converge to stationary points or periodic orbits we show that such trajectories are pareto efficient we introduce credit into the model and show how a constant credit expansion rate can result in erratic trajectories in prices and the real value of credit finally we briefly discuss certain technical aspects of the mathematics used and the statistical nature of the dynamics that can arise from deterministic dynamical systems

the perceived returns to education and the demand for schooling economists emphasize the link between market returns to education and investments in schooling though many studies estimate these returns with earnings data it is the perceived returns that affect schooling decisions and these perceptions may be inaccurate using survey data for eighth grade boys in the dominican republic we find that the perceived returns to secondary school are extremely low despite high measured returns students at randomly selected schools given information on the higher measured returns completed on average 0 20 0 35 more years of school over the next four years than those who were not

bank risk within and across equilibria abstract the global financial crisis highlighted that the financial system can be most vulnerable when it seems most stable this paper models non linear dynamics in banking small shocks can lead from an equilibrium with few bank defaults straight to a full freeze the mechanism is based on amplification between adverse selection on banks funding market and moral hazard in bank monitoring our results imply trade offs between regulators microprudential desire to shield individual weak banks and the macroprudential consequences of doing so moreover limiting bank reliance on wholesale funding always reduces systemic risk but limiting the correlation between bank portfolios does not

are ethical banks different a comparative analysis using the radical affinity index this article studies the differences between traditional financial intermediaries commercial banks savings banks and cooperative banks and ethical banks based on property rights in which the owner decides the ideology principles standards and objectives of the organisation in ethical banking affinity centres on positive social and ethical values the article consequently focuses on an index proposed both to differentiate ethical banks from other types of banks and also to pinpoint the differences between the various ethical banks themselves this is the radical affinity index rai which groups banks together in terms of their stance on ethical commitment concentrating on ethical ideology and principles information transparency placement of assets guarantees and participation and using a sample of 114 european banks the evidence shows that transparency of information and placement of assets are factors that differentiate ethical banks from other financial intermediaries guarantees and participation are characteristics specific to ethical banks these variables however do not offer clear evidence to our analysis

this time it s different an inevitable decline in world petroleum production will keep oil product prices high causing military conflicts and shifting wealth and power from democracies to authoritarian regimes abstract there is virtual agreement among geologists that world production of conventional oil will peak at some point in the future oil after all is a finite resource while demand will only grow over time geologists disagree however exactly when the peak will occur using data from the international energy agency the us department of energy the association for the study of peak oil and gas and petroleum industry sources we argue that conventional oil production will reach a worldwide maximum within the next 5 10 years earlier than generally estimated thus leaving a very short time frame within which to plan for conversion to alternative sources of energy unless planning is initiated immediately the united states and other western democracies will see their positions in the global economy undercut as military conflicts over limited energy resources increase and wealth and power are shifted to authoritarian regimes in russia venezuela africa and the middle east

neoclassical labour market dynamics chaos and the real wage phillips curve abstract the relationship between wage inflation and unemployment has been extensively investigated since the early work of phillips phillips a w 1958 the relation between unemployment and the rate of change of money wage rates in the u k 1861 1957 economica 25 283 299 and lipsey lipsey r g 1960 the relation between unemployment and the rate of change of money wage rates in the u k 1861 1957 a further analysis economica 27 1 31 and it is still a matter of debate in this paper we study the dynamics of a standard neoclassical labour market under the simplest walrasian adjustment rule we show that when consumption and leisure are sufficiently low substitutes the unique walrasian equilibrium of the economy can be destabilised and regular or even chaotic fluctuations of wages and employment appear this leads to an interesting resurrection of a real wage phillips curve as a long term phenomenon

the effect of pension design on employer costs and employee retirement choices evidence from oregon abstract we use administrative data from oregon s public employees retirement system pers to study the effect of pension design on employer costs and employee retirement timing decisions during our 1990 2003 sample period pers calculates each member s retirement benefit using up to three different formulas defined benefit db defined contribution dc and a combination of db and dc and pers pays the maximum benefit for which the member is eligible we show that this maximum benefit calculation results in average ex post retirement benefits that are 54 higher than if they had been calculated using only the db formula and that employees receiving dc benefits are significantly more likely than employees receiving db benefits to retire before the plan s normal retirement age monte carlo simulations verify that the higher costs could have been predicted at the start of our sample period exploiting exogenous plan changes we show that employees respond to within year variation in their retirement incentives and consistent with peer effects that they respond more strongly to these incentives when more of their coworkers face similar incentives finally consistent with the emerging literature on financial mistakes by households we show that a small but noteworthy fraction of retirees would have benefited from shifting their retirements by as little as one month

conscientious vs ambivalent consumers do concerns about energy availability and climate change influence consumer behaviour abstract energy availability and climate change are interrelated concerns with economic components they need to be addressed by policy makers and they require changes in energy consumption this study examines whether concerns about energy availability and climate change influence consumer behaviour policy perceptions and beliefs about future energy consumption this question is investigated by analysing data from the eurobarometer 75 4 a comprehensive survey of citizens from all countries of the european union that was conducted in june 2011 n 26 840 the regression results show that people concerned about climate change were significantly more likely to take action to mitigate climate change and to be more favourably disposed towards energy policies and future changes in energy consumption than people who were not concerned about climate change on the other hand people who were concerned about energy availability undertook fewer actions and neither supported energy policies nor believed in future changes in energy consumption this surprising finding raises questions regarding the adequate communication of energy availability and policies to the public in the european union

savings in times of demographic change lessons from the german experience pension reforms in many developed countries make individuals shoulder a bigger share of longevity and income risks the desired response is that individuals accumulate private assets for retirement whether this actually takes place is of paramount relevance for scientists and policy makers we take germany as an example twenty years of pension reform have transformed the monolithic german pension system into a multi pillar system formerly generous public pension benefits are gradually being reduced while substantial incentives are granted to occupational and private saving schemes has this transition worked out we survey the reform steps and household s reactions how did individuals adjust their labor market behavior how did private and occupational pension plans take off how do behavioral adjustments vary in the population most germans adapted to the new situation both actual and expected retirement decisions changedand the share of households without supplementary pensions decreased from 73 to 39 in little more than a decade this is a remarkable success nonetheless households with low education low income and less financial education did neither adjust their retirement behavior nor pick up supplementary pension plans and are thus likely to face difficulties in bridging the gap arising in future pension income

