intertemporal pricing and price discrimination a semiparametric hedonic analysis of the personal computer market we apply a smooth coefficient semiparametric model to a unique high frequency data set to examine the intertemporal pricing of personal computers furthermore we test whether firms charge differential component prices for their top performance personal computers and whether premium firms charge both a premium for all their computers and a premium for their top performance ones we find nonlinear effects in the pricing of personal computer components we also find that firms in general do not charge differential prices for the components of their top performance computers in addition high quality firms charge higher premia only for their most advanced products copyright 2006 john wiley sons ltd

is the european community an optimal currency area optimal taxation versus the cost of multiple currencies the authors propose a view of optimal currency areas that is based on the principles of public finance inflation taxes are distortionary and an optimal spreading of tax distortions may require high inflation in one region and low inflation in another each region would need its own currency to do this on the other hand multiple currencies imply valuation and currency conversion costs which impede trade between regions this tradeoff is explored in the context of the european community s debate over a common currency using a two country variant of robert lucas and nancy stokey s cash in advance model copyright 1990 by american economic association

identifiability of household equivalence scales through exact aggregation some empirical results general and commodity specific equivalence scales are estimated with canadian microdata the former are identifiable when exact aggregation is imposed however these identifiability restrictions can be tested as can homogeneity and symmetry in the model employed here exact aggregation is not rejected but homogeneity and symmetry are the estimated equivalence scales exhibit increasing returns to scale in family size they also rise with age exhibit strong regional effects and rural households scales are generally lower than those of urban households since scales are sensitive to imposing homogeneity and symmetry restrictions caution should be exercised in using such equivalence scales for policy purposes

credibility and seigniorage in a common currency area in the paper we show that common currency areas tend to amplify the inefficiencies associated with lack of credibility of monetary policy lack of commitment in redistribution of seigniorage leads to excessive inflation and suboptimal taxation in the monetary union lack of commitment to inflation creates multiple inefficient equilibria that do not exist in a regime of national monetary independence

the influence of household composition on household expenditure patterns theory and spanish evidence a concept of demographic separability is proposed that formalizes the notion that there are groups of goods adult goods that have little or no relationship to specific classes of household demographics the numbers or ages of children that there exist adult goods demographically separable from children is a necessary but not sufficient condition for the validity of rothbarth s method for measuring child costs we propose two different methods for testing demographic separability and present results from a 1981 survey of spain the econometric evidence is in fair agreement with the theoretical presuppositions

the allocation of seigniorage in a common currency area this paper considers the allocation of seigniorage in a common currency area with an independent central bank it is shown that if the central bank retains autonomy in the allocation of seigniorage inflation will be suboptimally high and taxes and government spending will be suboptimally low constitutionally mandating the rate of money growth will result in optimal inflation but taxes and government spending will be too low as long as consumers do not put too much weight on public good consumption relative to private it is better to constitutionally mandate seigniorage allocation shares than the level of money growth

on measuring child costs with applications to poor countries the theoretical basis for measuring child costs is discussed and detailed consideration is given to two straightforward procedures for calculation engel s food share method and rothbarth s adult good method each of these methods embodies different definitions of child costs so that the same empirical evidence can generate quite different estimates depending on the method used it is shown that true costs are generally overstated by engel s method and understated by rothbarth s procedure although the latter unlike the former can provide a sensible starting point for cost measurement our estimates from sri lankan and indonesian data suggest that children cost their parents about 30 40 percent of what they spend on themselves

monetary fiscal policy interactions and commitment versus discretion in a monetary union abstract we consider monetary fiscal policy interactions in a monetary union if monetary and fiscal authorities have different ideal output and inflation targets the nash equilibrium output or inflation or both are beyond the ideal points of all authorities leadership of either authority is better fiscal discretion entirely negates the advantage of monetary commitment the optimal monetary rule is equivalent to discretionary leadership of monetary over fiscal policy agreement about ideal output and inflation creates a monetary fiscal symbiosis yielding the ideal point despite disagreement about the relative weights of the two objectives for any order of moves without fiscal co ordination and without monetary commitment

household equivalence scales and interpersonal comparisons recent papers have used household equivalence scales to construct measures of welfare inequality this procedure rests on an often implicit value judgement namely that if after adjustment for demographic characteristics two households are on the same indifference curve they are equally well off that value judgement is not compelling and there are situations in which it is ethically repugnant this is particularly likely if tastes are functions of past experience and income

