overlapping generations and environmental control abstract this paper sets forth a continuous time olg model in order to analyze intertemporal trade offs in the use of environmental resources this theoretical framework proves to be particularly appropriate in examining the externalities arising from consumer heterogeneity and disconnectedness across generations we characterize the trade off between capital accumulation and the environment and derive the conditions for an optimal fiscal policy the role of government intervention is twofold first it has to achieve intergenerational equity compatibly with a time consistent social welfare criterion second it has to correct the intertemporal market failures due to the selfish behavior of each generation

agricultural price instability a survey of competing explanations and remedies there are two explanations for agricultural price dynamics one follows cobweb logic and models fluctuations driven by expectation errors but emphasises that these expectations create complex dynamics and possibly chaos the other stems from the rational expectations tradition of dynamics driven by real shocks the empirical evidence tends to support the latter but is not conclusive the rational expectations model generates an optimal dynamic path from which no improvement can be expected from public intervention however if we take account of all the potential market failures in agricultural markets and especially in developing countries this conclusion might require some qualifications although an appropriate policy design for stability has still to be achieved this paper surveys the positive and normative literature on agricultural prices highlighting empirical evidence and identifying remaining unresolved issues

expectationally driven market volatility an experimental study abstract we study the existence and robustness of expectationally driven price volatility in experimental overlapping generation economies in the theoretical model under study there exist pure sunspot equilibria which can be learned if agents use some adaptive learning rules our data show the existence of expectationally driven cycles but only after subjects have been exposed to a sequence of real shocks and learned a real cycle in this sense we show evidence of path dependent price volatility journal of economic literature classification numbers c62 c92 f17 e32 e44

has india s economic growth become more pro poor in the wake of economic reforms the extent to which india s poor have benefited from the country s economic growth has long been debated a new series of consumption based poverty measures spanning 50 years including a 15 year period after economic reforms began in earnest in the early 1990s is used to examine that issue growth has tended to reduce poverty including in the post reform period there is no robust evidence of more or less poverty responsiveness to growth since the reforms began although there are signs of rising inequality the impact of growth is higher when using poverty measures that reflects distribution below the poverty line and when using growth rates calculated from household surveys rather than national accounts the urban rural pattern of growth matters for the pace of poverty reduction however in marked contrast to the period before the reforms urban economic growth in the period after the reforms has brought significant gains to the rural poor as well as the urban poor

trading off generations equity discounting and climate change the prevailing literature discusses intergenerational trade offs in climate change predominantly in terms of the ramsey equation relying on the infinitely lived agent model we discuss these trade offs in a continuous time olg framework and relate our results to the infinitely lived agent setting we identify three shortcomings of the latter first underlying normative assumptions about social preferences cannot be deduced unambiguously second the distribution among generations living at the same time cannot be captured third the optimal solution may not be implementable in overlapping generations market economies

reap what you sow agricultural technology urbanization and structural change abstract this paper studies how productivity enhancing agricultural technology affects urbanization by provoking structural change we investigate these issues using a natural experiment in the united states the results show that technologies which improve crop productivity lead to a less urbanized economy as economic activity relocates from manufacturing and services towards agriculture the effects are highly persistent and are driven by the technology increasing agricultural labor demand our findings highlight the potentially unintended disruptive force of innovative technologies

agricultural productivity and structural transformation evidence from brazil we study the eects of the adoption of new agricultural technologies on structural transfor mation to guide empirical work we present a simple model where the eect of agricultural productivity on industrial development depends on the factor bias of technical change we test the predictions of the model by studying the introduction of genetically engineered soybean seeds in brazil which had heterogeneous eects on agricultural productivity across areas with dierent soil and weather characteristics we nd that technical change in soy production was strongly labor saving and lead to industrial growth as predicted by the model

nonfarm diversification poverty economic mobility and income inequality a case study in village india this paper assembles data at the all india level and for the village of palanpur uttar pradesh to document the growing importance and influence of the non farm sector in the rural economy between the early 1980s and late 2000s the suggestion from the combined national sample survey and palanpur data is of a slow process of non farm diversification whose distributional incidence on the margin is increasingly pro poor the village level analysis documents that the non farm sector is not only increasing incomes and reducing poverty but appears as well to be breaking down long standing barriers to mobility among the poorest segments of rural society efforts by the government of india to accelerate the process of diversification could thus yield significant returns in terms of declining poverty and increased income mobility the evidence from palanpur also shows however that at the village level a significant increase in income inequality has accompanied diversification away from the farm a growing literature argues that such a rise in inequality could affect the fabric of village society the way in which village institutions function and evolve and the scope for collective action at the village level failure to keep such inequalities in check could thus undermine the pro poor impacts from the process of structural transformation currently underway in rural india