estimation of multipliers for the activity of hotels and restaurants abstract the purpose of this paper is to model and estimate the multipliers for hotels and restaurants the most characteristic of the industries that make up the tourism business this multiplier can be used for estimating the economic impact of tourism demand likewise a tool for planners and policy makers is provided the data source is the set of input output tables gathered by the oecd which in its last edition has collected a sufficiently representative number of countries with an equally suitable disaggregation level two models are elaborated for the estimation of the rasmussen backwards multiplier and of the imports multiplier respectively some explanatory variables previously used in the literature are confirmed while others are proposed as alternative ones

political institutions and sorting in a tiebout model we construct a computational model of tiebout competition and show that political institutions differ in their ability to sort citizens effectively in particular we find that certain types of institutions those that become more politically unstable as citizen heterogeneity increases perform relatively poorly given a single jurisdiction yet these same institutions perform relatively well when there are multiple jurisdictions we provide an explanation for this phenomenon which draws upon simulated annealing a discrete nonlinear search algorithm jel

a review of eroei dynamics energy transition models abstract the need for an environmentally sustainable economy is indisputable but our understanding of the energy economy interactions dynamics that will occur during the transition is insufficient this raises fascinating questions on the future of economic growth energy technology mix and energy availability the crucial interactions between energy and economy systems can be usefully described in terms of the energy returned on energy invested eroei metric the energy cost of primary energy production multiple authors have used this metric to explore the behaviour of the economy over the transition to lower carbon energy sources the following text is a review of energy economy models that incorporate the eroei metric in particular the eroei dynamics literature is found to describe a common set of dynamics associated with the transition to lower eroei primary energy resources these include the rising resource cost of primary energy production the short term misallocation of resources the short term overproduction of energy and the potential decline in economic stability the literature can be divided into groups of related models following the review a number of key areas for additional work are identified and discussed

banking with ethics strategic moves and structural changes of the banking industry in the aftermath of the subprime mortgage crisis this paper explores the behavior of the banking industry in the new business environment that arose after the subprime crisis the main hypothesis is that there are two major types of banking institutions conventional banks and ethical banks each has a distinct business model to test how they have reacted to the new environment factor analysis techniques have been used the main findings are twofold firstly the new financial context has indeed caused the behavior of mainstream banks to change within this group one can further distinguish between those that have tried to anticipate the changes by adopting a more responsible financial attitude and those that have merely modified their banking practice to comply with the new regulatory framework secondly there are the so called ethical banks interestingly their behavior has scarcely been altered by the new financial context the main conclusion is that the different response of both types of banks reflects the existence of a distinct business model

concatenate coordination and mutual coordination abstract we tell of the evolving meaning of the term coordination as used by economists the paper is based on systematic electronic searches on coord etc of major works and leading journals the term coordination first emerged in professional economics around 1880 to describe the directed productive concatenation of factors or activities within a firm also transportation economists used the term to describe the concatenation of routes and trips of a transportation system these usages represent what we term concatenate coordination the next major development came in the 1930s from several lse economists hayek plant hutt and coase who extended that concept beyond the eye of any actual coordinator that is they wrote of the concatenate coordination of a system of polycentric or spontaneous activities these various applications of concatenate coordination prevailed until the next major development namely thomas schelling and game models here coordination referred to a mutual meshing of actions game theorists developed crisp ideas of coordination games like battle of the sexes coordination equilibria convention and path dependence this coordination was not a refashioning but rather a distinct concept one we distinguish as mutual coordination as game models became more familiar to economists it was mutual coordination that economists increasingly had in mind when they spoke of coordination economists switched so to speak to a new semantic equilibrium now mutual coordination overshadows the older notion of concatenate coordination the two senses of coordination are conceptually distinct and correspond neatly to the two dictionary definitions of the verb to coordinate both are crucial to economics we suggest that distinguishing between the two senses can help to clarify coordination talk also compared to talk of efficiency and optimality concatenate coordination allows for a richer more humanistic and more openly aesthetic discussion of social affairs the narrative is backed up by excel worksheets that report on systematic content searches of the writings of economics using the worldwide web and using jstor of quarterly journal of economics economic journal journal of political economy american economic review and economica

energy return on energy invested eroi oil prices and energy transitions very little work has been done so far to model test and understand the relationship between oil prices and eroi over time this paper investigates whether a declining eroi is associated with an increasing oil price and speculates on the implications of these results on oil policy a model of the relationship between eroi and oil market prices was developed using basic economic and physical assumptions and non linear least squares regression models to correlate oil production price with eroi using available data from 1954 1996 the model accurately reflects historical oil prices 1954 1996 and it correlates well with historical oil prices 1997 2010 if a linear extrapolation of eroi decline is assumed as eroi declines below 10 highly non linear oil price movements are observed increasing physical oil scarcity is already providing market signals that would stimulate a transition away from oil toward alternative energy sources but price signals of physical oil scarcity are not sufficient to guarantee smooth transitions to alternative fuel sources especially when there is insufficient oil extraction technology development a declining mark up ratio a non linear eroi cost of production relationship and a non linear eroi price relationship

new evidence on pensions social security and the timing of retirement using a unique dataset that links the economic and demographic information of households with the details of their pension formulas i estimate the combined effect of social security and pension benefits on the probability of retirement in a cross section of the population near retirement age the accrual rate of retirement wealth is shown to be a significant determinant of the probability of retirement simulations of extensions in pension coverage comparable to those that occurred in the early postwar period can account for one fourth of the contemporaneous decline in labor force participation rates 1998 elsevier science s a all rights reserved

open access harvesting of wildlife the poaching pit and conservation of endangered species abstract we extend the traditional g s model of open access by defining a non concave harvesting function we demonstrate the possible existence of multiple equilibria and perverse comparative statics and show that small changes in the underlying economic parameters may trigger large jumps in species abundance finally we briefly discuss implications for management

the auctioneerless economics of axel leijonhufvud the dark forces of time and ignorance and the coordination of economic activity leijonhufvud focuses his analysis on the coordination of economic activities in a world tossed and torn by ever new episodes of instability macroeconomic theory must finally admit and properly analyse the limits of collective and individual rationality starting from the system s coordination leijonhufvud underlines the crucial role of information learning and institutions coming to individual choice he unremittingly rejects unbounded rationality methodologically however his use of general equilibrium as a benchmark seems to have conditioned his analysis in bringing to light the dark forces of time and ignorance leijonhufvud himself seems to have fallen under the influence of the siren represented by general equilibrium theory copyright 2006 oxford university press

imperfect knowledge and behaviour in the foreign exchange market this paper explores the consequences of imperfect knowledge for exchange rate dynamics within the monetary class of models the authors framework which they call the theories consistent expectations framework provides a particular formalization of a world in which agents use theories in order to look forward but in which these theories provide only qualitative knowledge rather than quantitative knowledge about the economy the authors find that as long as agents possess at least some degree of imperfect knowledge the monetary models of the exchange rate generate dynamics consistent with the behavior observed in the literature copyright 1996 by royal economic society

