the less volatile u s economy a bayesian investigation of timing breadth and potential explanations using a bayesian model comparison strategy we search for a volatility reduction in u s real gross domestic product gdp growth within the postwar sample we find that aggregate real gdp growth has been less volatile since the early 1980s and that this volatility reduction is concentrated in the cyclical component of real gdp sales and production growth in many of the components of real gdp display similar reductions in volatility suggesting the aggregate volatility reduction does not have a narrow source we also document structural breaks in inflation dynamics that occurred over a similar time frame as the gdp volatility reduction

relational goods and participation incorporating sociability into a theory of rational action theoretical explanations of why rational individuals would participate in politics remain unsatisfactory this paper addresses the problem by developing and analyzing models which include among citizens payoffs relational goods objectives which depend upon interactions among persons the models predict more participation than do the standard approaches for example under some circumstances persons will be more likely to act if they believe others will act contrary to free rider logic more importantly conditions are identified under which leaders could increase mass activity thus a model is provided of mobilization in terms of the preferences and decisions of a rational individual

economies with many commodities we discuss the two fundamental theorems of welfare economics in the context of the arrow debreu mckenzie model with an infinite dimensional commodity space as an application we prove the existence of competitive equilibrium in the standard single agent growth model

business cycles with distorting taxes and disaggregated capital markets abstract this paper studies a neoclassical growth model to examine the linkages between distorting corporate and personal taxes and cyclical movements of aggregates such as investments in equipment and structures suppose tax variables vary stochastically and annually we solve quarterly individual and aggregate decision rules by recursive methods and quantify the dynamic impacts on aggregates from unit changes in tax structures and individual and joint tax specifications the findings suggest that corporate income tax is the major factor leading to substantial tax effects on business cycles moreover the impact of investment tax credit for equipment on disaggregated investments is equally significant

a foundation of location theory consumer preferences and demand abstract location models with a continuum of consumers have severe conceptual shortcomings this article considers an alternative foundation for location economics the commodity space of each of a finite number of consumers is the collection of measurable subsets of land this space is so large that a solution to the consumer maximization problem does not always exist the main result is the definition and use of a topology on land parcels to show that a solution will always exist for utilities continuous with respect to the topology the underlying preferences are exposed

bru u u uce the simple economics of mob goods this paper provides a pure economic rationale for chronic excess demand for tickets to events like rock concerts the model focuses on mob goods which are consumed jointly with crowd reaction or noise whereas the primary commodity is provided by the seller the joint product is provided collectively by buyers if propensities to make noise are inversely correlated with reservation prices and a capacity constraint applies excess demand queuing is a necessary condition for profit maximization one important implication is that anti scalping laws may be welfare increasing the paper explores other applications in professional sports restaurants and on stage theatre

nonatomic economies and the boundaries of perfect competition this paper explores the distinction between nonatomicity and thick markets as the source of perfect competition the focus of the paper is the construction of a model of an imperfectly competitive economy with a nonatomic continuum of traders and a continuum of differentiated commodities for which walrasian equilibria exist the failure of perfect competition in this instance can be identified in two ways individuals can affect prices and the core is strictly larger than the set of walrasian allocations by contrast it is shown that when markets are physically or economically thick or both then individuals cannot typically affect prices and the core always coincides with the set of walrasian allocations

measuring the social value of local public goods an empirical analysis within paris metropolitan area a non linear hedonic model is used to estimate the implicit marginal prices of 17 local public goods in a paris suburban area on an original data set of some 8200 housing units the results reveal a robust effect of local public school quality measured both by the fraction of junior high school students that are at least two years behind grade level and the student teacher ratio on house prices it is observed that housing owners marginal willingness to pay for reducing commuting time is roughly similar for public transportation than for car transportation another noticeable result is the complete capitalization of local taxes at a discount rate of 3 5 an illustration of the potential usefulness of the results for cost benefit analysis is also provided

