the problem of multiple commons a market design approach abstract there are several locations each of which is endowed with a resource that is specific to that location each agent will go to a single location and harvest some of the resource there several agents may go to each location and thereby cause a congestion effect that is modeled in a general way we assign harvesting rights based on preferences alone though we later extend the model to accommodate private endowments of money we find the best allocation rule in the class of rules that are strategy proof anonymous and that satisfy a weak continuity property for a special class of preferences we also find an ascending mechanism similar to an auction that implements the rule the rule coincides with a special pseudo market equilibrium wherein agents buy their desired resource with tokens distributed by the social planner

energy consumption and economic growth relationship evidence from panel data for low and middle income countries abstract this paper uses the panel data of energy consumption ec and economic growth gdp for 51 countries from 1971 to 2005 these countries are divided into three groups low income group lower middle income group and upper middle income group countries firstly a relationship between energy consumption and economic growth is investigated by employing pedroni 1999 panel cointegration method secondly panel causality test is applied to investigate the way of causality between the energy consumption and economic growth finally we test whether there is a strong or weak relationship between these variables by using pedroni 2001 method the empirical results of this study are as follows i energy consumption and gdp are cointegrated for all three income group countries ii the panel causality test results reveal that there is long run granger causality running from gdp to ec for low income countries and there is bidirectional causality between ec and gdp for middle income countries iii the estimated cointegration factor is not close to 1 in other words no strong relation is found between energy consumption and economic growth for all income groups considered in this study the findings of this study have important policy implications and it shows that this issue still deserves further attention in future research

investment spikes new facts and a general equilibrium exploration abstract using plant level data from chile and the u s we show that investment spikes are highly pro cyclical so much so that changes in the number of establishments undergoing investment spikes the extensive margin account for the bulk of variation in aggregate investment the number of establishments undergoing investment spikes also has independent predictive power for aggregate investment even controlling for past investment and sales we re calibrate the thomas 2002 is lumpy investment relevant for the business cycle journal of political economy cx 508 534 model that includes fixed costs of investing so that it assigns a prominent role to extensive adjustment the recalibrated model has different properties than the standard rbc model for some shocks

the market for used capital endogenous irreversibility and reallocation over the business cycle capital reallocation is strongly procyclical in the data but in standard business cycle models with heterogeneous firms it is countercyclical in this paper i argue that endogenizing the price of used capital solves this puzzle first i show empirically that for several sectors the price of used investment goods relative to new is procyclical second i build an equilibrium model of endogenous partial irreversibility with heterogeneous firms facing aggregate and idiosyncratic productivity shocks used investment goods are imperfect substitutes for new investment because of firm level capital specificity and this creates a downward sloping demand for used capital that shifts in response to aggregate shocks the model generates a procyclical resale price and procyclical reallocation in a recession when the price of used capital is low both static and dynamic real options effects induce unproductive firms to sell fewer assets to more productive firms this generates an amplification mechanism for measured aggregate tfp finally the model shows that endogenous irreversibility smooths aggregate investment and generates a countercyclical cross sectional dispersion of returns from capital consistent with the empirical evidence

fixed costs and long lived investments abstract fixed costs models are difficult to analyze because they feature non degenerate time varying distributions of capital across firms if investments are sufficiently long lived however then the cross sectional distribution of capital holdings has virtually no bearing on the equilibrium and the aggregate behavior of fixed cost models is essentially identical to neoclassical models the findings are due to a near infinite elasticity of investment timing for long lived investments a feature shared by fixed cost models and neoclassical models irrelevance results found in numerical studies of fixed cost models are not parametric special cases but instead are fundamental properties of models with long lived investment goods

a multivariate cointegrated modelling approach in testing temporal causality between energy consumption real income and prices with an application to two asian ldcs unlike previous studies on the casual relationship between energy consumption and economic growth this paper illustrates how the finding of cointegration i e long term equilibrium relationship between these variables may be used in testing granger causality based on the most recent johansen s multiple cointegration tests preceded by various unit root or nonstationarity tests we test for cointegration between total energy consumption real income and price level of two asian ldcs thailand and sri lanka nonrejection of cointegration between variables rules out granger noncausality and implies at least one way of granger causality either unidirectional or bidirectional secondly by using a dynamic vector error correction model we then analyse the direction of granger causation and hence the within sample grangerexogeneity or endogeneity of each of the variables thirdly the relative strength of the causality is gauged through the dynamic variance decomposition technique by decomposing the total

new keynesian perspectives on labor market dynamics abstract we find that demand shocks play an important role for business cycle fluctuations in unemployment and job vacancies the reason is that those shocks give a strong incentive to demand constrained firms to adjust production and thereby labor input furthermore we argue that whether real wage rigidity a la hall 2005 employment fluctuations with equilibrium wage stickiness american economic review 95 50 65 helps explain the remaining part of the unemployment volatility puzzle depends critically on assumptions regarding the form of the wage bargain between firms and workers real wage rigidity tends to generate volatility in employment only in the case in which hours are chosen efficiently if on the other hand the real wage is allowed to affect firms s choices of hours directly the feature of real wage rigidity loses its ability to increase employment volatility

the 2009 recovery act stimulus at the extensive and intensive labor margins abstract this paper studies the effect of government stimulus spending on a novel aspect of the labor market the differential impact of spending on the total wage bill versus employment we analyze the 2009 recovery act via instrumental variables using a new instrument the spending done by federal agencies that were not instructed to target funds towards harder hit regions we find a moderate positive effect on jobs created saved i e the extensive margin and also a significant increase in wage payments to workers whose job status was safe without recovery act funds i e the intensive margin our point estimates imply that roughly one half of the wage payments resulting from the act were paid at the intensive margin to provide a theoretical underpinning for the estimates we build a micro founded dynamic model in which a firm meets new government demand with a combination of new hiring and increasing existing workers average hours faced with hiring costs and an overtime premium the firm responds by increasing hours along both margins our model analysis also provides insight into how government spending policy should be structured to lower the cost of generating new jobs finally we catalogue survey evidence from recovery act fund recipients that reinforces the importance of the intensive labor margin