chaos significance mechanism and economic applications imagine a bargaining model say involving diplomats negotiating tariff levels or a disarmament treaty in which each party has been instructed by higher headquarters to respond to each new offer by her opposite number with a counteroffer that is to be calculated from a simple reaction function provided in advance both negotiating parties are prohibited from revealing their own reaction functions to the other if the perfectly deterministic sequence of offers and counteroffers that must emerge from these simple rules were to begin to oscillate wildly and apparently at random the negotiations could easily break down as each party not understanding the source of the problem came to suspect the other side of duplicity and sabotage yet all that may be involved as we will see is the phenomenon referred to as chaos a case that is emphatically not pathological but in which a dynamic mechanism that is very simple and deterministic yields a time path so complicated that it will pass most standard tests of randomness chaos has become a subject of great interest to specialists and nonspecialists alike besides economics it has entered the literature of geometry physics ecology and meteorology it has been written about at length in the new york times magazine and scientific american as well as technical publications this article seeks to describe what it is how it works and what it means for economics

from simplistic to complex systems in economics the applicability of complex systems theory in economics is evaluated and compared with standard approaches to economic theorising based upon constrained optimisation a complex system is defined in the economic context and differentiated from complex systems in physio chemical and biological settings it is explained why it is necessary to approach economic analysis from a network rather than a production and utility function perspective when we are dealing with complex systems it is argued that much of heterodox thought particularly in neo schumpeterian and neo austrian evolutionary economics can be placed within a complex systems perspective upon the economy the challenge is to replace prevailing simplistic theories based in constrained optimisation with simple theories derived from network representations in which value is created through the establishment of new connections between elements

planning and financial literacy how do women fare many older us households have done little or no planning for retirement and there is a substantial population that seems to undersave for retirement of particular concern is the relative position of older women who are more vulnerable to old age poverty due to their longer longevity this paper uses data from a special module we devised on planning and financial literacy in the 2004 health and retirement study it shows that women display much lower levels of financial literacy than the older population as a whole in addition women who are less financially literate are also less likely to plan for retirement and be successful planners these findings have important implications for policy and for programs aimed at fostering financial security at older ages

do people play nash equilibrium lessons from evolutionary game theory evolutionary game theory provides an answer to two of the central questions in economic modeling when is it reasonable to assume that people are rational and when is it reasonable to assume that behavior is part of a nash equilibrium and if it is reasonable which equilibrium the traditional answers are not compelling and much of evolutionary modeling is motivated by the need for a better answer evolutionary game theory suggests that in a range of settings agents do eventually play a nash equilibrium moreover evolutionary modeling has shed light on the relative plausibility of different nash equilibria

do changes in pension incentives affect retirement a longitudinal study of subjective retirement expectations this paper investigates the responsiveness of individuals retirement decisions to forward looking measures of pension accumulations in contrast to previous research we use within person variation in retirement incentives and are able to control for unobserved heterogeneity in tastes for retirement by studying a panel of subjective retirement expectations we confirm that individuals do respond as expected to pension incentives even when we control for individual fixed effects however the magnitude of these responses differs when estimated from models based on within person versus cross sectional variation the inclusion of fixed effects reduces the response by about half

on the complexities of complex economic dynamics complex economic nonlinear dynamics endogenously do not converge to a point a limit cycle or an explosion their study developed out of earlier studies of cybernetic catastrophic and chaotic systems complexity analysis stresses interactions among dispersed agents without a global controller tangled hierarchies adaptive learning evolution and novelty and out of equilibrium dynamics complexity methods include interacting particle systems self organized criticality and evolutionary game theory to simulate artificial stock markets and other phenomena theoretically bounded rationality replaces rational expectations complexity theory influences empirical methods and restructures policy debates

stabilizing chaos in a dynamic macroeconomic model abstract within a macroeconomic disequilibrium model it turns out that stationary and simple adaptive policies are not capable of stabilizing efficient steady states and lead to periodic or irregular fluctuations for large sets of policy parameters the application of recent control methods for chaotic dynamical systems shows that the government can in principle stabilize an unstable walrasian equilibrium in a short time by varying income tax rates or government expenditures different stabilizing policies are analyzed and compared with regard to their efficiency

assessing the date of the global oil peak the need to use 2p reserves combining geological knowledge with proved plus probable 2p oil discovery data indicates that over 60 countries are now past their resource limited peak of conventional oil production the data show that the global peak of conventional oil production is close many analysts who rely only on proved 1p oil reserves data draw a very different conclusion but proved oil reserves contain no information about the true size of discoveries being variously under reported over reported and not reported reliance on 1p data has led to a number of misconceptions including the notion that past oil forecasts were incorrect that oil reserves grow very significantly due to technology gain and that the global supply of oil is ensured provided sufficient investment is forthcoming to turn resources into reserves these misconceptions have been widely held including within academia governments some oil companies and organisations such as the iea in addition to conventional oil the world contains large quantities of non conventional oil most current detailed models show that past the conventional oil peak the non conventional oils are unlikely to come on stream fast enough to offset conventional s decline to determine the extent of future oil supply constraints calculations are required to determine fundamental rate limits for the production of non conventional oils as well as oil from gas coal and biomass and of oil substitution such assessments will need to examine technological readiness and lead times as well as rate constraints on investment pollution and net energy return

effective demand differential information and the multiplier the paper develops a rigorous model of the interaction between employment income and demand it is shown that when agents are differently informed about the income generated in the economy aggregate demand shocks create a keynesian type unemployment moreover the model explains nominal wage price stickiness and a multiplier effect so as to imply that a larger burden of adjustment is taken by quantities rather than prices copyright 1987 by royal economic society

evolution of erois of electricity until 2050 estimation and implications on prices abstract the eroi for energy returned on invested of an energy technology measures its ability to provide energy efficiently previous studies draw a link between the affluence of a society and the eroi of its energy system and show that erois of renewables are lower than those of fossil fuels logically concerns have been expressed that system wide eroi may decrease during a renewable energy transition first i explain theoretically that the erois of renewables themselves could then decrease as energy efficient fossil fuels would be replaced by less energy efficient renewables in the supply chain then using the multi regional input output model themis i estimate the evolution of erois and prices of electric technologies from 2010 to 2050 for different scenarios global eroi of electricity is predicted to go from 12 in 2010 to 11 in 2050 in a business as usual scenario but down to 6 in a 100 renewable one finally i study the economic implication of a declining eroi an inverse relation between eroi and price is suggested empirically even though theory shows that both quantities may move in the same direction