dynamics of the cobweb model with adaptive expectations and nonlinear supply and demand the price quantity dynamics of the cobweb model with adaptive expectations and nonlinear supply and demand curves is analysed we prove that chaotic dynamical behaviour can occur even if both the supply and demand curves are monotonic the introduction of adaptive expectations into the cobweb model leads to price quantity fluctuations with a smaller amplitude however at the same time the price quantity cycles may become unstable and chaotic oscillations may arise we present a geometric explanation why chaos can occur for a large class of nonlinear monotonic supply and demand curves

side effects of nonlinear profit taxes in an evolutionary market entry model abrupt changes coexisting attractors and hysteresis problems in order to demonstrate that nonlinear tax systems may have surprising and potentially undesirable side effects we develop an evolutionary market entry model in which firms decide on the basis of past profit opportunities whether or not to enter a competitive market our main focus is on the case of a proportional tax on positive profits such a piecewise linear tax scheme induces a kink in the firms profit functions and may lead to abrupt changes in a market s dynamics coexisting attractors and hysteresis problems since these phenomena can also be observed in more general models a proper understanding of their basic mechanism may be helpful to explain the intricate behavior of many economic systems

poverty decline agricultural wages and non farm employment in rural india 1983 2004 the authors analyze five rounds of national sample survey data covering 1983 1987 8 1993 4 1999 0 and 2004 5 to explore the relationship between rural diversification and poverty poverty in rural india declined at a modest rate during this period the authors provide region level estimates that illustrate considerable geographic heterogeneity in this progress poverty estimates correlate well with region level data on changes in agricultural wage rates agricultural labor remains the preserve of the uneducated and also to a large extent of the scheduled castes and scheduled tribes although agricultural labor grew as a share of total economic activity over the first four rounds it had fallen back to the levels observed at the beginning of the survey period by 2004 this all india trajectory masks widely varying trends across states during this period the rural non farm sector grew modestly mainly between the last two survey rounds regular non farm employment remains largely associated with education levels and social status that are rare among the poor however casual labor and self employment in the non farm sector reveal greater involvement by disadvantaged groups in 2004 than in the preceding rounds the implication for poverty is not immediately clear the poor may be pushed into low return casual non farm activities due to lack of opportunities in the agricultural sector rather than being pulled by high returns offered by the non farm sector econometric estimates reveal that expansion of the non farm sector is associated with falling poverty via two routes a direct impact on poverty that is likely due to a pro poor marginal incidence of non farm employment expansion and an indirect impact attributable to the positive effect of non farm employment growth on agricultural wages the analysis also confirms the important contribution to rural poverty reduction from agricultural productivity availability of land and consumption levels in proximate urban areas

agricultural productivity and the sectoral reallocation of labor in rural india abstract how do shocks to agricultural productivity affect the allocation of labor across sectors of the economy to answer this i use data from rural india to show that exogenous increases in agricultural productivity caused by abnormally high levels of precipitation lead to an increase in the labor share of the non agricultural sector i further show that the non tradable sector expands significantly when agricultural output increases this evidence is consistent with increasing agricultural output causing increased demand for local non tradables which in turn increases the non agricultural labor share

stability of cycles and expectations the actual dynamics of an economy depends on how agents forecast the future at every date as a function of their information on the past while possibly learning the structure of their environment we show in the case of a one dimensional state variable that under mild conditions on expectations functions a given cycle with perfect foresight that is stable in the actual dynamics is stable in a fictitious backward perfect foresight dynamics we exhibit a restricted class of expectations functions for which the converse is true

a cobweb model with local externalities abstract this paper considers an extension of the standard cobweb model in a market with local externalities in contrast with the standard cobweb model firms must forecast both prices and local quantities we develop new constructive stability and existence conditions for equilibria with positive outputs we find evidence of clusters of firms whose output behavior is correlated as equilibrium is reached we also show that an appropriately defined representative agent model with a global externality exhibits the same mean or second order properties of aggregate output as the more complex model with local externalities

commodity markets price limiters and speculative price dynamics abstract we develop a behavioral commodity market model with consumers producers and heterogeneous speculators to characterize the nature of commodity price fluctuations and to explore the effectiveness of price stabilization schemes within our model we analyze how nonlinear interactions between market participants can create either bull or bear markets or irregular price fluctuations between bull and bear markets through a global homoclinic bifurcation both the imposition of a bottoming price level to support producers or a topping price level to protect consumers can eliminate such homoclinic bifurcations and hence reduce market price volatility however simple policy rules such as price limiters may have unexpected consequences in a complex environment a minimum price level decreases the average price while a maximum price limit increases the average price in addition price limiters influence the price dynamics in an intricate way and may cause volatility clustering