poverty and household size the widely held view that larger families tend to be poorer in developing countries has influenced research and policy the scope for size economies in consumption cautions against this view we find that the correlation between poverty and size vanishes in pakistan when the size elasticity of the cost of living is about 0 6 this turns out to be the elasticity implied by a modified version of the food share method of setting scales by contrast some measures of child nutritional status indicate an elasticity of unity consideration of the weight attached to child versus adult welfare may help resolve the non robustness of demographic profiles of poverty excerpt

equivalent expenditure functions and expenditure dependent equivalence scales abstract this paper presents and investigates a new class of equivalent expenditure functions that is a generalization of the one that corresponds to exact independent of base equivalence scales it provides less restrictive household demands especially for children s goods and has associated equivalence scales that may depend on expenditure we show that under certain conditions equivalent expenditure functions and the associated expenditure dependent equivalence scales can be uniquely estimated from demand data we estimate them using canadian data and find that the resulting scales are both plausible and expenditure dependent the estimated equivalence scales for households with children decline significantly as expenditure increases

fiscal solvency and price level determination in a monetary union abstract this paper applies the fiscal theory of price level determination to the case of a monetary union a fiscal perspective suggests first that the focus of past studies on seigniorage per se may be misplaced second a rise in the level of debt by one member government can raise the common price level throughout the union suggesting a role for fiscal rules third conditions are discussed under which fiscal solvency is not necessary for each member government in a monetary union

non linearities and equivalence scales this paper focuses on the estimation and testing of equivalence scales in the context of a demand system with nonline ar logarithmic expenditure effects in its budget share equations the authors show that such nonlinearity enables one to identify the scal es without demographic separability restrictions on preferences and to avoid false rejection of the hypothesis that the scales are independ ent of the base utility level the empirical analysis is based on micro data drawn from the u k family expenditure survey copyright 1993 by royal economic society

a volatility based theory of fiscal union desirability abstract heterogeneous countries may rationally choose to form a currency union first and a fiscal union later we find and illustrate empirically for the emu countries reasonable volatility conditions under which this sequencing in the deepening process is indeed rationalizable changes in the distribution of expected income shocks require a reassignment of political weights to restore unanimous support for an added fiscal dimension the bargaining space depends on countries relative income size and cross correlation of shocks

equivalence scales in a rank 3 demand system abstract in the context of a rank 3 demand system equivalence scales measuring the cost of demographic characteristics independently of the base utility level can be identified from cross section data without demographic separability restrictions although this can also be achieved with a rank 2 demand system that contains a nonlinear log expenditure term in its budget shares tests performed in a nested framework suggest that the rank 3 demand system approach is empirically superior the informative structure of the rank 3 demand system is used to estimate a detailed pattern of demographic costs including the cost of single parenthood and economies of scale within the family

contemporaneous and intertemporal child costs equivalent expenditure vs equivalent income scales abstract parents may provide for their children by drawing on savings or borrowing as well as by reducing current consumption this means that child costs may be partly paid from reducing consumption in periods when the children themselves are not in the family static comparisons of consumption costs between households with and without children are therefore affected by the extent to which parents are willing and able to meet child costs through intertemporal transfers this paper analyses the implications of this argument for the estimation of adult equivalent scales and provides empirical illustrations using individual household data

capital tax competition under a common currency abstract we re examine the view that capital taxes are too low when capital is mobile across tax jurisdictions we do so by emphasising a previously neglected implication of decentralised capital tax setting when jurisdictions share a common currency namely capital taxes give rise to a vertical externality by affecting the revenues of the over arching central bank from issuing the common currency this externality may lead ceteris paribus to too high regional capital taxes and may more than offset the usual effects of tax competition in this case and contrary to conventional wisdom decentralised capital taxes will be too high