risk and resilience in the nigerian oil sector the economic effects of pipeline sabotage and theft abstract political unrest in the niger delta has long been viewed as a hurdle for extracting maximum value from nigeria s oil resources recently investors and policymakers have laid blame for sector under performance on pipeline sabotage and theft and sounded the alarm for an impending oil crisis however our understanding of the economic effects of social action against oil companies is incomplete rigorous analysis has not heretofore been offered as evidence for such dire futures despite the obvious risk of pipeline interdiction price dynamics and aggregate production respond minimally to pipeline interdiction based on quantitative analysis of the relationship among price production and pipeline interdiction from multiple data sources covering different time intervals monthly data from 2005 to 2014 and annual data from 1999 to 2013 we find no evidence of significant effects of pipeline interdiction on production and a weak relationship between pipeline interdiction and bonny light crude prices reported losses in product are substantial but there is no evidence of statistically significant impacts on price or production in the aggregate explanations for this counterintuitive result are cast in terms of sector resilience the implications of this finding for producer risk and the likelihood of an impending oil crisis are discussed

the effects of financial education in the workplace evidence from a survey of households abstract we use a novel household survey to investigate the effects of employer based financial education on personal saving we explore cross sectional relations between the availability of employer based financial education and various measures of asset accumulation and we interpret these patterns in light of various potentially confounding factors our findings favor the hypothesis that employer based financial education stimulates saving both in general and for retirement

labor supply responses to marginal social security benefits evidence from discontinuities abstract a key question for social security reform is whether workers respond to the link on the margin between the social security taxes they pay and the social security benefits they will receive we estimate the effects of the marginal social security benefits that accrue with additional earnings on three measures of labor supply retirement age hours and labor earnings we develop a new approach to identifying these incentive effects by exploiting five provisions in the social security benefit rules that generate discontinuities in marginal benefits or non linearities in marginal benefits that converge to discontinuities as uncertainty about the future is resolved we find that individuals approaching retirement age 52 and older respond to the social security tax benefit link on the extensive margin of their labor supply decisions we estimate that a 10 increase in the net of tax share reduces the two year retirement hazard by a statistically significant 2 0 percentage points from a base rate of 15 the evidence with regard to labor supply responses on the intensive margin is more mixed we estimate that the elasticity of hours with respect to the net of tax share is 0 42 and statistically significant but we do not find a statistically significant earnings elasticity though we lack statistical power to estimate results within subsamples precisely the retirement response is driven mostly by the female subsample while the hours response comes from the male subsample

on endogenous competitive business cycles the belief that the long run equilibrium of a competitive monetary economy that does not experience any exogeneous shocks whether originating from the external environment or from policy should be modelled as a state that is stationary or perhaps growing at a constant rate seems to be deeply rooted in the mind of some economists

the economic importance of financial literacy theory and evidence this paper undertakes an assessment of a rapidly growing body of economic research on financial literacy we start with an overview of theoretical research which casts financial knowledge as a form of investment in human capital endogenizing financial knowledge has important implications for welfare as well as policies intended to enhance levels of financial knowledge in the larger population next we draw on recent surveys to establish how much or how little people know and identify the least financially savvy population subgroups this is followed by an examination of the impact of financial literacy on economic decision making in the united states and elsewhere while the literature is still young conclusions may be drawn about the effects and consequences of financial illiteracy and what works to remedy these gaps a final section offers thoughts on what remains to be learned if researchers are to better inform theoretical and empirical models as well as public policy jel a20 d14 g11 i20 j26

pension enhancements and the retention of public employees the authors use data from workers in the largest public sector occupation in the united states teaching to examine the effect of pension enhancements on employee retention specifically they study

beyond microfoundations towards a not too rational macroeconomics at ucla we are establishing a center for computable economics i have been very much involved in this effort this may surprise you that a non mathematical macro monetary economist should become an enthusiast for this project is one of those things that do not compute but then as i will explain we take a special interest in things that do not compute one may come to computable economics by many intellectual routes i will trace my own not because it makes a particularly edifying story but because it will tell you what kind of problems i hope we can make progress on by developing the field of computable economics but before we get to that i had better explain what i mean by computable economics

emergence and complexity in austrian economics abstract emergence is often argued to be a deep property of complex systems with such systems exhibiting wholes that are in some way greater than the sum of their parts these ideas have played an important part in discussions of spontaneous order within austrian economics particularly by hayek drawing on arguments dating from mill and menger although with other traditions such as that of bohm bawerk not relying on such ideas philosophical discussions of these terms are considered that raise questions about the relationship between the emergent whole and the lower level parts that comprise it a major issue is the role of these ideas and processes within evolution with hayek in particular moving strongly towards identifying their linkage something advocated by many non austrian economists and non economists as well

the role of information for retirement behavior evidence based on the stepwise introduction of the social security statement abstract in 1995 the social security administration started sending out the annual social security statement it contains information about the worker s estimated benefits at the ages 62 65 and 70 i use this unique natural experiment to analyze the retirement and claiming decision making first i find that despite the previous availability of information the statement has a significant impact on workers knowledge about their benefits these findings are consistent with a model where workers need to gather costly information in order to improve their retirement decision second i use this exogenous variation in knowledge to analyze the optimality of workers decisions several findings suggest that workers do not change their retirement behavior i workers do not change their expected age of retirement after receiving the statement ii monthly claiming patterns do not show any change after the introduction of the social security statement iii workers do not become more sensitive to social security incentives after receiving the statement more research is needed to establish whether workers are already behaving optimally but the information contained in the statement is not sufficient to improve their retirement behavior

the role of financial literacy in determining retirement plans nber working paper seriesthe role of financial literacy in determining retirement plansrobert clarkmelinda sandler morrillsteven g allenworking paper 16612http www nber org papers w16612national bureau of economic research1050 massachusetts avenuecambridge ma 02138december 2010this research is funded in part by a grant from finra investor education foundation we wouldlike to thank jennifer maki mehtab randhawa and evan rogers for their research assistance theresearch could not have been accomplished without the cooperation of the companies that partneredwith us we would also like to thank nicholas horsewood annamaria lusardi olivia mitchell andtwo anonymous referees for useful comments all remaining errors are our own the views expressedherein are those of the authors and do not necessarily reflect the views of the national bureau of economicresearch finra investor education foundation or any of its affiliated companies 2010 by robert clark melinda sandler morrill and steven g allen all rights reserved shortsections of text not to exceed two paragraphs may be quoted without explicit permission providedthat full credit including notice is given to the source