energy consumption and economic growth revisited does the size of unrecorded economy matter abstract we analyze the long run relationship between energy consumption and real gross domestic product gdp in turkey taking into account the size of unrecorded economy since in developing countries mainly due to the unrecorded economic activities the official gdp is not measured correctly the investigation of the linkage between energy consumption and official gdp may not give reliable results in this study empirical results for the case of turkey over the period 1970 2005 suggest that there is a long run equilibrium relationship between the officially calculated gdp and energy consumption besides using the error correction modeling technique we find out that unidirectional causality runs from official gdp to energy in both short and long runs however when we take into account unrecorded economy we detect neither cointegration nor causality between energy consumption and true gdp these empirical findings imply that first energy conservation policies can be implemented in order to reduce greenhouse gas emissions without any adverse effect on the recorded economic activities second the production function in the unrecorded economy is not stable furthermore economic policies to combat unrecorded economy may not serve as a complement to energy conservation policies

the relationship between gdp and electricity consumption in 10 asian countries the purpose of this study is to estimate the relationships between gdp and electricity consumption in 10 newly industrializing and developing asian countries using both single data sets and panel data procedures the empirical results from single data set indicate that the causality directions in the 10 asian countries are mixed while there is a uni directional short run causality running from economic growth to electricity consumption and a bi directional long run causality between electricity consumption and economic growth if the panel data procedure is implemented these empirical findings imply that electricity conservation policies through both rationalizing the electricity supply efficiency improvement to avoid the wastage of electricity and managing demand side to reduce the electricity consumption without affecting the end user benefits could be initiated without adverse effect on economic growth the findings on the long run relationship indicate that a sufficiently large supply of electricity can ensure that a higher level of economic growth

heterogeneity and aggregation implications for labor market fluctuations comment abstract chang and kim 2007 develop an incomplete asset markets model incorporating discrete labor supply and idiosyncratic labor productivity their results resolve long standing puzzles for bus

energy consumption real income and temporal causality results from a multi country study based on cointegration and error correction modelling techniques abstract unlike previous studies on the causal relationship between energy consumption and economic growth this paper illustrates how the finding of cointegration i e long term equilibrium relationship between these variables may be used in testing granger causality based on the most recent johansen s multivariate cointegration tests preceded by various unit root or non stationarity tests we test for cointegration between total energy consumption and real income of six asian economies india pakistan malaysia singapore indonesia and the philippines non rejection of cointegration between variables rules out granger non causality and imples at least one way of granger causality either unidirectional or bidirectionial secondly by using a dynamic vector error correction model we then analyse the direction of granger causation and hence the within sample granger exogeneity or endogeneity of each of the variables thirdly the relative strength of the causality is gauged through the dynamic variance decomposition technique by decomposing the total impact of an unanticipated shock to each of the variables beyond the sample period into proportions attributable to shocks in the other variables including its own in the bivariate system results based on these tools of methodology indicate that while all pair wise relationships shared common univariate integrational properties only relationships for three countries india pakistan and indonesia were cointegrated for these countries temporal causality results were mixed with unidirectional causality from energy to income for india exactly the reverse for indonesia and mutual causality for pakistan the vdcs were not inconsistent with these results and provided us with an additional insight as to the relatively more dominant direction of causation in pakistan simple bivariate vector autoregressive models for the three non cointegrated systems did not indicate any direction of causality significantly in either direction

understanding the costs of consumer durable adjustments this article examines whether adjustment frictions help account for the patterns of household consumption expenditures observed in the consumer expenditure survey namely that the variance of log durable expenditure is four times larger than that of log nondurable expenditure for annual data and this gap substantially widens for quarterly data estimating a structural model of household consumption with nondurable and durable goods with the simulated method of moments i find that the fixed costs associated with durable adjustments are important in matching the cross sectional moments using the estimated model i also examine the response of nondurable and durable expenditures to income shocks jel d12 d91 e21

energy consumption and gdp causality relationship in g 7 countries and emerging markets abstract the causality relationship between energy consumption and income is a well studied topic in energy economics this paper studies the time series properties of energy consumption and gdp and reexamines the causality relationship between the two series in the top 10 emerging markets excluding china due to lack of data and g 7 countries we discover bi directional causality in argentina causality running from gdp to energy consumption in italy and korea and from energy consumption to gdp in turkey france germany and japan hence energy conservation may harm economic growth in the last four countries

a re examination of the relationship between electricity consumption and economic growth in malaysia abstract the purpose of this study is to re investigate the relationship between electricity consumption and economic growth in malaysia from 1972 1 to 2003 4 this study adopted the newly developed ecm based f test kanioura a turner p 2005 critical values for an f test for cointegration in the multivariate model applied economics 37 3 265 270 for cointegration to examine the presence of long run equilibrium relationship through the autoregressive distributed lag ardl model the empirical evidence suggests that electricity consumption and economic growth are not cointegrated in malaysia however the standard granger s test and mwald test suggest that electricity consumption and economic growth in malaysia granger causes each other this finding provides policymakers with a better understanding of electricity consumption and allows them to formulate electricity consumption policy to support the economic development and to enhance the productivity of capital labour and other factors of production for future economic growth in malaysia

lumpy investment and corporate tax policy in the presence of both convex and nonconvex capital adjustment costs in a dynamic general equilibrium model corporate tax policy generates both intensive and extensive margin effects via the channel of marginal q i ts impact is determined largely by the strength of the extensive margin effect which in turn depends on the cross sectional distribution of firms depending on the initial distribution of firms the economy displays asymmetric responses to tax changes moreover an anticipated increase in the future investment tax credit reduces investment and adjustment rate initially

firm level investment spikes and aggregate investment over the great recession it is widely accepted that firm level investment is characterized by periods of low investment punctuated by spikes but widely debated whether such lumpiness matters for aggregate investment we provide new empirical evidence that variation in uk aggregate investment is driven by variation in the number of firms undertaking investment spikes this pattern holds for all sectors and across the business cycle we set out and estimate a tractable firm level model of the timing of investment spikes that incorporates the effect of specific macroeconomic factors and aggregates to match observed variation in aggregate investment using simulations we establish that low demand growth was the dominant factor inhibiting uk firms investment spikes immediately following the great recession while heightened uncertainty prolonged low investment and prevented a v shaped economic recovery we use the great recession as a source of exogenous variation with which to study heterogeneity in response to aggregate shocks we find that the minority of firms operating with persistently high debt levels and therefore with balance sheets more exposed to the costs of financial distress were significantly less likely to undertake an investment spike following the recession