environmental valuation under sustainable development environmentalism has evolved since the 1960 s from a concern with the preservation of wilderness in the american experience to a concern over pollution of human habitat throughout the industrialized world northern anxiety spread to the loss of tropical rainforests and biodiversity in the south where environmentalism evolved further in an encounter with indigenous interpretations conditions and priorities by the late 1980 s climate change emerged as a central issue in a now global discourse on the relationship between environment and development the principle of sustainable development that current needs are to be met as fully as possible while ensuring that the life opportunities of future generations are undiminished relative to present is now widely accepted this paper illustrates that incorporating environmental values per se in decision making will not bring about sustainability unless each generation is committed to transferring to the next sufficient natural resources and capital assets to make development sustainable 11 refs 3 figs

land reforms poverty reduction and economic growth evidence from india recognition of the importance of institutions that provide security of property rights and relatively equal access to economic resources to a broad cross section of society has renewed interest in the potential of asset redistribution including land reforms empirical analysis of the impact of such policies is however scant and often contradictory this paper uses panel household data from india together with state level variation in the implementation of land reform to address some of the deficiencies of earlier studies the results suggest that land reform had a significant and positive impact on income growth and accumulation of human and physical capital the paper draws policy implications especially from the fact that the observed impact of land reform seems to have declined over time

the behavior of the exchange rate in the genetic algorithm and experimental economies this paper studies the behavior of the exchange rate in the kareken wallace overlapping generations economy with two currencies in which decision rules are updated using the genetic algorithm the analysis shows that a stationary monetary equilibrium of the kareken wallace model is not stable under the genetic algorithm dynamics the fluctuations in the genetic algorithm exchange rate are driven by fluctuations in the portfolio fractions which change over time in response to the inequality between the rates of return on two currencies further both the genetic algorithm simulations and the experiments with human subjects were characterized by continuing fluctuations of the exchange rate with first period consumption values close to a stationary value

popularity of reinforcement based and belief based learning models an evolutionary approach in an evolutionary model players from a given population meet randomly in pairs each instant to play a coordination game at each instant the learning model used is determined via some replicator dynamics that respects payoff fitness we allow for two such models a belief based best response model that uses a costly predictor and a costless reinforcement based one this generates dynamics over the choice of learning models and the consequent choices of endogenous variables we report conditions under which the long run outcomes are efficient or inefficient and they support the exclusive use of either of the models or their co existence

stability chaos and multiple attractors a single agent makes a difference abstract this paper provides an example in which a slight behavioral heterogeneity may fundamentally change the dynamical properties of a nonlinear cobweb market with a quadratic cost function and an isoelastic demand function we consider two types of producers cautious adapters and naive optimizers in a market of naive optimizers a single cautious adapter stabilizes the otherwise exploding market in a market of cautious adapters a single naive optimizer may destabilize the market without him there exists at most one periodic attractor in the market but with him there may appear many and even infinitely many coexisting periodic attractors

on the intergenerational allocation of natural resources it is known hartwick and others that under standard assumptions a society that invests in reproducible capital the competitive rents on its current extraction of exhaustible resources will enjoy a consumption stream constant in time it is shown here that this result can be interpreted as saying that an appropriately defined stock of capital including the initial endowment of resources is being maintained intact and that consumption can be interpreted as the interest on that patrimony this seems like a useful rule of thumb for policy

rational expectations may lead to complex dynamics in a muthian cobweb model with heterogeneous agents abstract starting from a muthian cobweb model we extend the profit based evolutionary setting in hommes and wagener 2010 by assuming that in addition to pessimistic optimistic and unbiased fundamentalists the market is populated by rational producers which correctly anticipate the next period price thanks to their introduction we find that differently from the framework in hommes and wagener 2010 the map governing the dynamics is no more monotonically decreasing hence if on the one hand adding rational agents enlarges the local stability region of the steady state on the other hand their consideration opens the door to complex dynamic outcomes characterized by chaotic attractors and rich multistability phenomena that we investigate along the paper

rural nonfarm employment and incomes in the himalayas abstract nonfarm activities generate on average about 60 of rural households incomes in the himalayas this article analyzes the determinants of participation in nonfarm activities and of nonfarm incomes across rural households a unique data set collected in the himalayan region of india allows us to deal with the heterogeneity of rural nonfarm activities by using aggregations into categories that are useful both analytically and for policy purposes we conduct an empirical inquiry that reveals that education plays a major role in accessing more remunerative nonfarm employment other household assets and characteristics such as land social status and geographical location also play a role