the characteristics model hedonic prices and the clientele effect in this paper the characteristics model of lancaster is reconsidered it is shown by example that equilibrium prices need not be linearly decomposable it does follow that equilibrium prices must be a convex function of characteristics however further it is shown that this fact holds independent of the form of firm competition e g perfect or monopolistic finally the predictions of the theory are discussed in the context of two empirical examples

equivalence of games and markets the author proves an equivalence between large games with effective small groups of players and games generated by markets small groups are effective if all or almost all gains to collective activities can be achieved by groups bounded in size a market is an exchange economy where all participants have concave quasi linear payoff functions the market approximating a game is socially homogeneous all participants have the same monotonic nondecreasing and 1 homogeneous payoff function our results imply that any market more generally any economy with effective small groups can be approximated by a socially homogeneous market

introduction to sunspots and lotteries abstract this introduces the symposium on sunspots and lotteries two stochastic general equilibrium concepts sunspot equilibrium se and lottery equilibrium le are compared it is shown that for some general pure exchange economies which allow for consumption nonconvexities or moral hazards the set of le allocations is equivalent to the set of se allocations provided that the randomizing device can generate events of any probability journal of economic literature classification numbers d51 d82 d84 e32

the efficiency of monopolistically competitive equilibria in large economies commodity differentiation with gross substitutes abstract a general model of commodity differentiation is developed using two different approaches to the theory of demand it is shown that a local version of bertrand s argument holds under reasonable conditions if all commodities are sustitutes and sunk costs are small there is never too little commodity differentiation relative to the optimum under the same conditions monopolistically competitive equilibria are approximately perfectly competitive if the optimal collection of commodities is sufficiently rich

cournot equilibrium without apology existence and the cournot inverse demand function in a multi commodity framework with absence of wealth effects we prove the existence of equilibrium for cournot oligopoly and that the concept is completely non ambiguous we also obtain a uniquely defined endogenous inverse demand function depending only on the competitive sector

competitive equilibria in production economies with an infinite dimensional commodity space the existence of competitive equilibrium is established for economies with a produc tion sector and an infinite dimensional space of commodities the cru cial assumptions which are required beyond those required in the fin ite dimensional setting are bounds on marginal rates of substitution and marginal rates of transformation copyright 1987 by the econometric society

an economy with infinite dimensional commodity space and empty core abstract we present an example of a two person pure exchange economy having an infinite dimensional commodity space and without core allocations

conditional markov chain and its application in economic time series analysis motivated by the great moderation in major u s macroeconomic time series we formulate the regime switching problem through a conditional markov chain we model the long run volatility change as a recurrent structure change while short run changes in the mean growth rate as regime switches both structure and regime are unobserved the structure is assumed to be markovian conditioning on the structure the regime is also markovian whose transition matrix is structure dependent this formulation imposes interpretable restrictions on the hamilton markov switching model empirical studies show that this restricted model well identifies both short run regime switches and long run structure changes in the u s macroeconomic data

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

supply and equilibrium in an economy with land and production a model with a finite number of consumers trading in land that can be changed through production is examined unlike most other models in urban economics land is modeled as measurable subsets of a compact set formally there are three major results conditions are found under which a solution to the producer s profit maximization problem exists secondly conditions are found under which a solution to the consumer s problem exists the assumptions used to prove these two results are standard finally the existence of an equilibrium is demonstrated copyright 1990 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

overlapping generations intermediation and the first welfare theorem abstract the first welfare theorem fails to hold for standard pure exchange overlapping generations economies because no agent exploits the profit opportunities which can arise from mediating intertemporal trade this paper modifies the standard economy by introducing an optimizing corporate intermediary which distributes net earnings back to consumer shareholders the pareto inefficient no trade state which is a stationary equilibrium for the standard economy cannot be an equilibrium for this modified brokerage economy because the intermediary perceives unbounded earnings opportunities if the intermediary seeks to maximize the minimum dividend per share distributed over time then there is a unique pareto efficient stationary equilibrium for the brokerage economy