global oil depletion a review of the evidence within the polarised and contentious debate over future oil supply a growing number of commentators are forecasting a near term peak and subsequent decline in production but although liquid fuels form the foundation of modern industrial economies the growing debate on peak oil has relatively little influence on energy and climate policy with this in mind the uk energy research centre ukerc has conducted an independent thorough and systematic review of the evidence with the aim of establishing the current state of knowledge identifying key uncertainties and improving consensus the study focuses upon the physical depletion of conventional oil in the period to 2030 and includes an in depth literature review analysis of industry databases and a detailed comparison of global supply forecasts this communication summarises the main findings of the ukerc study a key conclusion is that a peak of conventional oil production before 2030 appears likely and there is a significant risk of a peak before 2020

baby boomer retirement security the roles of planning financial literacy and housing wealth abstract we compare wealth holdings across two cohorts of the health and retirement study the early baby boomers in 2004 and individuals in the same age group in 1992 levels and patterns of total net worth have changed relatively little over time though boomers rely more on housing equity than their predecessors most important planners in both cohorts arrive close to retirement with much higher wealth levels and display higher financial literacy than non planners instrumental variables estimates show that planning behavior can explain the differences in savings and why some people arrive close to retirement with very little or no wealth

estimating coal production peak and trends of coal imports in china more than 20 countries in the world have already reached a maximum capacity in their coal production peak coal production such as japan the united kingdom and germany china home to the third largest coal reserves in the world is the world s largest coal producer and consumer making it part of the big six at present however china s coal production has not yet reached its peak in this article logistic curves and gaussian curves are used to predict china s coal peak and the results show that it will be between the late 2020s and the early 2030s based on the predictions of coal production and consumption china s net coal import could be estimated for coming years this article also analyzes the impact of china s net coal import on the international coal market especially the asian market and on china s economic development and energy security

schelling s spatial proximity model of segregation revisited schelling schelling t c 1969 models of segregation american economic review papers and proceedings 59 488 493 schelling t c 1971a dynamic models of segregation journal of mathematical sociology 1 2 143 186 schelling t c 1971b on the ecology of micromotives the public interest 25 61 98 schelling t c 1978 micromotives and macrobehavior new york norton presented a microeconomic model showing how an integrated city could unravel to a rather segregated city notwithstanding relatively mild assumptions concerning the individual agents preferences i e no agent preferring the resulting segregation we examine the robustness of schelling s model focusing in particular on its driving force the individual preferences we show that even if all individual agents have a strict preference for perfect integration best response dynamics may lead to segregation this raises some doubts on the ability of public policies to generate integration through the promotion of openness and tolerance with respect to diversity we also argue that the one dimensional and two dimensional versions of schelling s spatial proximity model are in fact two qualitatively very different models of segregation

exchange rate theory and practice this volume grew out of a national bureau of economic research conference on exchange rates held in bellagio italy in 1982 in it the world s most respected international monetary economists discuss three significant new views on the economics of exchange rates rudiger dornbusch s overshooting model jacob frenkel s and michael mussa s asset market variants and pentti kouri s current account portfolio approach their papers test these views with evidence from empirical studies and analyze a number of exchange rate policies in use today including those of the european monetary system

model unvertainty political learning and institutions a broader view on mancur olson s theory of institutional sclerosis in his rise and decline of nations mancur olson argues that politically stable countries suffer from declining growth rates caused by the growing influence of distributional coalitions that accumulate over time the empirical literature supports the notion of a negative relationship between a country s duration of political stability and its growth rates but finds only weak support for a negative influence of distributional coalitions on growth this paper sketches a simple model of party competition under model uncertainty which may explain this mixed empirical picture it shows that politically stable democracies are less well equipped to adjust to shifts in their economic environment than democracies with a shorter history of political stability in a further step the paper relates the major theme of this theory and olson s theory to the more recent literature on institutions and growth directions for further research are discussed

market liquidity hedging and crashes in the absence of significant news hedging strategies were blamed for the stock market crash of october 1987 but traditional models cannot explain how a relatively small amount of selling could cause so large a price drop the authors develop a rational expectations model in which prices play an important role in shaping expectations markets are much less liquid in their model than in traditional models discontinuities or crashes can occur even with relatively little hedging the model is consistent with theories as disparate as keynes beauty contest insights and thom s catastrophe analysis and suggests means to reduce volatility copyright 1990 by american economic association

stability and complex dynamics in a discrete tâtonnement model abstract in this paper we study the dynamics of discrete price adjustment processes we show that gross substitutability leads to a kind of stability of the process it guarantees that all prices converge to some bounded region that contains the unique equilibrium price the dynamics inside this region is by no means trivial we demonstrate that as the speed of adjustment increases the process undergoes several bifurcations and the dynamics may become quite complex our approach differs from other literature on t tonnement processes in that our systems are not necessarily one dimensional

time inconsistency and delayed retirement decision the french pension bonus with the increase in life expectancy and demographic shocks several public policies in the last decades aim to encourage individuals to postpone retirement one of them the pension bonus gives a

participation and investment decisions in a retirement plan the influence of colleagues choices abstract this paper investigates whether peer effects play an important role in retirement savings decisions we use individual data from employees of a large university to study whether individual decisions to enroll in a tax deferred account plan sponsored by the university and the choice of the mutual fund vendor for people who choose to enroll are affected by the decisions of other employees in the same department to overcome the identification problems we divide the departments into sub groups along gender status age and tenure lines and we instrument the average participation of each peer group by the salary or tenure structure in this group our results suggest that peer effects may be an important determinant of savings decisions

the market for preferences learning processes are widely held to be the mechanism by which boundedly rational agents adapt to environmental changes we argue that this same outcome might also be achieved by a different mechanism namely specialisation and the division of knowledge which we here extend to the consumer side of the economy we distinguish between high level preferences and low level preferences as nested systems of rules used to solve particular choice problems we argue that agents while sovereign in high level preferences may often find it expedient to acquire in a pseudo market the low level preferences in order to make good choices when purchasing complex commodities about which they have little or no experience a market for preferences arises when environmental complexity overwhelms learning possibilities and leads agents to make use of other people s specialised knowledge and decision rules

what you don t know can t help you pension knowledge and retirement decision making abstract this paper provides an answer to an important empirical puzzle in the retirement literature while most people know little about their own pension plans retirement behavior is strongly affected by pension incentives we combine administrative and self reported pension data to measure the retirement response to actual and perceived financial incentives and document an important role for self reported pension data in determining retirement behavior well informed individuals are far more responsive to pension incentives than the average individual ill informed individuals seem to respond systematically to their own misperceptions of pension incentives