an investigation of co integration and causality between energy consumption and economic activity in taiwan applying hsiao a version of the granger causality method this paper examines the causality between energy and gnp and energy and employment by applying recently developed techniques of co integration and hsiao s version of the granger causality to taiwanese data for the 1955 1993 period the phillips perron tests reveal that the series with the exception of gnp are not stationary and therefore differencing is performed to secure stationarity the study finds causality running from gdp to energy consumption without feedback in taiwan it is also found that causality runs from gdp to energy but not vice versa

technological heterogeneity and corporate investment we propose an importance sampling procedure to improve the computational performance of the simulated method of moments smm for the estimation of structural models with fixed parameter heterogeneity the main advantage of the procedure is that it does not require to simulate observations every time that the structural parameters change during the minimization of the smm criterion function we illustrate the use of our method by estimating a neoclassical model of investment for a sample of us manufacturing companies allowing the technological parameters to vary across firms

lumpy investment and the monetary transmission mechanism abstract the lumpy nature of plant level investment is generally not taken into account in the context of new keynesian monetary theory see e g christiano et al 2005 woodford 2005 our main result shows that if this theory is augmented by a standard model of lumpy investment monetary policy shocks lead to large but very short lived impacts on output and inflation in a way that goes against empirical evidence and the consensus view in the literature

large firm dynamics and the business cycle do large firm dynamics drive the business cycle we answer this question by developing a quantitative theory of aggregate fluctuations caused by firm level disturbances alone we show that a standard heterogeneous firm dynamics setup already contains in it a theory of the business cycle without appealing to aggregate shocks we offer an analytical characterization of the law of motion of the aggregate state in this class of models the firm size distribution and show that aggregate output and productivity dynamics display i persistence ii volatility and iii time varying second moments we explore the key role of moments of the firm size distribution and in particular the role of large firm dynamics in shaping aggregate fluctuations theoretically quantitatively and in the data

lumpiness capital adjustment costs and investment dynamics aggregate investment in the us economy displays a hump shaped pattern in response to shocks and the autocorrelation of aggregate investment growth is positive for the first few quarters turning negative for the later quarters this paper shows that this feature of the data is the natural outcome of a two sector consumption investment model designed and calibrated to reproduce plant level evidence on capital accumulation

s s pricing in a dynamic equilibrium model with heterogeneous sectors we study the impact of two sided nominal shocks in a dynamic equilibrium macroeconomic model goods complementarity differs across sectors as do the costs of changing prices even when strategic complementarities are equal across the sectors the systematic differences in costs of price adjustment mean nominal shocks have a sizeable impact on aggregate output and prices we exploit certain fundamental properties of markov processes to obtain analytical expressions for the stationary distributions of aggregate output and prices for the case of two sectors

cross sectoral variation in the volatility of plant level idiosyncratic shocks we estimate the volatility of plant level idiosyncratic shocks in u s manufacturing we measure the variation in revenue total factor productivity not explained by either industry or economy wide factors or by establishments characteristics we find that idiosyncratic shocks are much larger than aggregate shocks accounting for about 80 of the overall uncertainty faced by plants plants in the most volatile sector are subject to about six times as much idiosyncratic uncertainty as plants in the least volatile we provide evidence suggesting that idiosyncratic risk is higher in industries where the extent of creative destruction is likely to be greater

nonconvex factor adjustments in equilibrium business cycle models do nonlinearities matter recent empirical analysis has found nonlinearities to be important in understanding aggregated investment using an equilibrium business cycle model we search for aggregate nonlinearities arising from the introduction of nonconvex capital adjustment costs we find that while such costs lead to nontrivial nonlinearities in aggregate investment demand equilibrium investment is effectively unchanged our finding based on a model in which aggregate fluctuations arise through exogenous changes in total factor productivity is robust to the introduction of shocks to the relative price of investment goods

entry exit and investment specific technical change using european data this paper finds that i industry entry and exit rates are positively related to industry rates of investment specific technical change istc and ii the sensitivity of industry entry and exit rates to cross country differences in entry costs depends on industry rates of istc the paper con structs a general equilibrium model in which the rate of istc varies across industries and new investment specific technologies can be introduced by entrants or by incumbents in the calibrated model equilibrium behavior is consistent with stylized facts i and ii provided the cost of technology adop tion is increasing in the rate of istc jel g31 li 1 031 033 entry and exit rates differ significantly across industries over the period 1963 1982 timothy dunne mark j roberts and larry samuelson 1988 find that five year entry rates in us manu facturing data range from 21 percent in tobacco to 60 percent in scientific instruments high entry industries are high exit industries suggesting that entry and exit are largely due to the same industry specific factors at the same time little is known about what these factors might be this paper finds a strong positive link between industry entry and exit rates and the pace of technical progress in the capital goods that the industry uses the rate of investment specific technical change istc a significant fraction of entry and exit thus represents the introduction and replacement of capital embodied technologies istc is also positively related to the proportion of enterprises in each industry that displays large investment outlays in a given year that investment often occurs in spikes has been known since at least mark doms and dunne 1998 and the results link this pattern to the replacement of new capital embodied technologies by incumbents furthermore the decision of whether or when to exit appears sensitive to policy in countries in which the cost of entry is high rates of entry and exit are disproportionately suppressed in industries with high rates of istc to analyze these findings the paper develops a general equilibrium model in which chang ing the vintage of capital used by a particular enterprise is costly in the model this vintage is termed a technology and an enterprise is a technology manager pair the manager accumu lates expertise with a given technology over time and at any date may choose to upgrade to a newer technology at the expense of accumulated expertise as in boyan jovanovic and yaw