business cycle convergence in emu a first look at the second moment we analyse the dynamics of the standard deviation of demand and supply shocks as well as of the demand component of gdp across countries in the european monetary union emu this analysis allows us to evaluate the patterns of cyclical comovement in emu and compare them the cyclical performance of the new members of the eu and other oecd countries we make use of sigma convergence methods to identify synchronization patterns in business cycles the eurozone has converged to a stable lower level of dispersion across business cycles during the end of the 80s and the beginning of the 90s the new eu members have also experienced a strong pattern of convergence from 1998 to 2005 when a strong divergence trend appears an enlargement of the emu to 22 members would not significantly decrease its optimality as a currency area there is evidence for some europe specific characteristics as compared to global comovements in business cycles authors abstract

seigniorage and the case for national money in countries with high rates of inflation there is typically movement away from the use of the local currency the paper analyzes the costs and benefits of using a local currency with emphasis on the seigniorage foregone by using a foreign money even if it should be desirable for a country to fix its exchange rate it still loses seigniorage if it does not use its own money the case for using a foreign money then turns largely on the superior discipline imposed on domestic policymakers by removing their control over the money supply alternative methods of imposing discipline are discussed estimates of the amount of seigniorage raised by different governments are presented seigniorage amounts in some cases to about 10 percent of government revenue estimates are also presented of both the annual flow and one time stock costs of giving up use of domestic currencies and instead using the dollar the flow cost is typically about 1 percent of gnp and the stock cost is around 10 percent of gnp

fossil fuel producers under threat oil and gas producers face three threats prolonged low oil and gas prices tightening of climate policy and a tough budget on cumulative carbon emissions and technological innovation producing cheap substitutes for oil and gas these threats pose real risks of putting oil and gas producers out of business they lead to the problem of stranded assets and a significant downward valuation of oil and gas producers this calls for divesting from and shorting coal oil and gas the economies of oil and gas rich countries are typically in a deplorable state since they did not use their past windfalls to build up buffers and invest in a diversified economy more rapacious depletion of their oil and gas reserves will not help after the crash in oil and gas prices these countries are facing serious problems and it is difficult to see how they will cope with the outlined threats

the cumulative carbon budget and its implications the cumulative impact of carbon dioxide co2 emissions on climate has potentially profound economic and policy implications it implies that the long term climate change mitigation challenge should be reframed as a stock problem while the overwhelming majority of climate policies continue to focus on the flow of co2 into the atmosphere in 2030 or 2050 an obstacle however to the use of a cumulative carbon budget in policy is uncertainty in the size of this budget consistent with any specific temperature based goal such as limiting warming to 2 c this arises from uncertainty in the climate response to co2 emissions which is relatively tractable and uncertainty in future warming due to non co2 drivers which is less so we argue these uncertainties are best addressed through policies that recognize the need to reduce net global co2 emissions to zero to stabilize global temperatures but adapt automatically to evolving climate change adaptive policies would fit well within the paris agreement under the un framework convention on climate change

government finance with currency substitution abstract we analyze seigniorage in an overlapping generations model where a friction induces a precautionary demand for a weaker currency the friction which is modeled as a transactions cost is viewed as an inverse measure of currency substitutability governments finance spending with costly income taxation or seigniorage we show that if governments act independently money growth is suboptimally low if currencies are sufficiently substitutable and too high otherwise if money growth is suboptimally low increasing substitutability lowers it further however since greater substitutability is associated with smaller real costs of exchanging money welfare need not fall

inflation and taxation with optimizing governments this paper examines the empirical validity of the predictions that if governments minimize the deadweight loss from raising revenue through inflation and tax finance there should be a positive contemporaneous association between inflation and the level of tax burdens the authors examine the empirical validity of this prediction using data from great britain france germany japan and the united states inflation and tax rates are as likely to be negatively as positively correlated so the results cast doubt on the empirical relevance of simple models in which governments with time invariant tastes choose monetary policy to equate the marginal deadweight burdens of inflation and taxes copyright 1990 by ohio state university press

the age of electricity the age of electricity is coming driven by rapid technological change on the demand side the digitalization of many processes is leading to technologies that require electricity rather than liquid or solid fuels on the supply side renewable energy technologies provide electricity directly at falling cost electrification directly and indirectly e g using electricity to produce hydrogen fuel can aid the decarbonization of the economy strong climate policy would accelerate electrification the big question is when not if and the transition is not occurring anywhere near fast enough to meet the paris climate goals the immediate impact of the coming age of electricity is the transformation of electricity markets which need to adapt to near zero marginal costs and intermittency in the longer term the impact on fossil fuels will be radical fossil fuel prices will fall with demand and the oil and gas majors will either completely transform themselves or will harvest profits and exit