active intermediation in a monetary overlapping generations economy abstract this paper establishes that the profit seeking activities of private intermediaries can ensure pareto efficiency in the standard pure exchange monetary overlapping generations economy without the need for government monetary or fiscal policy intervention moreover these profit seeking activities are shown to rule out all aperiodic and k periodic cycles for k greater than 2 contrary to much recent work on intermediation the profit opportunities that arise for intermediaries in this context are not due to assumed frictions or asymmetric information rather they are due to the dynamic open ended structure of the economy which permits debt roll over

insurance contracts as commodities a note this paper extends recent developments in general equilibrium theory and applies them to the problem of measuring the real output of an economy s insurance sector these developments permit a priced commodity to be a complex incentive compatible contract these contracts are not bundles of more basic commodities these contracts are elementary in the same sense that event contingent goods deliveries are elementary in the arrow debreu framework

a model of carbon price interactions with macroeconomic and energy dynamics abstract this paper develops a model of carbon pricing by considering two fundamental drivers of european union allowances economic activity and energy prices on the one hand economic activity is proxied by aggregated industrial production in the eu 27 as it provides the best performance in a preliminary forecasting exercise vs other indicators on the other hand brent natural gas and coal prices are selected as being the main carbon price drivers as highlighted by previous literature the interactions between the macroeconomic and energy spheres are captured in a markov switching var model with two states that is able to reproduce the boom bust business cycle hamilton 1989 first industrial production is found to impact positively negatively the carbon market during periods of economic expansion recession thereby confirming the existence of a link between the macroeconomy and the price of carbon second the brent price is confirmed to be the leader in price formation among energy markets bachmeier and griffin 2006 as it impacts other variables through the structure of the markov switching model taken together these results uncover new interactions between the recently created eu emissions market and the pre existing macroeconomic energy environment

edgeworth equilibria in production economies abstract an edgeworth equilibrium is an allocation that belongs to the core of every n fold replica of the economy in this work we study the properties of edgeworth equilibria for economies with production and infinite dimensional commodity spaces under some relatively mild conditions we establish among other things that 1 edgeworth equilibria exist 2 every edgeworth equilibrium is a quasi equilibrium and 3 an allocation is an edgeworth equilibrium if and only if it can be decentralized by a price system

on the continuum approach of spatial and some local public goods or product differentiation models some problems abstract models with a continuum of consumers and locations such that each consumer can purchase goods in only one location are examined such models are common in the literature of the new urban economics an approximation by economies with a finite number of consumers is shown to fail in the first two examples the continuum economy equilibrium exists and is unique but the finite economy has many equilibria example 1 or none at all example 2 in example 3 the continuum economy has no equilibrium but the finite economy has one these three examples employ location dependent utilities the fourth example illustrates the conceptual difficulties that arise in approximation when transportation cost is introduced even with location independent utilities the results are related to the literatures concerning product differentiation and spatial economies

an overlapping generations model core equivalence theorem we show that in the overlapping generations model an allocation is a walrasian equilibrium if and only if the allocation belongs to the short term core of every replication of the olg economy and hence we establish a core equivalence theorem for the overlapping generations model

the workweek of capital and its cyclical implications abstract the neoclassical growth model studied in the kydland and prescott time to build paper is modified to permit the capital utilization rate to vary the effect of this modification is to increase the amplitude of the aggregate fluctuations predicted by theory as the equilibrium response to technological shocks if following solow the changes in output not accounted for by changes in the labor and tangible capital inputs are interpreted as being the technology shocks the statistical properties of the fluctuations in the postwar united states economy are close in magnitude and nature to those predicted by theory

valuation and optimality in the overlapping generations model we present versions of the fundamental theorems of welfare economics for the overlapping generations model with an infinite dimensional commodity space given samuelson s example one cannot hope for a version of the welfare theorems in terms of pareto optimality however we show that for malinvaud optimality both welfare theorems as formulated by debreu do hold the main result of this paper asserts that in an olg model an allocation is malinvaud optimal if and only if it is a valuation equilibrium a fundamental concern of general equilibrium theory dating at least from adam smith s wealth of nations is the optimality of the market mechanism the relationship between competitive behavior and the efficient allocation of resources has its clearest and most satisfying formulation in the two welfare theorems of k j arrow 1951 and g debreu 1954