lumpy investment lumpy inventories the link between the physical micro environment frictions and heterogeneity and the macroeconomic dynamics in general equilibrium macro models is influenced by the details of how exactly general equilibrium closes such a model we make this general observation concrete in the context of the recent literature on how important nonconvex capital adjustment costs are for aggregate investment dynamics specifically we introduce inventories into a two sector lumpy investment model we find that with inventories nonconvex capital adjustment costs dampen and propagate the reaction of investment to shocks the initial response of fixed capital investment to productivity shocks is 50 higher with frictionless adjustment than with the calibrated capital adjustment frictions once inventories are introduced the reason for this result is that with two means of transferring consumption into the future fixed capital and inventories the tight link between aggregate saving and fixed capital investment is broken in contrast in the case the literature has focussed on with only one type of capital good to save and invest in fixed capital investment dynamics are more tightly linked to consumption dynamics which in turn are determined by the euler equation of a representative household which holds regardless of whether fixed capital investment is costly or not

statistical nonlinearities in the business cycle a challenge for the canonical rbc model abstract the cyclical components of u s macroeconomic time series exhibit significant nonlinearities standard equilibrium models of business cycles cannot replicate nonlinear features of the data applying the efficient method of moments gallant a r tauchen g 1996 which moments to match econometric theory 12 4 657 681 to build an algorithm that searches over the model s parameter space establishes the parameterization that best allows replication of all statistical properties of the data the results show that under this parameterization the model captures nonlinearities in investment but fails to account for observed properties of consumption

fixed adjustment costs and aggregate fluctuations this paper studies the analytics of a canonical model of xed adjustment costs in the presence of idiosyncratic productivity shocks we provide a novel analytical characterization of the steady state and dynamics of aggregate outcomes implied by the model the dynamics are shown to have an intuitive partial adjustment representation these results are then used to derive a set of approximations to model outcomes in the presence of a small adjustment cost surprisingly these reveal that both aggregate steady state outcomes and aggregate dynamics are approximately neutral with respect to a small xed adjustment cost we show that this neutrality result emerges from a symmetry property in the distributional dynamics of the model and arises even in the absence of general equilibrium adjustment of prices a set of quantitative illustrations con rms these analytical results for parameterizations commonly used in the literature on employment adjustment

causal relationship between energy consumption and gdp revisited the case of korea 1970 1999 abstract causal relationship between energy consumption and economic growth is investigated applying a multivariate model of capital labor energy and gdp usual btu energy aggregate is substituted with a divisia aggregate in an attempt to mitigate aggregation bias to test for granger causality in the presence of cointegration among the variables we employ a vector error correction model rather than a vector autoregressive model empirical results for korea over the period 1970 1999 suggest a long run bidirectional causal relationship between energy and gdp and short run unidirectional causality running from energy to gdp the source of causation in the long run is found to be the error correction terms in both directions

a framework for dynamic oligopoly in concentrated industries in this article we introduce a new computationally tractable framework for ericson and pakes style dynamic oligopoly models that overcomes the computational complexity involved in computing markov perfect equilibrium mpe first we define a new equilibrium concept that we call moment based markov equilibrium mme in which firms keep track of their own state the detailed state of dominant firms and few moments of the distribution of fringe firms states second we provide guidelines to use mme in applied work and illustrate with an application how it can endogenize the market structure in a dynamic industry model even with hundreds of firms third we develop a series of results that provide support for using mme as an approximation we present numerical experiments showing that mme approximates mpe for important classes of models then we introduce novel unilateral deviation error bounds that can be used to test the accuracy of mme as an approximation in large scale settings overall our new framework opens the door to study new issues in industry dynamics

vietnam s energy sector a review of current energy policies and strategies abstract since the introduction of market oriented economy in 1986 vietnam has made noticeable socio economic progress in this progress the energy sector has played a vital role this role is likely to deepen in the years to come as vietnam strives to achieve even higher levels in economic progress such deepening in the role of energy this paper argues will heighten concerns about the security of energy supply and economic environmental social and political consequences in order to address these issues vietnam has over the last decade developed a suite of energy policies a deeper review of these policies suggests that they are typified by economic growth orientation exclusive focus on a single sector or single issue and largely neglect the significance of cross sectoral and cross thematic issues arising from the interdependencies between energy economy and the polity at large the existing energy policy settings are therefore unlikely to be able to provide a satisfactory redress to the challenges noted above this paper provides an overview of the current energy policies with a view to identify areas where further policy effort is needed in order to facilitate a sustainable development of the vietnamese energy sector

energy and economic growth in the usa a multivariate approach abstract this paper examines the causal relationship between gdp and energy use for the period 1947 90 in the usa the relationship between energy use and economic growth has been examined by both biophysical and neoclassical economists in particular several studies have tested for the presence of a causal relationship in the granger sense between energy use and economic growth however these tests do not allow a direct test of the relative explanatory powers of the neoclassical and biophysical models a multivariate adaptation of the test vector autoregression var does allow such a test a var of gdp energy use capital stock and employment is estimated and granger tests for causal relationships between the variables are carried out although there is no evidence that gross energy use granger causes gdp a measure of final energy use adjusted for changing fuel composition does granger cause gdp

a note on the causal relationship between energy and gdp in taiwan abstract this paper re examines the causality between energy consumption and gdp by using updated taiwan data for the period 1954 1997 as a secondary contribution we investigate the causal relationship between gdp and the aggregate as well as several disaggregate categories of energy consumption including coal oil natural gas and electricity applying granger s technique we find bidirectional causality between total energy consumption and gdp we find further that different directions of cause exist between gdp and various kinds of energy consumption

investment options and the business cycle abstract this paper extends r mehra e c prescott recursive competitive equilibrium the case of homogeneous households econometrica 48 1980 1365 1380 to a production economy with two capital goods it is an rbc model in which each unit of investment requires a new idea an option when options are scarce new capital is harder to put in place and the value of old capital rises thus the stock market and tobin s q are negative indexes of intangibles during a boom q rises gradually as options are used up because investment represents an exercise of options it has an intertemporal substitution tradeoff that is absent from the adjustment cost model equilibrium may be efficient even without markets for knowledge the stock market may suffice