complicated endogenous business cycles under gross substitutability abstract in this paper we investigate the global behaviour of the output equilibrium time paths in a two dimensional overlapping generations model with productive investment and capital accumulation where agents behave rationally and markets are competitive we show that equilibrium time paths can converge to complicated chaotic attractors as well as periodic attractors when the substitution effect dominates the income effect everywhere the occurrence of complicated equilibrium paths is guaranteed by homoclinic intersections of the stable and unstable manifolds of the autarkic steady state journal of economic literature classificiation number e32

genetic algorithm learning and the cobweb model this paper presents the cobweb model in which competitive firms in a market for a single good use a genetic algorithm to update their decision rules about next period production and sales the results of simulations show that the genetic algorithm converges to the rational expectations equilibrium for a wider range of parameter values than other algorithms frequently studied within the context of the cobweb model price and quantity patterns generated by the genetic algorithm are also compared to the data of experimental cobweb economies it is shown that the algorithm can capture several features of the experimental behavior of human subjects better than three other learning algorithms that are considered

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

living in an imaginary world that looks real abstract in the paper we show using standard approaches general equilibrium modeling and the assumption of complete rationality that the macroeconomic environment is endogenous and is indeterminate specifically it is argued without resorting to sunspot type arguments that microeconomic fundamentals do not suffice to characterize the economy at the macro level in particular we show how perceptions of rational agents of the workings of the economy a shape the environment b affect the environment sufficiently to ensure that rational economic agents find the observed environment consistent with their beliefs even though it is not as a by product we illustrate that endogenous macro uncertainty can arise as an outcome if rational economic agents whose expectations are anchored on endogenous variables expect them to arise finally we show that systematic errors can persist indefinitely under rationality

aid policies and growth the authors of this paper use a new database on foreign aid to examine the relationships among foreign aid economic policies and growth of per capita gdp in panel growth regressions for 56 developing countries and 6 four year periods 1970 93 they find that the policies that have a great effect on growth are those related to fiscal surplus inflation and trade openness they construct an index for those three policies and have that index interact with foreign aid they have instruments for both aid and aid interacting with policies they find that aid has a positive impact on growth in developing countries with good fiscal monetary and trade policies in the presence of poor policies aid has no positive effect on growth this result is robust in a variety of specifications which include or exclude middle income countries include or exclude outliers and treat policies as exogenous or endogenous they examine the determinants of policy and find no evidence that aid has systematically affected policies either for good or for ill they estimate an aid allocation equation and show that any tendency for aid to reward good policies has been overwhelmed by donors pursuit of their own strategic interests in a counterfactual they reallocate aid reduce the role of donor interests and increasing the importance of policy such a reallocation would have a large positive effect on developing countries growth rates

micro level welfare impacts of agricultural productivity evidence from rural malawi this article analyses the micro level welfare impacts of agricultural productivity using a two wave nationally representative panel data from rural malawi welfare is measured by various dimension

adaptive expectations and cobweb phenomena does heterogeneity matter this paper studies a cobweb type commodity market characterized by a strictly monotone demand and supply in which n types of firms operate types differ in a key parameter governing price expectations which are supposed to be adaptive the unique steady state of the resulting economic dynamics is characterized in terms of stability and the impact of the number of firms types is studied to this end the notions of structural and behavioural degree of instability which are introduced in the paper prove to be crucial in determining whether stability or instability prevail the case of market integration is also considered and conditions to have stability or instability in terms of the original markets parameters are given the baseline structure is extended in two directions the first extension assumes the point of view of an authority who is uncertain about the firms types in this case the structural degree of instability determines how heterogeneity affects the probability of ending up with a stable outcome the second extension consists in endogenizing the choice of predictors through a discrete choice based evolutionary mechanism in both cases the amount of the heterogeneity and its possible variations play a critical role in shaping the range of possible long run outcomes of the model

overlapping generations or infinitely lived agents intergenerational altruism and the economics of global warming do we need an overlapping generations model for the economics of global warming to answer this question an infinitely lived agent ila approach and an overlapping generations olg model are contrasted ila and olg can be viewed as polar representations of intergenerational altruism with ila an immortal agent acts through his investment savings decisions as trustee on the behalf of the future generations with olg agents need not behave altruistic they simply save during working years and dissave completely during retirement nevertheless ila and olg must not differ in their implication for greenhouse policy greenhouse gas abatement is a straightforward alternative to physical capital formation and even without altruism each age cohort has an incentive to provide current abatement in order to reduce future damages attributable to climate change indeed under reasonable assumptions and parameter values our simulations reveal such an invariance result provided carbon taxes are the only policy tool and tax revenues are recycled through socially mandated rules projections of economic growth climate change and energy consumption are only insignificantly affected by the choice of approach