an analysis of china s coal supply and its impact on china s future economic growth many people believe that china s economic growth can continue almost indefinitely for a manufacturingbased economy such as china s to continue to grow it needs an adequate supply of inexpensive energy to date this energy growth has primarily come from coal but china s indigenous coal supplies are now falling short of the amount needed to support this growth in this situation the status of china s future coal supply will be very important for china s future economic development our analysis shows that china s ultimate recoverable coal reserves equal 223 6 10 9 mt and its production will peak between 2025 and 2030 with peak production of approximately 3 9 10 9 mt the extent to which china can import coal in the future is uncertain with rising coal demand this combination is likely to create a significant challenge to china s future economic development

sustainability guided promotion of renewable electricity generation in recent years the threat of global climate change high fuel import dependence and rapidly rising electricity demand levels have intensified the quest for more sustainable energy systems this in turn has increased the need for policy makers to promote electricity generation from renewable energy sources guaranteed prices coupled with a buy back obligation for electricity fed into the grid is a popular renewables promotion instrument especially in europe more recently driven mainly by electricity market liberalisation efforts quota targets for the share of renewables in combination with tradable green certificates tgc have received considerable attention tgc offer a greater theoretical potential for economic efficiency gains due to price competition and the greater flexibility assigned to the obliged parties while guaranteed prices and tgc schemes support the operation of renewable energy technology systems bidding schemes for renewable energy generation capacity are used to raise economic efficiency on the plant construction side all of these policy instruments suffer from the shortcoming that they do not explicitly account for the often widely varying environmental social and economic impacts of the technologies concerned in this paper we propose a methodology for the design of renewable energy policy instruments that is based on integrated assessment in particular we argue that using participatory multicriteria evaluation as part of the design of renewable energy promotion policies would make it possible 1 to differentiate the level of promotion in a systematic and transparent manner according to their socio ecological economic impact and 2 to explicitly account for the preferences of stakeholders a further problem of existing tgc and bidding schemes is that diversity of supply could be severely diminished if few low cost technologies were allowed to dominate the renewable energy market to ensure a certain diversity of technologies our scheme suggests the use of different technology bands for technologies that are relatively homogeneous with respect to their maturity

what energy levels can the earth sustain abstract several official reports on future global primary energy production and use develop scenarios which suggest that the high energy growth rates of the 20th century will continue unabated until 2050 and even beyond in this paper we examine whether any combination of fossil nuclear and renewable energy sources can deliver such levels of primary energy around 1000 ej in 2050 we find that too much emphasis has been placed on whether or not reserves in the case of fossil and nuclear energy or technical potential in the case of renewable energy can support the levels of energy use forecast in contrast our analysis stresses the crucial importance of the interaction of technical potentials for annual production with environmental factors social political and economic concerns and limited time frames for implementation in heavily constraining the real energy options for the future together these constraints suggest that future energy consumption will be significantly lower than the present level

coming out of the niche social banking in germany an empirical analysis of consumer characteristics and market size the social banking market constitutes a small but rapidly growing submarket of the global banking sector due to an explicit commitment to sustainability social banking is a segment of banking services which is not exclusively focused on economic performance criteria but pursues ecological and social goal dimensions on an equal footing information on the number and reachability of potential social banking customers is essential for social banks to further promote sustainable consumption in finance in scientific research social banking is considered a relatively new field still lacking empirical analyses regarding the market size and specific consumer behaviour this study addresses the research gap by generating first insights into the german social banking market based on an online survey using an adaptive conjoint analysis a large data set covering 3537 respondents was compiled sample 1 comprises 2896 respondents who are customers of three major social banks in germany sample 2 covers the remaining 641 respondents who represent the german adult population and exclusively buy from conventional banks logistic regression modelling reveals that social banking customers differ significantly from their conventional counterparts regarding several socio demographic behavioural and psychographic factors in comparison with conventional banking customers social banking customers tend to be younger higher educated and located in larger places of residence contrary to existing research on socially responsible investors they are male to a higher proportion than female moreover social banking customers demonstrate stronger sustainable buying patterns and weaker preferences for financial but stronger preferences for social return than conventional banking customers the results further indicate a considerable untapped growth potential for social banks by uncovering a market size ranging between 10 and 26 of the german adult population finally suggestions for marketing strategies and future research are given

stabilization policy can lead to chaos stabilization policy can lead to chaos nonlinearities in economies as elsewhere can generate chaotic equilibria the presence of pareto inferior chaotic equilibria might seem reason enough to use stabilization policy to select preferable equilibria however i show that a stabilization policy with feedback can itself lead to chaotic dynamics thus the existence of nonlinearities in the economy does not by itself justify monetary or fiscal policies aimed at reducing economic instability current evidence cannot distinguish whether monetary policy stabilizes a nonlinear economy creates nonlinear dynamics in the economy or both i introduction in recent years the claim has been made that nonlinearities and self fulfilling expectations in the private economy generate economic instability that can and should be offset by government policies this instability shows up as a positive variance in the steady state of an economy that otherwise would have a steady state with zero variance and higher utility for households on the basis of such models grandmont and malgrange 1986 9 conclude that we should expect a free market economy to perform rather badly under laissez faire in addition there is a possible role for deterministic stabilization policies that would if understood and believed eliminate forecasting mistakes and the corresponding efficiency losses and would guarantee the ultimate disappearance of endogenous fluctuations the purpose of this note is to provide a simple example of stabilization policy leading to chaotic time series behavior this example is an elaboration of friedman s 1953 classic argument that with uncertain knowledge about the economy stabilization policy can increase the variance of the goal variable nonlinearities can make as much a case against stabilization policy as for it the example is ad hoc in some respects but it is based on common ingredients of many models ii a simple example interesting aspects of an economy can be summarized by the quantity equation 1 mv y assume that real income y is constant which implies that changes in nominal income are proportional to changes in the price level in one respect using the quantity equation means that the example below does not have the same force as a tight general equilibrium model of the economy without the underlying detail equation 1 is ad hoc in another respect the example below has more force an equation such as 1 commonly characterizes the general equilibrium models in which money has a significant effect on the economy hence one interpretation is that the example has some generality assume that the monetary authority targets nominal income and knows 1 that the quantity theory characterizes the long run equilibrium of the economy and 2 the level of velocity that is consistent with zero inflation v in these circumstances there is one obvious equilibrium consistent with the goal the money stock is constant and the public expects a constant money supply and zero inflation in this equilibrium nominal income can be stabilized at the target level of nominal income y the monetary authority just need set the money supply to m v 1y if the monetary authority is uncertain about the public s response to its actions one strategy is to adopt a cautious stabilization policy to support the economy s approach to the long run deterministic equilibrium one commonly proposed set of feedback rules is the proportional policies introduced by phillips 1954 in the levels such a rule for the money supply is 2 m m alpha y y sub 1 where y sub 1 is last period s nominal income and alpha is the adjustment parameter assume that private agents believe that the monetary authority eventually will accomplish its goal of setting y equal to y