investment dynamics with fixed capital adjustment cost and capital market imperfections this paper examines the implications of financing frictions on capital stocks and on capital accumulation in the presence of non convex costs of adjusting the capital stock in this setup finance has an influence on both the level of capital and the timing of investment finance and productivity are complements and finance influences investment the strongest when firms wish to significantly adjust capital for fundamental reasons these theoretical considerations are confronted with uk data while finance is mostly irrelevant for long term capital decision the short run investment function shows a significant impact of finance which is also strongest for strong fundamental investment incentives

the relationship between energy and gnp further results this paper reexamines the casuality between gnp and energy consumption by using updated us data for the period 1947 1979 as a secondary contribution we investigate the causal relationship between energy consumption and employment applying sims technique we find no causal relationship between gnp and energy consumption we find further that there is a slight unidirectional flow running from employment to energy consumption economic interpretations of the empirical results are also presented

explaining investment dynamics in u s manufacturing a generalized s s approach we are grateful to olivier blanchard whitney newey james stock an editor three anonymousreferees and seminar participants at brown cepr champoussin chicago columbia econometric society meetings caracas and tokyo efcc harvard impa lse nber princeton rochester site toronto u de chile and yale for their comments financial support to caballero from the national science and sloan foundations and to engel from fondecyt grant 195 510 and the mellon foundation grant 9608 is gratefully acknowledged 2since plants entry is excluded from their sample these statistics are likely to represent lowerbounds on the degree of lumpiness in plants investment patterns 3we use the word project to emphasize the fact that the actual implementation of a projectmay cover more than a year observation realistic time to build aspects of investment are not incontradiction with the view that investment episodes are lumpy in nature 4 see chirinko 1994 for a survey of the empirical investment literature

investment adjustment costs an empirical assessment we evaluate empirical evidence for costs that penalize changes in investment using us industry data in aggregate models such investment adjustment costs have been introduced to help account for a variety of business cycle and asset market phenomena so far no attempt has been made to estimate these costs directly at a disaggregated level we consider an industry model with investment adjustment costs and estimate its parameters using generalized methods of moments the ndings indicate small costs associated with changing the ow of investment at the industry level the weighted average of the industry elasticities with respect to the shadow price of capital which depends inversely on the adjustment cost parameter is more than seven times larger than the largest estimate based on aggregate data we examine potential sources which may account for the large industry aggregate dierence overall our results suggest

consumption dynamics during recessions when will durable expenditures respond strongly to economic stimulus we build from micro evidence and show that in a heterogeneous agent business cycle model with xed costs of durable adjustment responsiveness is substantially dampened during recessions our model estimates imply that during the great recession durable expenditures were half as responsive to additional stimulus as during the boom in the 1990s this procyclical responsiveness is driven by changes in the distribution of households desired durable holdings over the cycle we directly test our model by estimating this distribution empirically using psid micro data and nd that the distribution in the data moves cyclically as predicted in addition to this micro evidence we also provide support for our model s procyclical responsiveness using aggregate time series data and we show this time series evidence is inconsistent with simpler models featuring smooth adjustment costs

collateral taxes and leverage we quantify the importance of collateral versus taxes for firms capital structures we estimate a dynamic model in which a taxable firm seeks financing for investment and a dynamic contracting environment motivates endogenous collateral constraints optimal leverage stays a safe distance from the constraint balancing the tax benefit of debt with the cost of lost financial flexibility we estimate this flexibility cost to be 7 2 of firm assets a percentage that is comparable to the tax benefit models with different tax rates fit the data equally well and leverage responds to the tax rate only when taxes are low

inventories markups and real rigidities in menu cost models a growing consensus in new keynesian macroeconomics is that nominal cost rigidities rather than countercyclical markups account for the bulk of the real effects of monetary policy shocks we revisit these conclusions using theory and data on inventories we study an economy with nominal rigidities in which goods are storable our theory predicts that if costs of production are sticky and markups do not vary much in response to say expansionary monetary policy firms react by excessively accumulating inventories in anticipation of future cost increases in contrast if the data inventories are fairly constant over the cycle and in response to changes in monetary policy we show that costs must increase and markups must decline sufficiently in times of a monetary expansion in order to reduce firm s incentive to hold inventories and thus bring the model s inventory predictions in line with the data versions of the model consistent with the dynamics of inventories in the data imply that countercyclical markups account for a sizable fraction of the response of real variables to monetary shocks

estimating linearized heterogeneous agent models using panel data abstract we develop a method to estimate heterogeneous agent models that uses not only time series of macroeconomic aggregates but can also incorporate micro level data repeated cross section or panel the micro data may be collected at lower frequency and time aggregated the method is based on the linearization approach of reiter 2009 combined with optimal state aggregation as in reiter 2010 the model may contain decision problems with both continuous and discrete choice linearity of the model solution allows fast computation of second moments and likelihood we discuss various computational devices to maximize the speed of the estimation

a multivariate cointegration analysis of the role of energy in the us macroeconomy abstract this paper extends my previous analysis of the causal relationship of gdp and energy use in the usa in the post war period a majority of the relevant variables are integrated justifying a cointegration analysis the results show that cointegration does occur and that energy input cannot be excluded from the cointegration space the results are plausible in terms of macroeconomic dynamics the results are similar to my previous granger causality results and contradict claims in the literature based on bivariate models that there is no cointegration between energy and output

energy supply demand and policy in viet nam with future projections abstract this article provides background on the current status and recent trends of energy use in viet nam as well as projections of energy demand and energy supply in the coming decades the article summarizes the results of the current national master plan for developing the electricity supply sector to meet increasing electricity demand also described are the evolution and current status of viet nam s energy policies including those related to energy security energy efficiency and conservation the environment and development of renewable energy sources as well as strategies for power sector development and restructuring of the energy sector toward greater use of competitive energy markets the initial phase of the viet nam energy sector modeling effort under the asian energy security aes project is described the final section of this article offers conclusions regarding the status of viet nam s energy sector and policies and recommendations regarding next steps in energy security analysis

