stability in a discrete time model of the walrasian tatonnement abstract almost all of the extensive literature on the stability of the walrasian t tonnement models the process in continuous rather than discrete time since the motivation for the use of continuous time is primarily mathematical not economic and since stability for a continuous time model does not imply the stability of its discrete time analogue it is of interest to investigate the stability of the walrasian t tonnement modeled in discrete time the question is of particular importance since much of the recent literature on topics such as expectations disequilibrium trading and temporary equilibrium utilizes discrete time this paper demonstrates that for a certain class of models conditions known to be sufficient for stability in continuous time are also sufficient in a discrete time formulation of the price adjustment mechanism excess demand functions having the properties of gross substitution dominant diagonals and the morishima system of complementary commodities are analyzed

a wage price regime switching model abstract the model we discuss in this paper combines an employment function which is based on a kaldor type consumption function and a simple production function with a wage price subsystem whose parameters switch when a critical level of employment is reached depending on the way in which exogenous variables are specified and on parameter values the model is capable of generating a wide variety of behavior in both real and nominal wages and prices

unemployment growth and taxation in industrial countries unemployeement and taxes do taxes affect the rate of umemployeement to the layman the upward trend in european unemployment is related to the slowdown of economic growth we argue that the layman s view is correct the increase in european unemployment and the slowdown in economic growth are related because they stem from a common cause an excessively rapid growth in the cost of labour in europe labour costs have gone up for many reasons but one is particularly easy to identify higher taxes on labour if wages are set by strong and decentralized trade unions an increase in labour taxes is shifted onto higher real wages this has two effects first it reduces labour demand and thus creates unemployment secondly as firms substitute capital for labour the marginal product of capital falls over long periods of time this in turn diminishes the incentive to invest and to grow the data strongly support this view according to our estimates the observed rise of 14 percentage points in labour tax rates between 1965 and 1995 in the eu could account for a rise in eu unemployment of roughly 4 percentage points a reduction of the investment share of output of about 3 percentage points and a growth slowdown of about 0 4 percentage points a year francesco daveri and guido tabellini

market entry waves and volatility outbursts in stock markets abstract we develop a simple agent based financial market model in which speculators market entry decisions are subject to herding behavior and market risk in addition speculators orders depend on price trends market misalignments and fundamental news using a mix of analytical and numerical tools we show that a herding induced market entry wave may amplify excess demand triggering lasting volatility outbursts eventually however higher stock market risk reduces stock market participation and volatility decreases again simulations furthermore reveal that our approach is also able to produce bubbles and crashes excess volatility fat tailed return distributions and serially uncorrelated price changes moreover trading volume is persistent and correlated with volatility

interactions between stock bond and housing markets abstract we develop a model in which investors can participate in stock bond and housing markets investors market entry decisions are subject to herding effects and depend on the markets price trends and on their mispricings the dynamics of our model is governed by a four dimensional nonlinear map and its unique inner steady state is characterized by standard present value relations between dividends rents and the bond rate amongst other things we show that endogenous stock and housing market dynamics emerge countercyclical to each other if investors react strongly to the markets price trends such a cross feedback reflects investors tendency to transfer their enthusiasm from one speculative market to another

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

positive welfare effects of trade barriers in a dynamic partial equilibrium model we develop a simple two region cobweb type dynamic partial equilibrium model to demonstrate the existence of optimal possibly non zero trade barriers a pure comparative statics analysis of our model suggests that a reduction of trade barriers modeled as small but positive import tariffs always enhances welfare however taking a dynamic perspective reveals that nonlinear trade interactions between two regions may generate endogenous price fluctuations which can hamper welfare finally we allow special interest groups such as consumers or producers from these two regions to lobby for a particular level of trade barriers our model predicts that time varying trade barriers may be another channel for market instability

the sources of divergent practices in china s nuclear power sector abstract unlike markets that were early developers of reactors which are dominated by single technologies china s nuclear power sector adopts and imports multiple technologies even after the chinese government introduced a policy to develop a standardized unified and technologically advanced nuclear power sector in the early 2000s different technologies continue to be imported this study uses an institutional lens to explore the decoupling of policy intentions and implementation the three phases of nuclear technology imports that occurred between the 1980s and 2010 are examined and compared data are collected from multiple sources including the diary of a major decision maker news articles project websites a regulation database domestic journal articles and interviews with industry experts using interactive content analysis this study identifies the multiple policy principles and goals of different domains that led to different import arrangements and interpretations of the available foreign technology new arrangements do not replace but overlap the existing ones that are perpetuated by the actors who benefit from them the results show that the multiplicity of china s nuclear power sector coupled with the government s late attempts at standardization contributes to diversified policy implementation they provide important policy implications for the sustainable development of the sector