grand corruption instead of commitment reconsidering time inconsistency of monetary policy abstract this paper suggests that inflation may be affected differently by grand corruption compared to its positive nexus with petty corruption in an extended barro and gordon 1983a model grand corruption may serve as a quasi commitment device a cheating expropriating government may actually deter a monetary authority from cheating reneging furthermore rogoff s 1985 conservative central banker has an unambiguously beneficial effect she reduces the inflationary bias even more while also rendering fiscal policy more effective the model nests the standard fiscal monetary interaction logic with and without expropriation as well as the diametrical symbiosis result obtained by dixit and lambertini 2003a

symbiosis of monetary and fiscal policies in a monetary union we consider the interaction between the monetary policy in a monetary union and the separate fiscal policies of the member countries we use a barro gordon type model extended to many countries and fiscal policies each country s fiscal policies inflict externalities on other countries and the common monetary policy has its time consistency problem but if the two types of policymakers agree about the ideal levels of output and inflation then this ideal is attained despite disagreements about the weights of the objectives despite ex post monetary accommodation to fiscal profligacy without fiscal coordination without monetary commitment and for any order of moves

life cycle expenditure allocations and the consumption costs of children abstract in this paper we assess whether it is changing needs or intertemporal substitution that dominate household expenditure responses to the presence of children over the life cycle we construct lifetime expenditure paths for households with different demographic profiles and consider the shape of these paths and some possible implications for welfare measures simulated expenditure paths based on consistent single period and multi period models indicate that it is indeed changing needs that dominate such paths in periods when children are present in the household however allowing for intertemporal substitution is still shown to be important since it can introduce new information relevant to the calculation of household welfare

on estimating the cost of characteristics indices from consumer demand analysis we examine the information content of relative equivalence scales using a multiperiod framework and argue that in the absence of independence of base ib these scales can be uniquely identified from demand analysis only when the transformations of preferences through time are the same for all household types a property termed as intertemporally invariant base iib utility restrictions imposed by iib on conditional demands are tested empirically and found rejected within the context of a rank 3 demand system applied to individual household data drawn from the u k family expenditure survey 1970 86 welfare implications of false iib assumptions are also empirically investigated jel classification d1 a propos de l estimation du cout des indices caracteristiques a partir de l analyse de la demande des consommateur ce memoire examine le contenu informationnel des echelles d equivalence relative en utilisant un cadre d analyse sur plusieurs periodes et suggere que en l absence d une independance de la base ib ces echelles peuvent etre identifiees d une maniere univoque seulement si les transformations de preferences dans le temps sont les memes pour tous les types de menages on nomme cette propriete utilite de base invariante dans le temps iib les restrictions verifiables imposees par iib sur les demandes conditionnelles sont verifiees empiriquement et sont rejetees dans le contexte d un systeme de demande de rang 3 applique aux donnees des menages individuels dans une etude des depenses des menages de la grande bretagne 1970 86 les implications de faux postulats iib sont analysees empiriquement

equivalence scales and the costs of disability abstract the impact of disability on household welfare is estimated by equivalence scales using data from the 1986 1987 fes disability survey three methods of identifying scales from cross section data are considered these imply a series of restrictions that are tested on quadratic logarithmic engel curves the results indicate that there are substantial consumption costs associated with physical disability

time inconsistency and free riding in a monetary union in monetary unions a time inconsistency problem in monetary policy leads to a novel type of free rider problem in the setting of non monetary policies the free rider problem leads union members to pursue lax non monetary policies that induce the monetary authority to generate high inflation free riding can be mitigated by imposing constraints on non monetary policies without a time inconsistency problem the union has no free rider problem then constraints on non monetary policies are unnecessary and possibly harmful this theory is here detailed and applied to several non monetary policies labor market policy fiscal policy and bank regulation