is lumpy investment relevant for the business cycle the lumpiness of investment activity at the plant level is a well established fact previous research has suggested that such discrete and occasional adjustments have significant aggregate implications in particular it has been argued that changes in plants willingness to invest in response to aggregate shocks can at times generate large movements in total investment demand in this study i reassess these predictions in a general equilibrium environment specifically assuming nonconvex costs of capital adjustment i derive generalized s s adjustment rules yielding lumpy plant level investment within an otherwise standard equilibrium business cycle model in contrast to previous partial equilibrium analyses model results reveal that the aggregate effects of lumpy investment are negligible in general equilibrium households preference for relatively smooth consumption profiles offsets changes in aggregate investment demand implied by the introduction of lumpy plant level investment as a result

energy consumption and gdp in tunisia cointegration and causality analysis abstract in this paper the johansen cointegration technique is used to examine the causal relationship between per capita energy consumption pcec and per capita gross domestic product pcgdp for tunisia during the 1971 2004 period in order to test for granger causality in the presence of cointegration among the variables a vector error correction model vecm is used instead of a vector autoregressive var model our estimation results indicate that the pcgdp and pcec for tunisia are related by one cointegrating vector and that there is a long run bi directional causal relationship between the two series and a short run unidirectional causality from energy to gross domestic product gdp the source of causation in the long run is found to be the error correction terms in both directions hence an important policy implication resulting from this analysis is that energy can be considered as a limiting factor to gdp growth in tunisia conclusions for tunisia may also be relevant for a number of countries that have to go through a similar development path of increasing pressure on already scarce energy resources

income and wealth heterogeneity in the macroeconomy how do movements in the distribution of income and wealth affect the macroeconomy we analyze this question using a calibrated version of the stochastic growth model with partially uninsurable idiosyncratic risk and movements in aggregate productivity our main finding is that in the stationary stochastic equilibrium the behavior of the macroeconomic aggregates can be almost perfectly described using only the mean of the wealth distribution this result is robust to substantial changes in both parameter values and model specification our benchmark model whose only difference from the representative agent framework is the existence of uninsurable idiosyncratic risk displays far less cross sectional dispersion and skewness in wealth than u s data however an extension that relies on a small amount of heterogeneity in thrift does succeed in replicating the key features of the wealth data furthermore this extension features aggregate time series that depart significantly from permanent income behavior

energy consumption and economic growth the case of oil exporting countries this paper examines the causal relationship between the per capita energy consumption and the per capita gdp in a panel of 11 selected oil exporting countries by using panel unit root tests and panel cointegration analysis the results show a unidirectional strong causality from economic growth to energy consumption for the oil exporting countries the findings have practical policy implications for decision makers in the area of macroeconomic planning in most major oil exporting countries government policies keep domestic prices bellow free market level resulting in high levels of domestic energy consumption the results imply that the energy conservation through reforming energy price policies has no damaging repercussions on economic growth for this group of countries

the causal relationship between electricity consumption and economic growth in the asean countries abstract this paper investigates the causal relationship between electricity consumption and economic growth among the association of south east asian nations asean 4 members namely indonesia malaysia singapore and thailand using modern time series techniques for the period 1971 2002 the results indicate that there is a bi directional causality between electricity consumption and economic growth in malaysia and singapore this means that an increase in electricity consumption directly affects economic growth and that economic growth also stimulates further electricity consumption in the two countries however uni directional causality runs from economic growth to electricity consumption in indonesia and thailand without any feedback effect thus electricity conservation policies can be initiated without deteriorating economic side effects in the two countries

causality between energy consumption and economic growth in india a note on conflicting results abstract this note examines the different direction of causal relation between energy consumption and economic growth in india applying engle granger cointegration approach combined with the standard granger causality test on indian data for the period 1950 1996 we find that bi directional causality exists between energy consumption and economic growth further we apply johansen multivariate cointegration technique on the different set of variables the same direction of causality exists between energy consumption and economic growth this is different from the results obtained in earlier studies

consumption commitments and habit formation we analyze the implications of household level adjustment costs for the dynamics of aggregate consumption we show that an economy in which agents have consumption commitments is approximately equivalent to a habit formation model in which the habit stock is a weighted average of past consumption if idiosyncratic risk is large relative to aggregate risk consumption commitments can thus explain the empirical regularity that consumption is excessively sensitive and excessively smooth findings that are typically attributed to habit formation unlike habit formation and other theories but consistent with empirical evidence the consumption commitments model also predicts that excess sensitivity and smoothness vanish for large shocks these results suggest that behavior previously attributed to habit formation may be better explained by adjustment costs we develop additional testable predictions to further distinguish the commitment and habit models and show that the two models have different welfare implications

designing random allocation mechanisms theory and applications randomization is commonplace in everyday resource allocation we generalize the theory of randomized assignment to accommodate multi unit allocations and various real world constraints such as group specific quotas controlled choice in school choice and house allocation and scheduling and curriculum constraints in course allocation we develop new mechanisms that are ex ante efficient and fair in these environments and that incorporate certain non additive substitutable preferences we also develop a utility guarantee technique that limits ex post unfairness in random allocations supplementing the ex ante fairness promoted by randomization this can be applied to multi unit assignment problems and certain two sided matching problems jel c78 d82

energy consumption economic growth and prices a reassessment using panel vecm for developed and developing countries this paper reinvestigates the energy consumption gdp growth nexus in a panel error correction model using data on 20 net energy importers and exporters from 1971 to 2002 among the energy exporters there was bidirectional causality between economic growth and energy consumption in the developed countries in both the short and long run while in the developing countries energy consumption stimulates growth only in the short run the former result is also found for energy importers and the latter result exists only for the developed countries within this category in addition compared to the developing countries the developed countries elasticity response in terms of economic growth from an increase in energy consumption is larger although its income elasticity is lower and less than unitary lastly the implications for energy policy calling for a more holistic approach are discussed c 2006 elsevier ltd all rights reserved

investment dynamics with information costs investment in physical capital at the micro level is infrequent and large or lumpy the most common explanation for this is that firms face non convex physical adjustment costs the model developed in this paper shows that information costs make investment lumpy at the micro level even in the absence of non convex adjustment costs when collecting and processing information is costly the firm optimally chooses to do it sporadically and to be inactive most of the time this behavior results in infrequent and possibly large capital adjustments the model fits plant level investment rate moments well and it also matches some higher order moments of aggregate investment rates keywords investment dynamics information costs inattentiveness lumpy investment jel classification d21 d83 d92 e22