the effects of ageing and an environmental trust fund in an overlapping generations model on carbon emission reductions most currently employed integrated assessment models for climate change are of a dynastic nature they employ the ramsey rule linking the interest rate economic growth and the rate of pure time preference this paper argues that although a dynastic framework might be convenient for economic analysis it is restrictive and can be misleading overlapping generations models which do not employ the ramsey rule are more flexible and may give results different from those derived from dynastic models with the integrated assessment model alice 2 0 it is shown how various assumptions on demographic change and public institutions can affect the interest rate thereby influencing the efficient greenhouse gas emission reductions it is concluded that dynastic integrated assessment models are in many respects inappropriate for providing policy makers with quantitative figures about the costs of carbon dioxide emissions and their desirable reduction levels 2001 elsevier science b v all rights reserved

managing rational routes to randomness abstract within the seminal cobweb model of brock and hommes firms adapt their price expectations by a profit based switching behavior between free naive expectations and costly rational expectations brock and hommes demonstrate that fixed point dynamics may turn into increasingly complex dynamics as the firms intensity of choice increases we show that policy makers are able to manage such rational routes to randomness by adjusting profit taxes in particular policy makers should increase decrease profit taxes if destabilizing expectations generate higher lower profits than stabilizing expectations to alter the composition of applied expectation rules and thereby to promote market stability our results are not restricted to cobweb models a huge body of literature demonstrates that rational routes to randomness may emerge in many different markets

heterogeneous beliefs and the non linear cobweb model abstract this paper generalizes the evolutionary cobweb model with heterogeneous beliefs of brock and hommes 1997 econometrica 65 1059 1095 to the case of non linear demand and supply agents choose between a simple freely available prediction strategy such as naive expectations and a sophisticated costly prediction strategy such as rational expectations and update their beliefs according to an evolutionary fitness measure such as past realized net profits it is shown that for generic non linear monotonic demand and supply curves the evolutionary dynamics exhibits rational routes to randomness that is bifurcation routes to strange attractors occur when the traders sensitivity to differences in evolutionary fitness increases

adaptation to land constraints is africa different since the seminal works of malthus and boserup scientists have long debated the impact of population growth and land constraints on the wellbeing of rural people today these concerns are particularly relevant to africa with its rapid population growth very small farms and chronic food insecurity in this paper we examine adaptation to falling land labor ratios using a comprehensive theoretical framework in which households faced with binding land constraints can respond in three ways intensifying agricultural production diversifying out of agriculture and reducing fertility rates using cross country data and drawing upon the existing literature we reach three conclusions first population density is associated with reduced fallows and more intensive use of land but not fertilizer use or irrigation indicating major challenges in achieving sustainable intensification or agricultural productivity growth second there is little evidence of successful non farm diversification in response to land pressures in africa from domestic or international income sources third rural africans in land constrained countries desire smaller families but have thus far benefited little from family planning policies these findings underscore the need for a coordinated multi sectoral approach to sustainably reduce poverty in the region

climate change and the representative agent the artifice of an infinitely lived representative agent iscommonly invoked to balance the present costs and future benefitsof climate stabilization policies since actual economies arepopulated by overlapping generations of finite lived persons this approach begs important questions of welfare aggregation this paper compares the results of representative agent andoverlapping generations models that are numerically calibratedbased on standard assumptions regarding climate economyinteractions under two social choice rules pareto efficiencyand classical utilitarianism the models generate closelysimilar simulation results in the absence of policies toredistribute income between present and future generations efficient rates of carbon dioxide emissions abatement rise from15 to 20 between the years 2000 and 2105 under classicalutilitarianism in contrast optimal control rates rise from 48 to 79 this same period

descriptive prescriptive and second best approaches to the control of global greenhouse gas emissions a prescriptive second best approach is developed for determining the control of greenhouse gas emissions in an inter temporal multi region model of the world concerns about inter and intra generational equity are reflected in the rate of time preference and regional weights of a social welfare function choices are narrowed down by the ethical principle of anonymity a third dimension of equity inequality aversion is subject to greater variation the aggressiveness of recommended abatement can be made to bracket results for a common descriptive model by the choice of inequality aversion in this manner the perception of a sharp dichotomy between descriptive and prescriptive approaches is moderated

fundamentalists vs chartists learning and predictor choice dynamics abstract in a simple forward looking univariate model of price determination we investigate the evolution of expectations dynamics in the presence of two types of agents fundamentalists and chartists in particular we combine evolutionary selection among heterogeneous classes of models through predictor choice dynamics based on a logit model with adaptive learning in the form of parameters updating within each class of rules we find that for different parameterizations it can happen that fundamentalists drive chartists completely out of the market or vice versa and also that heterogeneous equilibria in which fundamentalists and chartists coexist are possible interestingly though only equilibria in which fundamentalists outperform chartists turn out to be adaptively learnable by agents