optimal taxation in theory and practice the optimal design of a tax system is a topic that has long fascinated economic theorists and flummoxed economic policymakers this paper explores the interplay between tax theory and tax policy it identifies key lessons policymakers might take from the academic literature on how taxes ought to be designed and it discusses the extent to which these lessons are reflected in actual tax policy we begin with a brief overview of how economists think about optimal tax policy based largely on the foundational work of ramsey 1927 and mirrlees 1971 we then put forward eight general lessons suggested by optimal tax theory as it has developed in recent decades 1 optimal marginal tax rate schedules depend on the distribution of ability 2 the optimal marginal tax schedule could decline at high incomes 3 a flat tax with a universal lump sum transfer could be close to optimal 4 the optimal extent of redistribution rises with wage inequality 5 taxes should depend on personal characteristics as well as income 6 only final goods ought to be taxed and typically they ought to be taxed uniformly 7 capital income ought to be untaxed at least in expectation and 8 in stochastic dynamic economies optimal tax policy requires increased sophistication for each lesson we discuss its theoretical underpinnings and the extent to which it is consistent with actual tax policy to preview our conclusions we find that there has been considerable change in the theory and practice of taxation over the past several decades although the two paths have been far from parallel overall tax policy has moved in the y n gregory mankiw is professor of economics matthew weinzierl is assistant professor of business administration and danny yagan is a ph d candidate in economics all at harvard university cambridge massachusetts their e mail addresses are ngmankiw

competitive business cycles in an overlapping generations economy with productive investment abstract this paper examines the emergence of long run competitive periodic equilibria in a two period overlapping generations model with capital accumulation the existence of periodic equilibria is a consequence of the existence of an aggregate bubble money and of a non linear behaviour of aggregate savings the technique used is to show that the problem can be reduced to the study of a dynamical map from an interval into itself although it is originally two dimensional this will allow us to study the occurrence of cycles from a global point of view

complex economic dynamics obvious in history generic in theory elusive in data summary the capacity of nonlinear dynamic models to mimic qualitative features of economic data is illustrated with an adaptive version of the neoclassical growth theory implications for econometric methodology are discussed emphasizing structural estimation and qualitative inference

international trade and the possible occurrence of chaos abstract the paper demonstrates that international trade among fluctuating economies may involve the occurrence of a strange attractor and hence of chaos once autonomous economies display cyclical behavior international trade activities can be considered as a perturbation of the motion of the autonomous economies possible implying chaos via a theorem by newhouse ruelle and takens 1979

financial crises and regime dependent dynamics abstract generalized with the regime dependent beliefs and regime switching dynamics the simple market maker framework established by day and huang 1990 is capable to model all types of crises that is sudden crisis disturbing crisis and smooth crisis and to offer economic and dynamic justifications on how and why these crises appear moreover the model simulations verify the salient qualitative and statistical properties commonly observed in the real financial data such as fat tails volatility clustering long range dependence leverage effect and other stylized facts additionally the model replicates the various chart patterns widely applied in the technical analysis

renewable energy investment by the world bank world bank group lending for renewable energy accelerated in the 1990s and resulted in 17 approved projects with 700 million in bank loans and 230 million in grants by the global environment facility the bank s 1999 energy sector strategy fuel for thought charted new directions for renewable energy investment the present paper considers the implementation challenges of fuel for thought strategies and the opportunities for carrying them out the paper distinguishes between agendas in the energy and rural development sectors and reviews limitations to implementing these agendas lessons from projects are just emerging but suggest ve areas of support for renewable energy by the bank in the future renewable energy nancing electric power policy frameworks rural energy enterprises regulated rural energy concessions and domestic technology manufacturing interviews with the private sector suggest additional forms of support assist with business plans nance pre feasibility studies reduce commercial risks support joint ventures build market volume and stability and pilot and test innovative business models the e ectiveness of the bank in following through on its ambitious agenda fundamentally rests on the willingness and commitment of developing countries to pursue these strategies and the degree to which renewable energy applications are seen to serve countries development priorities 2001 elsevier science ltd all rights reserved

chaotic price behavior in a non linear cobweb model abstract the cobweb model for the evolution of prices is considered with backward bending supply curves and multi valued demand curves these deterministic non linear dynamical systems are shown to exhibit a broad spectrum of complex time behavior including stable periodic cycles of arbitrary order and chaos

caution implies profit abstract the paper illustrates by simple cobweb models that under certain circumstances fluctuations in perpetual disequilibrium may not only be viable but also preferable to a competitive equilibrium from the long run perspective

chaotic dynamics in economic time series abstract there has recently been considerable interest in chaotic dynamics in a variety of disciplines this paper introduces and then surveys some of the associated literature and techniques applications to economic theory are discussed but the primary focus is on empirical applicability in addition to surveying the literature we also provide an example of the use of these techniques in economics we conclude by highlighting the importance of the techniques for empirical work as well as considering their context in econometric methodology

understanding carbon lock in abstract this paper narrative argues that industrial economies have been locked into fossil fuel based energy systems through a process of technological and institutional co evolution driven by path dependent increasing returns to scale it is asserted that this condition termed carbon lock in creates persistent market and policy failures that can inhibit the diffusion of carbon saving technologies despite their apparent environmental and economic advantages the notion of a techno institutional complex is introduced to capture the idea that lock in occurs through combined interactions among technological systems and governing institutions while carbon lock in provides a conceptual basis for understanding macro level barriers to the diffusion of carbon saving technologies it also generates questions for standard economic modeling approaches that abstract away technological and institutional evolution in their elaboration the question of escaping carbon lock in is left for a future paper

replicator dynamics in a cobweb model with rationally heterogeneous expectations abstract this paper extends the adaptively rational equilibrium dynamics of brock and hommes brock w a hommes c h 1997 a rational route to randomness econometrica 65 1059 1160 by introducing a generalized version of the replicator dynamic the replicator equilibrium dynamics red couples the price dynamics of a cobweb model with predictor selection governed by an evolutionary replicator dynamic we show that the red supports the conclusion of sethi and franke sethi r franke r 1995 behavioural heterogeneity under evolutionary pressure macroeconomic implications of costly optimisation the economic journal 105 583 600 that costly rational beliefs persist though unlike them these results obtain in the deterministic case numerical evidence shows that complex dynamics exist as in brock and hommes even though no weight is placed on strictly dominated predictors in an red steady state