the future of fossil fuels is it the end contrary to the assumptions underlying many of current energy and climate policies the prices of fossil fuels have fallen and may remain at the new normal levels in the medium term iran and iraq have considerable potential to increase their outputs and the new shale technologies will gradually globalize longer term new technologies in electricity generation storage and smart demand side technologies together with electric cars and the shift towards digitalization and new electricity based technologies in manufacturing will increase demand for electricity but not fossil fuels these new and emerging technologies rather than international agreements and the promotion of current generation renewables will probably bring fossil fuel dominance to a gradual close to facilitate decarbonization energy policy should be directed at enhancing r d and next generation renewables instead of supporting existing ones

government finance in a common currency area abstract european integration in 1992 may require greater exchange rate coordination thatn currently exists the delors report goes as far as to recommend the eventual adoption of a single currency however the formation of a common currency area raises fears that independent fiscal policies may produce inferior outcomes this paper shows that lack of cooperation in fiscal policy leads to too little inflation too high taxes and too much government spending jel f33

the rank and model specification of demand systems an empirical analysis using united states microdata a rank three demand system is estimated with united states consumer expenditure survey microdata a unique price data set is also used which permits the analysis of effects of systematic errors in price variables it is found that errors in price variables bias test results for the rank three hypothesis in particular towards rejection other test results are affected to a lesser extent estimating smaller systems of demand equations even when conditioning on excluded goods yields significantly different results another important conclusion is that model specification is statistically significantly different for households of varying family sizes and housing tenure statuses jel classifications c31 d12 le rang et la specification du modele des systemes de demande une analyse empirique utilisant des microdonnees americaines on calibre un systeme de demande de rang trois a l aide de microdonnees americaines tirees de la united states consumer expenditures survey un ensemble unique de prix est utilise afin de permettre l analyse des effets d erreurs systematiques dans les variables de prix il appert que les erreurs dans les variables de prix distorsionnent les resultats du test de l hypothese de rang trois en faveur d un rejet d autres resultats de tests sont affectes a un moindre degre si l on calibre de plus petits systemes d equations de demande meme en posant des conditions sur des biens exclus des resultats qui different de maniere significative s ensuivent une autre conclusion importante est que la specification du modele est differente de maniere statistiquement significative pour les menages selon la taille de la famille et le statut domiciliaire

evaluating participation in african monetary unions a statistical analysis of the cfa zones abstract thirteen african nations are engaged in two monetary unions with france often referred to as the cfa zone despite the acknowledged benefits of zone membership a convertible currency pooled resources and greater monetary and fiscal discipline several observers have questioned whether particular aspects of the zone such as the lack of autonomy of the two central banks and the surrender of the exchange rate as a policy instrument have impeded its members growth this paper addresses that question by testing whether cfa zone countries had different gnp growth rates from selected comparator countries during 1960 1982 results show that cfa countries grew significantly faster than comparator sub saharan african countries but usually slower and often significantly so than the whole sample of developing countries when the comparison is made by subperiod before and after 1973 cfa countries performance vis a vis that of their comparators improved during the 1973 1982 period casting further doubt on the claim that the monetary union is not functioning adequately

the economic effects of climate change greenhouse gas emissions are fundamental both to the world s energy system and to its food production the production of co2 the predominant gas implicated in climate change is intrinsic to fossil fuel combustion specifically thermal energy is generated by breaking the chemical bonds in the carbohydrates oil coal and natural gas and oxidizing the components to co2 and h2o one cannot have cheap energy without carbon dioxide emissions similarly methane ch4 emissions an important greenhouse gas in its own right are necessary to prevent the build up of hydrogen in anaerobic digestion and decomposition one cannot have beef mutton dairy or rice without methane emissions climate change is the mother of all externalities larger more complex and more uncertain than any other environmental problem the sources of greenhouse gas emissions are more diffuse than any other environmental problem every company every farm every household emits some greenhouse gases the effects are similarly pervasive weather affects agriculture energy use health and many aspects of nature which in turn affects everything and everyone the causes and consequences of climate change are very diverse and those in low income countries who contribute least to climate change are most vulnerable to its effects climate change is also a long term problem some greenhouse gases have an atmospheric life time measured in tens of thousands of years the quantities of emissions involved are enormous in 2000 carbon dioxide emissions alone and excluding land use change were 24 billion metric tons of carbon dioxide tco2

children and household economic behavior this paper looks at some of the methodological issues that arise in modeling the effects of children on household behavior and presents some estimates for selected areas for our purposes household behavior will be taken to refer to household decisions on labor supply the allocation of expenditure to different periods and the decision as to what to do with the difference between income and expenditure i shall be concerned mainly with the effects of dependent children and i restrict attention largely to western societies excerpt