statistical properties of genetic learning in a model of exchange rate abstract we study statistical properties of the time series of the exchange rate data generated in the environment where agents update their savings and portfolio decisions using the genetic algorithm the genetic algorithm adaptation takes place within an overlapping generations model with two currencies and the free trade flexible exchange rate system the theoretical model implies a constant exchange rate under the perfect foresight assumption under the genetic algorithm learning the model s equilibrium dynamics is not constant but exhibits bounded oscillations the time series analysis of the data indicates that the dynamics of the exchange rate returns is chaotic out of equilibrium inequality of rates of return on two currencies prompts the genetic algorithm agents to take advantage of the arbitrage opportunities by increasing the amount of the currency with higher rate of return in their portfolios this profit seeking results in chaotic patterns of the exchange rate series

economic liberalization and indian economic growth what s the evidence india s growth and poverty performance over the last three decades has been a subject of great curiosity unlike the east asian countries india s growth spurt is not associated with exceptionally high domestic savings or foreign capital inflows or manufacturing exports so what triggered the change in the growth trajectory did the market liberalization policies of the 1990s help how have the initial conditions shaped the process and how has the indian model impinged on india s central problem of mass poverty this paper surveys the literature and offers its own assessment of the drivers of change jel i32 o13 o14 o15 o21 o47

economic growth and the rise of forests although forests have diminished globally over the past 400 years forest cover has increased in some areas including india in the last two decades aggregate time series evidence on forest growth rates and income growth across countries and within india and a newly assembled data set that combines national household survey data census data and satellite images of land use in rural india at the village level over a 29 year period are used to explore the hypothesis that increases in the demand for forest products associated with income and population growth lead to forest growth the evidence is consistent with this hypothesis which also shows that neither the expansion of agricultural productivity nor rising wages in india increased local forest cover

an analysis of the cobweb model with boundedly rational heterogeneous producers abstract this paper considers the traditional cobweb model with heterogenous risk averse producers whose supply functions involve their estimates of the conditional mean and variance of the future price the producers seek to learn these quantities by applying geometric decay processes gdp to past prices the heterogeneity manifests itself in the lag lengths and memory parameters applied to past prices as well as in risk aversion coefficients we find that each dimension of heterogeneity changes enriches the cobweb dynamics with respect to the case of homogeneous producers

rural industrialization in china and india role of policies and institutions summary the dynamic rural nonfarm sector in china has been a major contributor to the country s remarkable growth while in india the growth in output and employment in this sector has been rather stagnant this paper argues that the observed patterns in the rural nonfarm development are the results of institutional differences between the two countries especially in their political systems ownership structure and credit institutions a review of the strengths and weaknesses of the rural nonfarm economy in china and india highlights the potentials and challenges of growth in the sector

interacting cobweb markets abstract we enrich the classical cobweb framework by allowing producers to enter different markets the market entry decision is repeated every period and depends on the markets historical profit differentials as a result the number of producers in a market and thus also a market s total supply vary over time analytical and numerical investigations of our four dimensional nonlinear model indicate that interacting cobweb markets may contribute to the strong cyclical price motion observed in many commodity markets we furthermore find that endogenous dynamics may either set in via a flip or a neimark sacker bifurcation interestingly the latter scenario is prevalent if producers are sufficiently risk averse

expectational diversity in monetary economies abstract we investigate an overlapping generations monetary economy in which expectations depend upon backward looking predictors of the future price level we use discrete choice theory to model how agents select a predictor based on its past forecast error letting the number of available predictors tend to infinity we obtain the large type limit of the system taking the large type limit dramatically reduces the number of free parameters while maintaining the expectational diversity which we argue is necessary for constructing plausible learning based models the model s dynamics are strongly influenced by the intensity of choice which measures how sensitive an agent s predictor choice is to differences in forecast errors across predictors when the intensity of choice is low the monetary steady state is stable as the intensity of choice increases and if certain parametric restrictions are met the system undergoes a hopf bifurcation in which case we document the existence of highly irregular equilibrium price paths

agricultural productivity growth rural economic diversity and economic reforms india 1970 2000 a salient theme in d gale johnson s work is the importance of agricultural development for general prosperity and for economic diversification e g johnson 2000 johnson has also noted that most of the world s poor are engaged in farming so that a key focus of development policy is to raise the incomes of farmers from a global perspective increasing the productivity of agriculture given the fixity of land is necessary for both poverty reduction and the development of the nonagricultural sector at the level of the world agricultural productivity gains poverty reduction and the growth of the nonfarm sector are complements however the question remains whether these observations imply that every poor country should focus its public resources on agricultural development in order to raise the incomes of people now engaged in farming and whether such a policy is necessary for obtaining economic diversity in this article we use the experience of india over the past 30 years to address the issue of whether agricultural technical change actually leads to economic diversification and income growth within the rural sector in the context of an open economy country in which there are cross area trade and capital flows we focus in particular on the rural sector because this is the sector in which linkages between agricultural and nonagricultural sectors are thought to be the strongest we exploit the fact that india has maintained a policy of openness with respect to agricultural technology over this period permitting and actively supporting agricultural development and has moved to a reformed regime in which goods are traded and capital is more mobile in the 1990s evidence on the relationship between agricultural growth and nonfarm