energy consumption and economic growth in vietnam abstract this study attempts to analyse the relationship between energy consumption and economic growth in vietnam using the neoclassical solow growth framework for the 1971 2011 period the concept and methods of cointegration and granger causality are used to establish the relationship between the variables of interest our results confirm the existence of cointegration among the variables in particular energy consumption fdi and capital stock were found positively influence economic growth in vietnam the granger causality test revealed unidirectional causality running from energy consumption to economic growth hence vietnam is an energy dependent economy and any energy or environment policy drawn up in an attempt to conserve energy will jeopardise the process of economic development in vietnam for this reason the renewable energy policy should be given attention to provide sufficient supplies of energy to speed up economic expansion investment in r d may be required to incentivise private public institutions to engage in this innovation while the awareness for energy saving policy among public could be integrated to meet social economic development

plant level irreversible investment and equilibrium business cycles this paper evaluates the importance of microeconomic irreversibilities for aggregate dynamics using a real business cycle rbc model characterized by investment irreversibilities at the establishment level the main finding is that investment irreversibilities do not play a significant role in an otherwise standard realbusiness cycle model even though investment irreversibilities are crucial for establishment level dynamics aggregate fluctuations are basically the same under fully flexible or completely irreversible investment jel e22 e32

contractual externalities and systemic risk we study effort and risk taking behaviour in an economy with a continuum of principal agent pairs where each agent exerts costly hidden effort principals write contracts based on both absolute and relative performance evaluations ape and rpe respectively to make individually optimal risk return trade offs but do not take into account their impact on endogenously determined aggregate variables this results in contractual externalities when these aggregate variables are used as benchmarks in contracts contractual externalities have welfare changing effects when principals put too much weight on ape or rpe due to information frictions relative to the second best if the expected productivity is high risk averse principals over incentivize their own agents triggering a rat race in effort exertion resulting in over investment in effort and excessive exposure to industry risks the opposite occurs when the expected productivity is low inducing pro cyclical investment and risk taking behaviours

machine replacement and the business cycle lumps and bumps this paper explores investment fluctuations due to discrete changes in a plant s capital stock the resulting aggregate investment dynamics are surprisingly rich reflecting the interaction between a replacement cycle the cross sectional distribution of the age of the capital stock and an aggregate shock using plant level data lumpy investment is procyclical and more likely for older capital further the predicted path of aggregate investment that neglects vintage effects tracks actual aggregate investment reasonably well however ignoring fluctuations in the cross sectional distribution of investment vintages can yield predictable nontrivial errors in forecasting changes in aggregate investment

optimal investment policy with fixed adjustment costs and complete irreversibility we develop and solve analytically an investment model with fixed adjust ment costs and complete irreversibility that reproduces observed investment dynamics at the micro level we impose a minimal set of restrictions on tech nology and uncertainty most of the results duplicate or generalize earlier findings that have been established either by simulations or under contrefac tual assumptions

the combinatorial assignment problem approximate competitive equilibrium from equal incomes this paper proposes a new mechanism for combinatorial assignment for example assigning schedules of courses to students based on an approximation to competitive equilibrium from equal incomes ceei in which incomes are unequal but arbitrarily close together the main technical result is an existence theorem for approximate ceei the mechanism is approximately efficient satisfies two new criteria of outcome fairness and is strategyproof in large markets its performance is explored on real data and it is compared to alternatives from theory and practice all other known mechanisms are either unfair ex post or manipulable even in large markets and most are both manipulable and unfair

economic growth and energy consumption revisited evidence from linear and nonlinear granger causality the relationship between energy consumption and economic growth is considered as an imperative issue in energy economics previous studies have ignored the nonlinear behavior which could be caused by structural breaks in this study both linear and nonlinear granger causality tests are applied to examine the causal relationship between energy consumption and economic growth for a sample of asian newly industrialized countries as well as the u s this study finds evidence supporting a neutrality hypothesis for the united states thailand and south korea however empirical evidence on philippines and singapore reveals a unidirectional causality running from economic growth to energy consumption while energy consumption may have affected economic growth for taiwan hong kong malaysia and indonesia policy implications are also discussed

surprise surprise measuring firm level investment innovations abstract using the ifo investment survey for the german manufacturing sector we construct a forty year panel of firm level investment innovations surprises we document the cross sectional and time series properties of this panel and our main findings are the cross sectional dispersion of investment surprises is countercyclical as is their average within firm time series volatility and both are highly correlated this justifies in part strategies in the literature to use cross sectional moments for the calibration of heteroscedasticity at the same time the cross sectional dispersion of investment is procyclical suggesting a nonsmooth capital adjustment friction at the micro level there is substantial dispersion in within firm volatility a feature consistent with a recent literature on information frictions at the firm level finally the aforementioned second moments of investment innovations are granger caused by recessions but not vice versa rendering simple exogenous uncertainty shocks less plausible as drivers of business cycles

energy consumption and economic growth in new zealand results of trivariate and multivariate models abstract this study examines the energy consumption growth nexus in new zealand causal linkages between energy and macroeconomic variables are investigated using trivariate demand side and multivariate production models long run and short run relationships are estimated for the period 1960 2004 the estimated results of demand model reveal a long run relationship between energy consumption real gdp and energy prices the short run results indicate that real gdp granger causes energy consumption without feedback consistent with the proposition that energy demand is a derived demand energy prices are found to be significant for energy consumption outcomes production model results indicate a long run relationship between real gdp energy consumption and employment the granger causality is found from real gdp to energy consumption providing additional evidence to support the neoclassical proposition that energy consumption in new zealand is fundamentally driven by economic activities inclusion of capital in the multivariate production model shows short run causality from capital to energy consumption also changes in real gdp and employment have significant predictive power for changes in real capital