evolutionary competition in a mixed market with socially concerned firms abstract in this paper we study an oligopoly market where profit maximizing firms and socially concerned firms compete in quantities confronting remarks by milton friedman and gary becker we are using an evolutionary setting to investigate the endogenous choice of the proper objective of business firms and the influence of product differentiation on the long run survival of firms which pursue non profit motives we find that firms which consider a combination of profit and consumer welfare can indeed have larger market shares and profits than their profit maximizing rivals one insight is that it might pay off for shareholders to consider stakeholder welfare but that the level of social concern should not be too high based on a strategy s profitability we consider asynchronous evolutionary updating with firms selecting nash quantities or choosing best replies to the expected market quantity here we observe that the consumers willingness to pay a price premium for products is crucial for the long run survival of socially concerned firms depending on the degrees of product differentiation and social concern long run outcomes consist either of both types of firms or only one type of firm if the firms propensity to switch between a social or a profit maximizing strategy is sufficiently large steady states are unstable and even complicated dynamics can occur

equilibrium models displaying endogenous fluctuations and chaos abstract this paper surveys current developments in dynamic general equilibrium theory concerned with conditions under which endogenous fluctuations are possible existing contributions are divided into two classes the larger one consists of models with a unique perfect foresight equilibrium while the second includes models where equilibrium is indeterminate and the set of equilibria involving endogenous fluctuations includes sunspots equilibria while the two classes of models involve oscillations of different natures and with different policy implications we show that both are consistent with optimizing behavior and competitive equilibrium

micro heterogeneity of firms and the stability of industrial growth abstract in the micro macro m m model moses real swedish firms make independent decisions in markets schumpeterian innovative activities and wicksellian capital market disequilibria generate a growth cycle production and investment decisions in firms are dynamically coordinated by markets for products labor and capital under different market regimes as to speed intensity of competitive processes and of innovative activity by varying market regime ceteris par leux long term growth rates of the economy can be generated at cliffe as much as between the industrial countries during the last 50 years high speed market processes increase output growth for long periods but make the model economy sensitive to disturbances that eventually generate a severe depression simulation results suggest the importance for stable macroeconomic growth of a steady input of innovative technical change through new investment new entry and exit to preserve micro diversity of structures

irregular growth cycles this paper uses the familiar neoclassical theory of capital accumulation to show how complex behavior can emerge from quite simple economic structures indeed when sufficient nonlinearities and a production lag are present the interaction alone of the propensity to save and the productivity of capital can lead to growth cycles that exhibit a wandering sawtooth pattern not unlike those observed in reality these fluctuations need not converge to a cycle of any regular periodicity so they are not quasi periodic because such chaotic trajectories are unstable errors of estimation in parameters or initial conditions however tiny will accumulate rapidly into substantial errors of forecast moreover periods of erratic cycling can be interspersed with periods of more or less stable growth evidently the future behavior of a model solution cannot be anticipated from its patterns in the past a situation that seems to mimic experience apparent structural change and unpredictability is explained in the present theory by a deterministic single equation model random shocks play no role so the reader can visualize just what it is we are are talking about a noteworthy simulation is presented in figure 1 for gnp in a growth model that is described below in section iii a period of relatively rapid growth is followed by a period of cycles then remarkably for a considerable time about twenty periods apparently steady state growth occurs wandering cycles however emerge another brief period close to the steady state appears again toward the end of the series i establish conditions of savings and productivity that lead to results of this kind this analysis makes use of the mathematical theory of chaos which in the form exploited here originated in the work of edward lorenz a formal definition of chaos and sufficient conditions for chaotic trajectories were provided in a seminal paper by t y li and james yorke a survey of these related contributions is found in yorke and evelyn yorke this theory was introduced into economics by jess benhabib and myself 1981 where we showed that sequences of rational choices can be erratic when preferences depend on experience in a certain way by michael stutzer who provides a detailed analysis of trygve haavelmo s growth model by benhabib and myself 1980 in an application of the overlapping generations model and in my forthcoming study of the classical growth model

growing through chaotic intervals abstract we consider a growth model proposed by matsuyama k matsuyama growing through cycles econometrica 67 2 1999 335 347 in which two sources of economic growth are present the mechanism of capital accumulation solow regime and the process of technical change and innovations romer regime we will shown that no stable cycle can exist except for a fixed point and a cycle of period two the necessary and sufficient conditions for regular or chaotic regimes are formulated the bifurcation structure of the two dimensional parameter plane is completely explained it is shown how the border collision bifurcation leads from the stable fixed point to pure chaotic regime which consists either in 4 cyclical chaotic intervals 2 cyclical chaotic intervals or in one chaotic interval

the emergence of chaos from classical economic growth this paper shows how fluctuations of an erratic and unstable nature can emerge from the classical deterministic economic growth process implications of the analysis would appear to be at least two first pronounced changes in the way an economy behaves need not cause us to reject our understanding of how it works second we need not seek in exogenous forces an explanation as to why behavioral patterns change and why it may be so difficult to anticipate future events from the profile of past experience

memory and market stability the case of the cobweb abstract when optimizing agents use their memories in a non linear cobweb model it will be asymptotically stable instability and chaos cannot occur this contrasts with the results when agents are forgetful however short run fluctuations are erratic and sensitive to initial conditions