how does social security claiming respond to incentives considering husbands and wives benefits separately abstract most women receive some social security benefits based upon their husbands earnings history but husbands benefit claiming is inconsistent with maximizing lifetime benefits for the couple i show that husbands claiming behavior responds to the actuarial incentives from their retired worker benefits not responding to incentives from spouse and survivor formulas reduces wives lifetime benefits rule changes to the social security benefit calculation the age difference between spouses and the relative strength of the wife s labor force history creates variation in incentives segments of the population predicted to be more responsive to incentives provides similar results to the main specification

ethics politics and nonsatiation in consumption a synthesis in contrast with the production of goods and services by firms where the production costs are minimized under appropriate behavioral assumptions consumer producers in neoclassical theory maximize consumption expenditure i e production costs of their outputs according to kenneth boulding were the impact upon the limited resources available on planet earth taken into account consumption expenditure should be minimized we propose that we keep consumer theory as a reasonable description of reality however we should evaluate the long run consequences of such postulated behavior in a larger context which as a consequence of larger population with increasing per capita consumption comprises the overburdening of natural resources by decomposing the time horizon of cultural evolution into shorter periods of adjustment we may then distinguish several types of institutional determination of how societies take decisions as a group and individually the consumer theory simply reflects the predominant ethical values of which ideologies political platforms and demand patterns are shorter run adjustments

the anatomy of emergence with a focus upon capital formation abstract emergence is a unifying theme of both evolutionary economics and complex systems theory in spite of this centrality emergence in economics has not been subject to an extensive critical analysis this paper remedies this deficit we identify several conditions that economic patterns i e rule systems structures must satisfy to qualify as emergent 1 material realization emergent patterns are realized in physical structures and processes 2 coherence pattern is not a mere aggregate but a systemic whole 3 non distributivity pattern possesses global properties absent from its parts 4 structure dependence systemic properties depend upon connective structure these four core features are common to all forms of emergence in economics evolutionary economic systems also exhibit extra strength versions of emergence which require that patterns possess one or more additional features 5 genuine novelty 6 unpredictability in principle and 7 irreducibility we introduce three basic forms of emergence that occur in economic systems minimal diachronic and synchronic emergence and apply these ideas to capital formation at all levels of economic order the economy wide capital structure exhibits strongly emergent properties both diachronic and synchronic that depend on its structural and functional organization it is not a mere aggregate of capital goods within the realm of capital phenomena we also compare the distinguishing characteristics of emergent and spontaneous self organizing orders we provide a case study of the iphone as an emergent capital pattern to illustrate conditions 1 7 above and the different types of emergence

worker retirement responses to pension incentives do they respond to pension wealth abstract pension enhancements generate pension wealth spikes at the eligibility milestones i analyze two major enhancements that generated different gains in pension wealth for eligible workers the responsiveness of retirement behavior to these enhancements depends on how well workers understand their pension incentives to test the retirement response to pension wealth i use administrative data from missouri teachers and leverage variation in enhancement impacts on teacher pension wealth owing to differences in teachers entering ages i find that retirements respond strongly to pension enhancements but the strength of the response does not align with their pecuniary value my findings contribute to a growing body of research showing that workers have imperfect knowledge of their pension benefits and they use imprecise information to make retirement timing decisions

global energy crunch how different parts of the world would react to a peak oil scenario peak oil theory predicts that oil production will soon start a terminal decline most authors imply that no adequate alternate resource and technology will be available to replace oil as the backbone resource of industrial society this article uses historical cases from countries that have gone through a similar experience as the best available analytical strategy to understand what will happen if the predictions of peak oil theorists are right the author is not committed to a particular version of peak oil theory but deems the issue important enough to explore how various parts of the world should be expected to react from the historical record he is able to identify predatory militarism totalitarian retrenchment and socioeconomic adaptation as three possible trajectories

effective climate energy solutions escape routes and peak oil abstract many well intended climate energy strategies are ineffective in the absence of serious environmental regulation this holds among others for direct support of clean energy voluntary energy conservation technical standards on a limited set of products unilateral stringent carbon pricing and awaiting peak oil as a climate strategy all of these suffer from escape routes that indirectly increase co2 emissions and thus make the original strategy ineffective on the other hand environmental regulation alone may lead to a myopia bias stimulating early dominance of cost effective technologies and a focus on incremental innovations associated with such technologies rather than on radical innovations although adopting a partial viewpoint keeps the analysis simple we urgently need a more inclusive systems perspective on climate solutions this will allow the formulation of an effective climate policy package that addresses the various escape routes

sins of the sons of samuelson vision pedagogy and the zig zag windings of complex dynamics abstract the standard economics text is centered on a vision of a naturally self regulated dynamically stable system with a unique global attractor this paper discusses how we got there and how recent developments in the study of dynamical systems allow us to go beyond that it traces the evolution of the teaching of economics from alfred marshall who built his supply and demand framework within a complexity vision of the economy it suggests that that complexity vision was lost as economists formalized the supply demand framework and extended it to the entire economy this paper argues that the current textbook presentation of economics should not and cannot serve as the only intellectual frame we provide to our students

knowledge information and retirement saving decisions evidence from a large scale intervention in chile all over the world retirement income depends increasingly on individuals savings choices over their lifetime while government sponsored retirement schemes like the u s social security system provide a reasonable stream of resources for old age middle and high income workers are expected to make their own additional savings arrangements either through employer sponsored pension plans matching contribution schemes such as the 401 k plans in the united states or individual savings through tax favored investment vehicles 1to adequately plan for retirement individuals need information about their current situation the different choices available to them and some minimal mathematical and abstraction capabilities to properly process this information there is growing concern however regarding the low level of financial literacy among the general population the baby boomer generation does not seem to have accumulated sufficient financial wealth beyond housing with particularly low asset levels for female headed households 2 even if the lack of financial sophistication could be overcome by the use of retirement planning services the existing evidence suggests that these services are rarely sought and when they are it is mostly by individuals with initially higher levels of financial literacy 3 furthermore individuals with less exposure to financial planning tend to make wrong choices saving less than required in poorly diversified portfolios or not profiting from tax favored instruments 4in a defined contribution scheme the level of the benefit is not known beforehand and individuals face uncertainty about how their current savings will translate into future benefits in this setting one key piece of information that individuals need to make active decisions to improve their retirement wealth is the pension level they are expected to receive given their current financial wealth and their historical saving behavior assuming that individuals can reasonably form an expectation of the income level they would like to receive in old age the comparison between desired and projected income could induce them to save more transfer their wealth into more conservative or aggressive portfolios postpone retirement or seek retirement planning advice while it is always possible to make these adjustments the effectiveness of these choices depends on the time horizon until retirement while small changes when one is young can have a large impact on retirement individuals with low asset levels can do little to improve their situation as they approach retirement age except perhaps postpone their exit from the labor force in this article we exploit a large scale natural experiment to analyze the impact of a personalized pension projection ppp which was sent to practically all chilean active dependent workers in july 2005 on their retirement saving behavior the objective of this intervention was to simplify the information received by pension system members to help them make better decisions in essence we compare the saving behavior of individuals during the first twelve months after they received the ppp with that of comparable individuals who were not sent this statement due to some specific administrative rules we use this analysis to address two different issues first if individuals were well aware of their current financial stance receipt of this information should have no effect on their retirement related saving behavior our analysis serves as a test of the full information hypothesis second the large scope of the intervention allows us to look at different subgroups of the population as mentioned above the age dimension is particularly important since the possibility of correcting misalignments between expectations and projections depends crucially on the time horizon until retirement the gender dimension is also important for the chilean case as the actuarial nature of the chilean pension system tends to directly translate gender differences in the labor market into differences in their old age income chilean women tend to work less frequently receive lower wages for a comparable job retire earlier and live longer