carbon dioxide and intergenerational choice depending on ethical beliefs different decisions emerge for resolving the carbon dioxide co sup 2 issue it is doubtful that an international consensus can be reached on a correct ethical criterion perhaps the best strategy would be to delay acceptance of either a particular set of beliefs or the existing scientific evidence and wait for more accurate and conclusive research to emerge if the scientific evidence is accepted as valid and all future generations that will exist are evaluated equally then the optimal current regulatory strategy is to restrict as much as possible current emissions of co sup 2 17 references 2 figure 1 table

adaptive expectations coordination in an economy with heterogeneous agents abstract in this paper we study the problem of expectations coordination on the stationary state in a one dimensional economy with heterogeneous agents we consider a constant gain adaptive learning rule we allow for heterogeneity of the fundamentals and of the constant gain parameters we show that these two sources of heterogeneity may create difficulties to the process of coordination

impacts of co2 taxes in an economy with niche markets and learning by doing in this paper we analyse the impact of carbon taxes on emission levels when niche markets exist for new carbon free technologies and when these technologies experience learning by doing effects for this purpose a general equilibrium model has been developed demeter that specifies two energy technologies one based on fossil fuels and one on a composite of carbon free technologies initially the carbon free technology has relatively high production costs but niche markets ensure positive demand learning by doing decreases production costs which increases the market share which in turn accelerates learning by doing and so forth this mechanism allows a relatively modest carbon tax of about 50 us tc to almost stabilise carbon emissions at their 2000 levels throughout the entire 21st century sensitivity analysis shows that the required carbon tax for emission stabilisation crucially depends on the elasticity of substitution between the fossil fuel and carbon free technology

rural nonagricultural activities in development theory and application abstract this paper focusses on the potentially important role of rural nonagricultural activity in the development process using the hymer resnick z goods model as a point of departure we first show that its pessimistic conclusions are based on rather restrictive assumptions as applied to the colonial period we relax these assumptions indicating the theoretical possibility of a substantially more positive scenario for that period subsequently we analyze the role of z goods traditional and nontraditional in the post independence era again distinguishing between archetypal pessimistic and optimistic cases finally the comparative historical experience of the philippines and taiwan is brought to bear to illustrate the argument empirically

does distribution matter efficiency equity and flexibility in greenhouse gas abatement this paper analyses banking and borrowing ofcarbon emission rights within the framework ofa simple integrated assessment model breaking the world economy in just two regionsit will be shown 1 increasing intertemporal flexibility in greenhouse gasabatement through banking and borrowing ofcarbon emission permits has a positive effecton welfare for regions with a poor endowment incarbon emission rights but negatively affectsrich endowed regions 2 intergenerationalfairness advocates intertemporal flexibility ingreenhouse gas abatement irrespectively of theinitial allocation of carbon rights 3 optimal carbon accumulation is not independentof the initial allocation of carbon rights different initial sharing rules clearlyinfluence the development of atmospheric carbonconcentration

endogenous fluctuations under evolutionary pressure in cournot competition abstract an evolutionary game theoretic model of cournot competition is investigated individuals choose from a finite set of different behavioral rules each rule specifies the quantity to be produced in the current period as a function of past quantities using more sophisticated rules may require extra information costs based upon realized payoffs the fractions of the population choosing a certain behavioral rule are updated according to the replicator equation with noise the long run behavior of the evolutionary system consisting of the population dynamics coupled with the quantity dynamics of the cournot game may be complicated and endogenous fluctuations may arise we consider a typical example where firms can choose between two rules the nash rule and the best reply rule we show that a homoclinic tangency between the stable and unstable manifold of the equilibrium occurs as evolutionary pressure increases implying bifurcation routes to complicated dynamics and strange attractors

non farm activity household expenditure and poverty reduction in rural vietnam 2002 2008 summary diversifying into non farm activities has been suggested as an effective way out of poverty for rural households in developing countries using the vietnamese household living standards surveys of 2002 2004 2006 and 2008 we test this claim and investigate the effect of non farm sector involvement on poverty and expenditure growth our endogeneity corrected estimates show that an additional household member involved with non farm activity reduces the probability of poverty by 7 12 and increases the household expenditure by 14 over a two year period our findings also indicate that non farm involvement reduces the hours worked on farm but not the household agricultural income