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

a laboratory experiment on the heuristic switching model abstract we present results from the first laboratory experiment on the seminal heuristic switching model introduced by brock and hommes 1997 1998 subjects choose between two alternatives a sophisticated and stabilizing but costly heuristic and a destabilizing but cheap heuristic and are paid according to the performance of the chosen heuristic aggregate choices determine the evolution of a state variable and consequently the performance of both heuristics theoretically an increase in the costs for the stabilizing heuristic generates instability and leads to endogenous fluctuations in both the state variable and the fraction of agents using that heuristic we vary the costs of the stabilizing heuristic in the experiment and find that the predictions of the heuristic switching model are partially confirmed for low costs the dynamics are stable for high costs the dynamics initially are unstable and exhibit the type of bubbles and crashes emblematic for the heuristic switching model however over time the pattern of bubbles and crashes disappears and the dynamics become more stable we estimate a standard discrete choice model on aggregate choice data and observe that subjects have a tendency to become less sensitive to payoff differences when the environment is less stable which has important implications for the application of heuristic switching models

poverty equilibrium an introductory systemic analysis abstract this paper represents an attempt to clarify the field of the studies concerning the poor stagnant economy using systemic analysis the original theories are reformulated in such a way as to highlight their similarities and dynamic structure the works of ragnar nurkse gunnar myrdal john k galbraith and harvey leibenstein are presented as components of a general theory of stagnation at low incomes the paper ends with an attempt to formulate a modern version of the theory using the chaotic dynamics approach to depict the situation the main purpose of this paper is to formulate the concept or in other words to clarify mathematically the hypothesis in order to test it the building of the empirical tests and of economic models to explain it is treated in other papers

the role of capital depreciation in multi sectoral models abstract this study investigates the role of capital depreciation in economic fluctuations that may appear in multi sectoral models of optimal growth in the standard literature on non linear optimal dynamics it has been assumed that capital depreciates completely within a period this study in contrast deals with the case in which capital depreciates slowly more precisely only by a certain percentage we adopt the standard two sector model with cobb douglas production functions and characterize the dynamics around the stationary state we derive explicit conditions on parameter values under which cyclical optimal paths appear these conditions reveal the complexity that slow depreciation adds to multi sectoral optimal dynamics the economic interpretation of slow depreciation in multi sectoral models is also discussed

review of barriers to the dissemination of decentralized renewable energy systems abstract this paper reviews the available literature dealing with the barriers to the dissemination of decentralized renewable energy systems decentralized renewable energy systems may face a range of technical economic institutional socio cultural and environmental barrier to their dissemination in the paper barriers impeding the dissemination of decentralized renewable energy systems have been identified and assessed in addition appropriate remedial measures and corresponding responsibility centers as reported in the literature have also been discussed inappropriateness of technology unavailability of skilled manpower for maintenance unavailability of spare parts high cost lack of access to credit poor purchasing power and other spending priorities unfair energy pricing lack of information or awareness and lack of adequate training on operation and maintenance of decentralized renewable energy systems are found to be the most critical barriers long term conducive policies appropriate regulatory framework financial incentives capital subsidies and soft loans to users technology and skill development internalization of externalities in the cost of energy withdrawal of subsidies presently being given to fossil fuels development of specialized institutions cooperation with international agencies participation of local community and awareness generation have been recommended for increased dissemination of decentralized renewable energy systems

perfectly competitive models of endogenous business fluctuations the endogenous hypothesis is not new at a pre analytic level it is based on the simple intuition that market mechanisms are inherently dynamically unstable at least around their stationary positions in this note i want to stress the theoretical point that there is nothing in the working of a perfectly competitive market system that prevents it from displaying persistent and endogenous fluctuations and that moreover such fluctuations may have their origins in market fundamentals such as factor intensities factor substitutability degree of impatience and so forth nevertheless macroeconomic models of endogenous fluctuations still have to prove that apart from being very beautiful they can also be useful to understand the so called heal world hit sunt leones this article is not intended to be a survey of all that has been written in this area in the last decade i have no title whatsoever to talk about empirical studies chera sayers contribution in this same volume addresses that guestion scheinkman 1990 is a readily available survey of nonlinear statistical methods that are relevant to this debate as for the theory incompetence recommends that i avoid touching on sunspot equilibria olg models and more generally expectations driven cycles they are instead discussed in jean michel grandmont s article finally marketing awareness implies recommending boldrin and woodford 1990 as a reasonably complete survey of what the endogenous cycle research program has recently produced at a theoretical level

patenting and licensing university inventions lessons from the history of the research corporation recent developments in the relationships between r d in us industry and research in us universities especially in the growth of university patenting and licensing of technologies to private firms have attracted considerable attention this paper discusses the history of an important institution in the history of these relationships the research corporation the ultimate withdrawal of the research corporation from its major role reflected shifting federal policies towards philanthropic organizations as well as the bayh dole act the evidence provided in this paper however suggests that the seeds of decline had been planted well before 1980 and were apparent in the growing deficits of the research corporation during the 1970s since some of these factors are also apparent within many us university licensing offices it is likely that some shake out will occur in the future as a number of these universities reduce or terminate their activities in this area those that survive are likely to pursue a broader set of goals than royalty income alone copyright 2001 by oxford university press

exchange rate speculation and chaos inducing intervention abstract we show that in a market characterized by high volatility transactions designed to have a stabilizing effect may inadvertently induce chaos in the foreign exchange market for example excessive interventions by a central bank may lead to an increase in erratic behavior rather than to the calming of exchange rate movements