short waves in hungary 1923 and 1946 persistence chaos and lack of control abstract monetary policies follow a complex and chaotic process one that is enhanced when monetary growth is taken to the extreme as in hyperinflation while we have a basic understanding of the complex dynamics of hyperinflation a less explored phenomenon accompanying hyperinflationary episodes is the effect that they have on institutional development building on recent advances in economic history examining monetary policy and institutions this analysis uses more explicit recourse to complexity theory and in particular complex adaptive systems to examine two separate hyperinflationary episodes in hungary 1923 and 1946 delving into the institutional and cultural roots of the inflationary policies of the hungarian government and detailing the institutional effects which succeeded hyperinflation this paper shows that the twin experiences of hungary were both chaotic and created a chaotic and complex aftermath the results of which are still being felt indeed hungary s 1923 and especially its 1946 hyperinflation shows that some economic chaos cannot be restrained by political institutions and in fact the institutions themselves were changed when staring into the abyss hungary also found that the abyss stared back

a model of experimentation with information externalities abstract this paper presents a simple model of experimentation and information externality specifically we analyze an experimentation game in which the consequences of the actions of each agent can be costlessly observed by other agents our analysis provides a complete characterization of the noncooperative equilibrium in stationary strategies in particular it shows that such an equilibrium is not efficient because players stop experimenting when the social value of experimentation is still positive we also prove however a folk type result according to which a socially efficient outcome can be sustained as an equilibrium when the players have memory of previous actions and are sufficiently patient finally we indicate a large class of economic problems which provides motivation for our model and to which our approach might be applied

there may be unemployment when the labour market is competitive and the output market is not is unemployment always caused by union power or more generally downwards rigidity of wages the influential article by hart i 982 says yes there cannot be unemployment unless labour unions prevent wages from falling the more recent papers by d aspremont et al i 984 i989 a b and by dehez i 985 say no unemployment may occur when the labour market is perfectly competitive and the output market is not all this work assumes a fixed labour supply but the more recent models significantly depart from hart s formulation in other respects 2 one may ask which answer is the robust one this paper shows that hart s answer is based on a facilitating assumption on marginal revenue i replace it by a more realistic hypothesis and replicate hart s existence and comparative statics results except that now unemployment may occur when the labour market is perfectly competitive and the output market is not more precisely there can be unemployment at any nonnegative wage and perfect competition in the labour market may generate zero wages and unemployment labour becoming a free good in excess supply a useful costless resource is then wasted away and thus a gross form of inefficiency occurs in hart i982 on the contrary perfect competition in the labour market necessarily yields full employment and pareto efficiency labour does not often become a free good in excess supply in modern industrial economies but this possibility may help explain why labour markets have become noncompetitive wages are positive at an overall walrasian equilibrium but imagine that the output markets become oligopolistic and as a result the perfectly competitive wage drops to zero workers are now severely exploited in the sense of joan robinson i933 ch 25 and pigou i920 because the real wage is lower than the physical marginal product of labour unionisation can then be seen as providing countervailing power in

imperfect foresight and chaos an example of a self fulfilling mistake abstract we consider an overlapping generations economy with a single production sector and a government first we assume that the households have imperfect foresight in the sense that they cannot distinguish between the trajectories of a deterministic chaotic system and a stochastic process it is shown that mistaking a deterministic chaotic system for a stochastic one is a self fulfilling mistake because the possibility of making this mistake arises only when it is made the unique perfect foresight equilibrium is proved to exhibit simple dynamics for most parameter values finally we show that when agents apply simple econometric models to build their expectations the resulting dynamics resemble the chaotic dynamics of the imperfect foresight equilibrium under certain parameter constellations while they are close to the simple dynamics of the perfect foresight equilibrium for other parameter values

market instability and nonlinear dynamics the potential role of nonlinear dynamics in generating market instability is investigated using a simple market equilibrium model of the u s dairy industry the supply function reflects the nonlinear dynamics of the dairy herd as estimated by chavas and klemme it is shown that in the absence of any uncertainty an inelastic demand contributes to market instability and chaos

connecting net energy with the price of energy and other goods and services net energy is intuitively compelling and useful in calculating total impacts e g primary energy greenhouse gases land use and water requirements of delivering useful energy to the larger economy however it has little policy impact unless connected quantitatively to the price of energy and other goods and services i present an input output io based method to do this the method is illustrated by a two sector model fitted to u s io economic data in an io characterized system the energy returned on energy invested eroi and the energy intensity of energy are directly related however eroi and prices are not uniquely related because they depend differently on four independent io coefficients representing internal structure of and the relationship between the energy sector and the rest of the economy if only one of these coefficients varies then eroi does uniquely determine prices uncertainties in the io coefficients as well as persistent issues of choosing system boundary and aggregating diverse energy types further complicate the eroi price connection in this context i review two recent empirical comparisons of u s oil and gas prices and eroi for 1954 2007

the origin of predictable dynamic behavior abstract nonlinear dynamic theory implies optimal decisions often behave like random chaos such random target motion is impossible for imperfect agents to follow without error however they can still gradually approach the optimal target if and only if they partially adjust toward its perceived location so as to induce their behavior to converge to an equilibrium reducing dynamic errors through partial adjustment thereby induces a stable regularity in behavior that otherwise may never evolve this result agrees with the stability properties observed in experimental markets including cobweb auction and asset markets whose dynamics before reaching equilibrium exhibit adaptive rather than rational expectations