the damage costs of climate change toward more comprehensive calculations it is argued that estimating the damage costs of a certain benchmark climate change is not sufficient what is needed are cost functions and confidence intervals although these are contained in the integrated models and their technical manuals this paper brings them into the open in order to stimulate discussion after briefly reviewing the benchmark climate change damage costs region specific cost functions are presented which distinguish tangible from intangible losses and the losses due to a changing climate from those due to a changed climate furthermore cost functions are assumed to be quadratic as an approximation of the unknown but presumably convex functions results from the damage module of the integrated climate economy model fund are presented next uncertainties are incorporated and expected damages are calculated it is shown that because of convex loss functions and right skewed uncertain ties the risk premium is substantial calling for more action than analysis based on best guess estimates the final section explores some needs for further scientific research

eductive expectations coordination on deterministic cycles in an economy with heterogeneous agents abstract in this paper we study expectations coordination on a deterministic 2 cycle by an eductive approach in which agents are concerned with forecasting the forecasts of others this approach is grounded in some common knowledge assumptions we consider an overlapping generations economy in which agents have heterogeneous utility functions we show that locally eductively stable 2 cycles can exist when agents have stationary beliefs we also show that heterogeneity may hinder eductive coordination

on the consistency of backward looking expectations the case of the cobweb in dynamic models of economic fluctuations backward looking expectations with systematic forecasting errors are inconsistent with rational behaviour in non linear dynamic models exhibiting seemingly unpredictable chaotic fluctuations however simple habitual rule of thumb backward looking expectation rules may yield non zero but nevertheless non systematic forecasting errors in a chaotic model expectational forecasting errors may have zero autocorrelations at all lags even for rational agents patterns in these forecasting errors may be very difficult to detect especially in the presence of small noise backward looking expectations are then not necessarily inconsistent with rational behaviour we investigate whether simple expectation schemes such as naive or adaptive expectations can be consistent with rational behaviour in the simplest of all non linear dynamic economic models the non linear cobweb model

declining discount rates the long and the short of it the last few years have witnessed important advances in our understanding of time preference and social discounting in particular several rationales for the use of time varying social discount rates have emerged these rationales range from the ad hoc to the formal with some founded solely in economic theory while others reflect principles of intergenerational equity while these advances are to be applauded the practitioner is left with a confusing array of rationales and the sense that almost any discount rate can be justified this paper draws together these different strands and provides a critical review of past and present contributions to this literature in addition to this we highlight some of the problems with employing ddrs in the decision making process the most pressing of which may be time inconsistency we clarify their practical implications and potential pitfalls of the more credible rationales and argue that some approaches popular in environmental economics literature are ill conceived finally we illustrate the impact of different approaches by examining global warming and nuclear power investment this includes an application and extension of newell and pizer discounting the benefits of climate change mitigation how much do uncertain rates increase valuations journal of environmental economics and management 46 2003 52 to uk interest rate data

carl s nonlinear cobweb abstract this essay surveys some of my work on expectations learning and bounded rationality within the classical cobweb model following early inspiring ideas from carl chiarella in particular i focus on the role of nonlinear dynamics learning and heterogeneity within the cobweb framework and how price fluctuations in the cobweb theory fit with observations of individual and aggregate behaviour from laboratory experiments with human subjects

carbon taxes a drop in the ocean or a drop that erodes the stone the effect of carbon taxes on technological change abstract we develop an economic partial equilibrium model for energy supply and demand with capital and labor as production factors and endogenous technological change through learning by research and learning by doing our model can reproduce the learning curve typical for bottom up energy system models the model also produces an endogenous s curved transition from fossil fuel energy sources to carbon free energy sources over the coming two centuries we use the model to study carbon taxes effects on fossil fuel and carbon free energy use and carbon dioxide emissions it is shown that without induced technological change carbon taxes have a modest effect on emissions while with induced technological change they accelerate the substitution of carbon free energy for fossil fuels substantially

cobweb dynamics under bounded rationality this paper discusses recent work on expectation formation in the familiar cobweb hog cycle model a convenient feature of the model is the fact that it has a unique rational expectations equilibrium ree attention will be focused on whether this unique ree can be learned under bounded rationality with agents using simple habitual rule of thumb forecasting rules or whether other approximate rational expectations equilibria can arise where forecasts are although not perfect approximately correct in particular the possibility of chaotic equilibria under bounded rationality will be discussed both the homogeneous agent case and the heterogeneous case with evolutionary competition between different forecasting rules will be discussed recent experimental work on expectations formation in the cobweb economy suggests excess volatility and endogenous possibly chaotic price fluctuations driven by the interaction of competing boundedly rational agents