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

threshold models of interpersonal effects in consumer demand abstract whether one buys may be determined in part by how many others have when the correlation is positive we refer to bandwagon effects and when negative reverse bandwagons we construct demand schedules in the presence of such effects and with simple assumptions about supply investigate the existence of and approach to equilibrium stable price quantity equilibria exist but for many plausible parameter values equilibria are asymptotically unstable and system trajectories consist of cycles that can move with slight parameter changes via successive bifurcations into what has been called chaotic dynamics essentially indistinguishable from random noise these conditions occur despite assumptions of erfect information profit maximizing firms and utility maximizing individuals

commodity price fluctuations price dependent delays and nonlinearities as explanatory factors this paper develops a price adjustment model for a single commodity market with state dependent production and storage delays conditions for the equilibrium price to be stable are derived in terms of a variety of economic parameters when stability of the equilibrium price is lost a hopf bifurcation occurs giving rise to an oscillatory commodity price with a period between two and four times the equilibrium production storage delay

rational choice and erratic behaviour in this paper we show that rational choice in a stationary environment can lead to erratic behaviour when preferences depend on experience we mean by erratic behaviour choice sequences that do not converge to a long run stationary value or to any periodic pattern early investigations of the effects of experience on choice goes back to pareto see also benhabib 1979 some keynesian theories of the consumption function incorporate the effects of experience and habit formation on current levels of consumption duesenberry 1949 modigliani 1949 and brown 1952 a general model of experience dependent choice was described in day 1970 and investigated in day and kennedy 1971 while the specific issue of the existence of stable representable long run consumer demand when tastes vary endogenously has been treated by gorman 1967 pollak 1970 1976 weizsaicker 1971 mccarthy 1974 and hammond 1976 pollak gave conditions for the representability of long run choice when the equations of preference dependence are linear and utility additive hammond in a generalization of these findings provides conditions for stable representable long run choice when preferences are acyclic a condition which in essence assures convergence to a long run choice

the bull and bear market model of huang and day some extensions and new results abstract we develop a financial market model with interacting chartists and fundamentalists that embeds the famous bull and bear market model of huang and day as a special case their model is given by a one dimensional continuous piecewise linear map our model on the other hand is more flexible and is represented by a one dimensional discontinuous piecewise linear map nevertheless we are able to provide a more or less complete analytical treatment of the model dynamics by characterizing its possible outcomes in parameter space in addition we show that quite different scenarios can trigger real world phenomena such as bull and bear market dynamics and excess volatility

delay differential neoclassical growth model abstract this paper develops a continuous time neoclassical growth model with time delay despite of its simple structure the resulting dynamic system shows emergence of erratic fluctuations in the capital accumulation process when the production function is unimodal and the delay in production is explicitly considered it complements the seminal paper of day 1982 in which a discrete time neoclassical growth model displayed chaotic behavior for some configurations of the propensity to save the growth rate of labor and the capital depreciation rate our analysis has at least two implications first nonlinearities and delay matter for a birth of aperiodic fluctuations of national product in the continuous time model second comparing the effects caused by two different time delays fixed and continuously distributed time delays reveals that the continuous time model with the former can generate complex fluctuations while the one with the latter generates simple fluctuations when the shape parameter of the density function is small and complex fluctuations when large

are new institutional economics enough promoting photovoltaics in india s agricultural sector solar photovoltaic pv technology can bring emissions free electricity to rural areas without access to the grid currently policymakers are seeking ways to expand markets for off grid pv from solar home systems to productive uses in order to enhance income generation and contribute to social development this paper explores the role of the state in promoting such market growth as a start the state must improve institutions thus echoing popular recommendations based in new institutional economic theory nie that are currently touted by the world bank and other large development agencies yet nie s framework may be insufficient because it fails to offer viable solutions to overcoming political barriers that contribute to technological path dependency a case study in punjab india where an agricultural pv water pumping program showed promising signs of successful market penetration in its first 3 years of operation illustrates how the nie s shortcomings manifest themselves in practice the program was beginning to penetrate market entry for pv pumps via competition between pv providers however the government of india achieved this feat by providing subsidies to wealthy farmers a move that is frowned upon by the nie school based on findings from the case study states should look beyond nie s framework to expand and improve pv markets in productive uses by accounting for political constraints assessing how pv technology can improve development goals and cultivating locally appropriate service delivery models

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

solar energy markets economics and policies abstract solar energy has experienced phenomenal growth in recent years due to both technological improvements resulting in cost reductions and government policies supportive of renewable energy development and utilization this study analyzes the technical economic and policy aspects of solar energy development and deployment while the cost of solar energy has declined rapidly in the recent past it still remains much higher than the cost of conventional energy technologies like other renewable energy technologies solar energy benefits from fiscal and regulatory incentives including tax credits and exemptions feed in tariff preferential interest rates renewable portfolio standards and voluntary green power programs in many countries the emerging carbon credit markets are expected to provide additional incentives to solar energy deployment however the scale of incentives provided by the existing carbon market instruments such as the clean development mechanism of the kyoto protocol is limited despite the huge technical potential the development and large scale deployment of solar energy technologies world wide still has to overcome a number of technical financial regulatory and institutional barriers the continuation of policy supports might be necessary for several decades to maintain and enhance the growth of solar energy in both developed and developing countries