electricity consumption growth nexus the case of malaysia abstract the goal of this paper is to model the relationship between electricity consumption and real gross domestic product gdp for malaysia in a bivariate and multivariate framework we use time series data for the period 1971 2003 and apply the bounds testing approach to search for a long run relationship our results reveal that electricity consumption real gdp and price share a long run relationship the results of the autoregressive distributed lag ardl estimates of long run elasticity of electricity consumption on gdp are found to be around 0 7 and statistically significant finally in the short run the results of the causality test show that there is a unidirectional causal flow from electricity consumption to economic growth in malaysia from these findings we conclude that malaysia is an energy dependent country leading us to draw some policy implications this paper adds support and validity thus reducing the policy makers concern on the ambiguity of the electricity and growth nexus in malaysia

evaluating assignment without transfers a market perspective all random assignments allocations without transfers can be considered as market outcomes with personalized prices and an equal income prices proportional across agents imply efficiency common prices lead to efficiency and envy freeness this market perspective also reveals a weakness of envy freeness

lumpy investment sticky prices and the monetary transmission mechanism abstract smoothness in aggregate capital accumulation is a necessary condition for new keynesian nk models to imply a quantitatively relevant monetary transmission mechanism see e g woodford 2005 firm specific capital and the new keynesian phillips curve international journal of central banking 2 1 46 can that aggregate smoothness be entertained in the context of an nk model featuring lumpy plant level investment our answer is yes imperfect competition in goods markets and or sticky prices are identified as economic mechanisms which render lumpy investment relevant in general equilibrium

heterogeneous producers facing common shocks an overlapping generations example abstract an analytically tractable model of a competitive full information economy is provided in which for some parameter values entry and exit over the course of the business cycle is concentrated among small firms this model is intended to make the logical point that the relatively high sensitivity of small firms to business cycle fluctuations does not necessarily indicate the presence of informational or incentive constraints in financial markets

structural break unit root and the causality between energy consumption and gdp in turkey abstract this paper tries to investigate a series of unit root and causality tests to detect causality between the gdp and energy consumption in turkey employing hsiao s version of granger causality method for the 1950 2000 period the conventional unit root tests indicate the series are i 1 whereas the endogenous break unit root tests proposed by zivot and andrews zivot e and andrews d w k 1992 further evidence on the great crash the oil price shock and the unit root hypothesis journal of business and economics statistics 10 251 270 and perron perron p 1997 further evidence on breaking trend functions in macroeconomic variables journal of econometrics 80 355 385 reveal that the series are trend stationary with a structural break therefore it is inappropriate to take the first difference of the data to achieve stationarity the main conclusion of this study is that there is no evidence of causality between energy consumption and gdp in turkey based on the detrended data

the relationship between energy consumption energy prices and economic growth time series evidence from asian developing countries this paper estimates the causal relationships between energy consumption and income for india indonesia the philippines and thailand using cointegration and error correction modelling techniques the results indicate that in the short run unidirectional granger causality runs from energy to income for india and indonesia while bidirectional granger causality runs from energy to income for thailand and the philippines in the case of thailand and the philippines energy income and prices are mutually causal the study results do not support the view that energy and income are neutral with respect to each other with the exception of indonesia and india where neutrality is observed in the short run c 2000 elsevier science b v all rights reserved jel classifications c22 q43 q48

interest rates and the market for new light vehicles we study the impact of interest rates changes on both the demand for and supply of new light vehicles in an environment where consumers and manufacturers face their own interest rates an increase in the consumers interest rate raises their cost of financing and thus lowers the demand for new vehicles an increase in the manufacturers interest rate raises their cost of holding inventories both channels have equilibrium effects that are amplified and propagated over time through inventories which serve as a way to both smooth production and facilitate greater sales at a given price through the estimation of a dynamic stochastic market equilibrium model we find evidence of both channels at work and of the important role played by inventories a temporary 100 basis point increase in both interest rates causes vehicle production to fall 12 percent and sales to fall 3 25 percent at an annual rate in the short run

cross sectoral variation in the volatility of plant level idiosyncratic shocks the volatility of plant level idiosyncratic shocks we estimate the volatility of plant level idiosyncratic shocks in u s manufacturing we measure the variation in revenue total factor productivity not explained by either industry or economy wide factors or by establishments characteristics we find that idiosyncratic shocks are much larger than aggregate shocks accounting for about 80 of the overall uncertainty faced by plants plants in the most volatile sector are subject to about six times as much idiosyncratic uncertainty as plants in the least volatile we provide evidence suggesting that idiosyncratic risk is higher in industries where the extent of creative destruction is likely to be greater

what are the determinants of hiring the importance of product market demand and search frictions in this article we study the importance of product market demand and search frictions for hiring we use a search matching model with imperfect competition in the product market to derive an equat

idiosyncratic shocks and the role of nonconvexities in plant and aggregate investment dynamics we examine a model of lumpy investment wherein establishments face persistent shocks to common and plant specific productivity and nonconvex adjustment costs lead them to pursue generalized s s investment rules we allow persistent heterogeneity in both capital and total factor productivity alongside low level investments exempt from adjustment costs to develop the first model consistent with available evidence on establishment level investment rates reassessing the implications of lumpy investment for aggregate dynamics in this setting we find that they remain substantial when factor supply considerations are ignored but are quantitatively irrelevant in general equilibrium the substantial implications of general equilibrium extend beyond the dynamics of aggregate series while the presence of idiosyncratic shocks makes the time averaged distribution of plant level investment rates largely invariant to market clearing movements in real wages and interest rates we show that the dynamics of plants investments differ sharply in their presence thus model based estimations of capital adjustment costs involving panel data may be quite sensitive to the assumption about equilibrium our analysis also offers new insights about how nonconvex adjustment costs influence investment at the plant when establishments face large and weakly persistent idiosyncratic productivity shocks consistent with existing estimates we find that nonconvex costs do not cause lumpy investments but act to eliminate them

plant level nonconvex output adjustment and aggregate fluctuations in most manufacturing industries plant level output is adjusted along three margins of capacity utilization shiftwork weekend work and closing temporarily down due to the discrete and lumpy nature of these margins only a fraction of plants adjust output in response to shocks in a business cycle model calibrated to establishment level observations these nonconvexities make aggregate output less volatile than when plants can adjust smoothly further the mass of adjusting plants is larger in downturns than in upturns leading to counter cyclical volatility of aggregate output and government policy being slightly more effective in recessions than in expansions