an evolutionary cournot model with limited market knowledge abstract in this paper we analyze a dynamic game of cournot competition with heterogeneous firms choosing between two different adaptive behavioral rules in deciding output strategies the underlying oligopoly structure is standard using a constant return to scale technology n firms produce homogeneous goods which are sold in a market characterized by constant price elasticity in this setup we assume that a fraction of firms employs a quite rough rule of thumb the so called local monopolistic approximation lma whereas the complementary fraction plays best reply br a more demanding strategy in terms of information and computation requirements the model is first considered with exogenously fixed fractions of firms in the two complementary groups then it is generalized by considering an endogenous evolutionary switching process between the two behavioral strategies based on profit driven replicator dynamics the role of the number of firms information costs and inertia or anchoring attitude in production decisions is analyzed as well as the influence in the evolutionary process of random noise in the demand function and memory of past profits global properties of the oligopoly with evolutionary pressure between behavioral rules are discussed with particular regard to cases in which the nash equilibrium is unstable

growing through cycles the neoclassical growth model focuses on factor accumulation as an engine of growth while the neo schumpetarian growth model stresses innovation this paper argues that these two views of growth may capture different phases of a single growth experience in the model presented below the balanced growth path is unstable and the economy achieves sustainable growth through cycles under an empirically plausible condition perpetually moving back and forth between two phases one phase is characterized by higher output growth higher investment no innovation and a competitive market structure the other phase is characterized by lower output growth lower investment high innovation and a more monopolistic market structure both investment and innovation are essential in sustaining growth indefinitely and yet they move in an asynchronized way only one of them appears to play a dominant role in each phase the economy grows faster along the cycles than along the unstable balanced growth path

investment incentives and corporate tax asymmetries abstract recent facts on the importance of corporate losses motivate more careful study of the impact of tax incentives for investment on firms that lose money i model firm investment decisions in a setting featuring financing constraints and carrybacks and carryforwards of operating losses i estimate investment responses to tax incentives allowing effects to vary with cash flows and taxable status results suggest that asymmetries in the corporate tax code could have made recent bonus depreciation tax incentives at most 4 less effective than they would have been if all firms were fully taxable cash flows have more important effects on the impact of tax incentives recent declines in cash flows would predict a 24 decrease in the effectiveness of bonus depreciation results thus suggest that tax incentives have the smallest impact on investment exactly when they are most likely to be put in place during downturns in economic activity when cash flows are low

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

chaotic dynamics in credit constrained emerging economies abstract this paper analyzes the role of financial development as a source of endogenous instability in small open economies by assuming that firms face credit constraints our model displays a complex dynamic behavior with high period cycles or even chaotic dynamic patterns for intermediate values of the parameter representing the level of financial development of the economy we derive sufficient conditions for global stability and we prove that chaos appears via a border collision bifurcation the basic implication of our model is that economies experiencing a process of financial development are more unstable than both very underdeveloped and very developed economies

reconsidering the bayh dole act and the current university invention ownership model abstract the bayh dole act of 1980 provided u s universities with the right to commercialize employees inventions made while engaged in government funded research this paper argues that the current university invention ownership model in which universities maintain de jure ownership of inventions is not optimal either in terms of economic efficiency or for advancing the social interest of rapidly commercializing technology and encouraging entrepreneurship we argue that this model is plagued by ineffective incentives information asymmetries and contradictory motivations for the university the inventors potential licensees and university technology licensing offices tlos these structural uncertainties can lead to delays in licensing misaligned incentives among parties and obstacles to the flow of scientific information and the materials necessary for scientific progress the institutional arrangements within which tlos are embedded have encouraged some of them to become revenue maximizers rather than facilitators of technology dissemination for the good of the entire society we suggest two alternative invention commercialization models as superior alternatives the first alternative is to vest ownership with the inventor who could choose the commercialization path for the invention for this privilege the inventor would provide the university an ownership stake in any returns to the invention the inventor would be free to contract with the university tlo or any other entity that might assist in commercialization the second alternative is to make all inventions immediately publicly available through a public domain strategy or through a requirement that all inventions be licensed non exclusively both alternatives would address the current dysfunctional arrangements in university technology commercialization

a puzzle for adaptive theory abstract over the life cycle aspirations for material goods grow commensurately with consumer wealth but aspirations for marriage and the number and quality of children do not change much the puzzle is why there is this difference between life domains in the extent to which aspirations adapt to actual circumstances the findings come from a cohort analysis of 1978 and 1994 survey responses on the good life

non linear structure of a metzlerian inventory cycle model abstract this study considers optimizing behavior of an inventory holding firm its main purpose is to investigate a consistent microeconomic foundation of the non linear macrodynamic model that generates inventory cycles it solves present value maximization problems under two different specifications of expectation formations one is specifying expectation formation independently of the optimizing process of the firm i call it a myopic perfect formation of expectation the other is incorporating the expectation formation in the optimizing process i call it a dynamic perfect formation of expectation the analysis demonstrates that the firm with the myopic perfect formation can posses sufficient nonlinearity for generation of cyclical macrodynamics whereas the firm with the dynamic perfect formation cannot these results suggest that the myopic perfect treatment of expectations of economic agents can be a source of macro fluctuations like inventory cycles

a discrete and symmetric price adjustment process on the simplex abstract we study the t tonnement process in an exchange economy with three commodities and three agents we argue that for the multiplicative t tonnement process the simplex is a natural normalization rule we analyse the influence of symmetry in preferences and endowments on the dynamics of the t tonnement process depending on this symmetry there are different bifurcation routes to chaos in particular coexisting attractors may emerge when the symmetric equilibrium price vector becomes unstable this coexistence of attractors is robust in the sense that it also exists for close by asymmetric t tonnement processes

world bank gef solar home systems projects experiences and lessons learned 1993 2000 abstract twelve projects provide energy services to off grid rural households in developing countries by enhancing markets for solar home systems and by removing barriers to their dissemination project approaches are reviewed along with early implementation experience and lessons suggested by experience most projects incorporate the following features pilot private sector and ngo delivery models pilot consumer credit delivery mechanisms pay first cost subsidies and offer affordable system sizes support policy development and capacity develop codes and standards and establish certification testing and enforcement institutions and conduct consumer awareness and marketing programs most projects are just beginning implementation a few are almost completed lessons from early experience suggest that solar home system delivery firms face a myriad of difficulties operating in rural areas credit risk is a serious concern of both financiers and dealers and makes credit sales particularly challenging technical performance of systems is becoming well proven customers desire a range of component options and service levels and can benefit from even small systems projects must recognize the link between rural electric grid extension and solar home system demand and marketing campaigns can be extremely costly and time consuming in rural areas challenges are to demonstrate sustainable and replicable business models develop regulatory models for energy service concessions and integrate rural electrification policy with solar home system delivery

on the complicated price dynamics of a simple one dimensional discontinuous financial market model with heterogeneous interacting traders abstract we develop a financial market model with heterogeneous interacting agents market makers adjust prices with respect to excess demand chartists believe in the persistence of bull and bear markets and fundamentalists bet on mean reversion moreover speculators trade asymmetrically in over and undervalued markets and while some of them determine the size of their orders via linear trading rules others always trade the same amount of assets the dynamics of our model is driven by a one dimensional discontinuous map despite the simplicity of our model analytical graphical and numerical analysis reveals a surprisingly rich set of interesting dynamical behaviors

learning to lend for off grid solar power policy lessons from world bank loans to india indonesia and sri lanka abstract the world bank has sought to advance the diffusion of solar photovoltaic pv technology for off grid applications in the developing world as these systems are fundamentally different to centralised power stations and conventional rural electrification the world bank has been learning how best to lend for such technology this study seeks to highlight the lessons learnt from the world bank s first loans for off grid pv to india indonesia and sri lanka it uses lifetime cost analysis to justify continued intervention in this sector and it draws on theories of innovation diffusion to guide analysis and ultimately policy recommendations because of the special role of entrepreneurial start up companies in the rural pv sector the paper also uses a company cash flow model to demonstrate the efficacy of various supply side policies finally the study concludes with a checklist of policy lessons and a consideration of the role of the international finance corporation in this sector

the emergence of equilibrium cycles in a monetary economy with a separable utility function abstract this paper analyzes the dynamic properties of the monetary economy when money held during the period induces some utility it is shown that the price level and real money balances may have chaotic dynamic paths even if the utility function is separable in real money balances and consumption a crucial point is that a constraint on the utility of money yields the wealth effect that inflation will reduce the real value of assets hence as in the overlapping generations model the conflict between substitution and wealth effects may cause globally stable periodic orbits as well as the complicated dynamics

complex dynamics in a simple macro disequilibrium model abstract this study analyzes disequilibrium dynamics in a simple macro economic model constructed with micro foundation in which the behavior of individual economic agents concerning consumption labor supply employment output supply and the formation of expectation can be described by very simple and conventional monotonic functions it is demonstrated that despite that simplicity complex nonlinear dynamics may appear through the interaction of those individual behavior in different markets

durable capital and chaos in competitive business cycles abstract this study constructs an example of chaotic optimal accumulation that results from the existence of the limitation of capital depreciation an example is an extension of the model developed by weitzman

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

credit traps and credit cycles we develop a simple macroeconomic model of credit market imperfections with heterogeneous investment projects the projects differ in productivity the investment requirement and the severity of agency problems behind the borrowing constraints a movement in borrower net worth shifts the composition of the credit between projects with different productivity levels thereby causing endogenous investment specific technological change furthermore such endogenous technological change in turn affects borrower net worth these composition effects could give rise to credit traps credit collapse leapfrogging credit cycles and growth miracles in the dynamics of the aggregate investment and borrower net worth jel e22 e44 o33

financing energy access and off grid electrification a review of status options and challenges abstract this paper provides a review of funding needs and financing mechanisms for energy access in general and off grid electrification in particular to find whether the funding for these activities has been adequate whether sufficient funding is likely to be available to meet the needs of universal energy access whether innovative approaches can be used in funding it finds that in all successful cases the state has played an important role in funding infrastructure investments but many developing countries have neglected the energy access issue for a long time international donor agencies have provided selective and limited support while the innovative mechanisms are also unfriendly towards small scale projects weak governance limited organisational capacity and unfavourable policy environment militate against large scale mobilisation of financial resources in the poorest countries of the world where energy access is a chronic problem the challenge of mobilising finance and ensuring its appropriate delivery and use remains a major issue and would require a co ordinated effort of all relevant stakeholders

the viability of solar photovoltaics abstract this paper summarises the contributions to a special issue of energy policy aiming to assess the viability of solar photovoltaics pvs as a mainstream electricity supply technology for the 21st century it highlights the complex nature of such an assessment in which technical economic environmental social institutional and policy questions all play a part the authors summarise briefly the individual contributions to the special issue and draw out a number of common themes which emerge from them for example the vast physical potential of pvs the environmental and resource advantages of some pv technologies and the fluidity of the market most of the authors accept that the current high costs will fall substantially in the coming decade as a result of improved technologies increased integration into building structures and economies of scale in production in spite of such reassurances energy policy makers still respond to the dilemma of pvs with some hesitancy and prefer to leave its evolution mainly in the hands of the market this paper highlights two clear dangers inherent in this approach firstly that short term cost convergence may not serve long term sustainability goals and secondly that laggards in the race to develop new energy systems may find themselves faced with long term penalties

differential savings factor shares and endogenous growth cycles abstract the paper analyzes the dynamic properties of the neoclassical one sector growth model with differential savings in the sense of kaldor pasinetti the economy exhibits unstable steady states and fluctuations if the income distribution varies sufficiently and if shareholders save more than workers the paper analyzes in detail the dynamics for the case with a fixed proportions technology as well as with a smooth approximation if the savings propensities differ by an arbitrarily small amount the system exhibits topological chaos in the sense of li and yorke for an open set of production functions the analytical results are supplemented by numerical experiments

optimal taxation and optimal tax systems the theory of optimal taxation has for the pas two decades been the reigning normative approach of taxation this paper argues that in its current state optimal tax theory is incomplete as a guide to action concerning many critical issues in tax policy it is incomplete because it has not yet come to terms with taxation as a system of coercively collecting revenues from individuals who will tend to resist the coercive nature of collection taxes implies that the resource cost of implementing a tax system have been and will continue to be a critical determinant of appropriate tax policy the paper first presents the three cornerstone propositions of optimal tax theory and then it discusses the influence of these propositions on recent tax policy developments it concludes by sketching an alternative to optimal taxation called the theory of optimal tax systems which embraces the insights of optimal taxation but also considers the technology of raising taxes and the constraints placed upon tax policy by that technology the optimal tax systems perspective is shown to shed light on the choice of tax instruments the problem of tax evasion and the appropriate tax treatment of capital income this abstract was borrowed from another version of this item

learning from one another international policy emulation and university industry technology transfer cross border emulation of economic and technology policies among industrial economy governments has become common in recent years and spans policies ranging from intellectual property rights to collaborative r d recent initiatives by a number of industrial economy governments suggest considerable interest in emulating the bayh dole act of 1980 a piece of legislation that is widely credited with stimulating significant growth in university industry technology transfer and research collaboration in the united states i examine the effects of bayh dole on university industry collaboration and technology transfer in the united states emphasizing the lengthy history of both activities prior to 1980 and noting the extent to which these activities are rooted in the incentives created by the unusual scale and structure by comparison with western europe or japan of the us higher education system efforts at emulation of the bayh dole policy by other governments are likely to have modest success at best without greater attention to the underlying structural differences among the higher education systems of these nations copyright 2011 the author 2011 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

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

ergodic fluctuations in deterministic economic models abstract nonperiodic business fluctuations are shown to exist with positive measure generically and to behave like stationary stochastic processes in the standard dynamic macro model the implication is that so called chaotic fluctuations are probable for random initial conditions in a large class of recursive economies

endogenous cycles in a stiglitz weiss economy the literature on financial imperfections and business cycles has focused onpropagation mechanisms in this paper we model a purereversion mechanism such that the economy may converge to a two period equilibrium cycle this mechanism confirms that financial imperfections may have a dramatic amplification effect unlike in some related models contracts are complete indexation is not assumed away the welfare properties of a possible stabilizing policy are analyzed the model itself is a dynamic extension of the well known stiglitz weiss model of lending under moral hazard although stylized the model still captures some important features of credit cycles

financial crises and interacting heterogeneous agents in this paper we examine various types of financial crises and conjecture their underlying mechanisms using a deterministic heterogeneous agent model ham in a market maker framework forward looking investors update their price expectations according to psychological trading windows and cluster themselves strategically to optimize their expected profits the switches between trading strategies lead to price dynamics in market that subsequently move price up and down and in the extreme case cause financial crises the model suggests that both fundamentalists and chartists could potentially contribute to the financial crises

nonlinear business cycle modelling abstract literature which employs nonlinearities to explain economic fluctuations commonly called business cycles is surveyed relaxation of the linearity assumption significantly increases the range of possible dynamic solution paths and introduces the possibility that business cycles are endogenously determined the dominant post war modelling strategy has been the frisch 1933 and slutsky 1937 inspired one of developing essentially log linear economic models which produce damped cycles or monotonic damping to propagate the energy provided by repeated random or autocorrelated shocks the cycle is exogenously driven since it would die out in the absence of shocks deterministic nonstochastic nonlinear models can produce a wide range of endogenous fluctuations including stable limit cycles growth cycles and chaotic output which have the appearance of random fluctuations further the same model can produce qualitatively different outputs according to starting and parameter values if the possibility of shocks to parameters is admitted then behaviour can change abruptly following shocks evidence on the existence of nonlinearities and chaos in macroeconomic time series is assessed and alternative approaches to modelling dynamic economic development related to the work of keynes marx schumpeter and shackle are discussed their ideas have not proved readily amenable to mathematical modelling but attempts to encapsulate some of them are reviewed