on the need for fiscal constraints in a monetary union the desirability of fiscal constraints in monetary unions depends critically on whether the monetary authority can commit to following its policies if it can commit then debt constraints can only impose costs if it cannot commit then fiscal policy has a free rider problem and debt constraints may be desirable this type of free rider problem is new and arises only because of a time inconsistency problem

estimates of semiparametric equivalence scales within the semiparametric framework introduced by pendakur 1999 we introduce a new loss function to estimate equivalence scales this loss function uses all available information from the total expenditures of both the reference and nonreference households and as such it produces more reliable estimates using canadian family expenditure data for 1996 we apply this loss function to obtain equivalence scale estimates for a variety of expenditure share categories such as food fuel and clothing copyright 2006 john wiley sons ltd

the competitive externalities and the optimal seignorage this study analyzes the inflation tax in an economy with several competing decisionmakers who can effectively print more money via the central bank the author derives the sequential rational expectation equilibrium and shows that the presence of competing decisionmakers increases the inflation rate and may put the economy on the wrong side of the inflation tax laffer curve the analysis is interpreted for a country consisting of several states or provinces where the centralized government system is weak similar results apply to the case of competing ministers in an economy where the central bank is weak copyright 1992 by ohio state university press

monetary union without fiscal coordination may discipline policymakers abstract with benevolent policymakers and fiscal leadership monetary unification reduces inflation taxes and public spending these disciplining effects of a monetary union which become stronger if the number of participants in the union increases are likely to raise welfare two types of arrangements are considered for the union s common central bank ccb making the ccb more conservative and imposing an inflation target on the ccb in contrast to the results of svensson 1997 svensson l e o 1997 optimal inflation targets conservative central banks and linear inflation contracts american economic review 87 98 114 an optimally designed conservative ccb may outperform inflation targeting finally we find that fiscal coordination offsets the disciplining effects of monetary unification hence subsidiarity in fiscal policymaking may enhance welfare

what is the income cost of a child exact equivalence scales for canadian two parent families this note asks how much income does it take to preserve the prechild standard of living for all members of the postchild household equivalence scales for canadian two parent families are estimated using a complete demand system approach and imposing the condition of equiva lence scale exactness independent of a base blackorby and donaldson 1993 lewbel 1989 this approach has several advantages 1 it is formally grounded in economic theory 2 the income required for children can be estimated without ignoring the well being of the children themselves 3 the estimates obtained appear reasonable relative to others currently available in the literature

testing the rank of engel curves with endogenous expenditure abstract we find that the endogeneity of consumer expenditure tends to increase the estimated rank of engel curves this result based on nonparametric procedure is in line with previous results obtained in the context of parametric specifications

what do we learn about consumer demand patterns from micro data the aim of this paper is to assess the importance of using micro level data in the econometric analysis of consumer demand to do this we utilize a time series of repeated cross sections covering some 4 000 households in each of 15 years employing a number of different aggregation procedures we conclude that aggregate data alone are unlikely to produce reliable estimates of structural price and income coefficients however once certain aggregation factors as well as trend and seasonal components are included an aggregate model is not necessarily outperformed across all demand equations in terms of forecasting ability jel d12 c52 c31 the purpose of this paper is to develop a complete consumer demand system based on a time series of individual household data and to use it to measure the biases introduced into the study of consumer de mand behavior when aggregate data are used in place of the appropriate microeco nomic data we assess the suitability of ag gregate data through the impact on income and price elasticities and by evaluating the ability of both micro and aggregate based models to forecast aggregate consumer de mand the biases introduced by the use of aggregate data depend upon the way that household characteristics interact with in come and price effects and on departures of demand systems from linearity we explore the structure of microeconomic demand sys tems and the role of household characteris tics in the behavior of consumer demand both for the light this may shed on the pattern of future demands and for the im plications this behavior has for issues of aggregation consumer demand patterns typically found in micro data sets vary considerably across households with different household characteristics and with different levels of income we model this variability by making intercept and slope parameters in the budget share equations of our demand sys tem depend on household characteristics and by allowing for nonlinear total log expenditure terms in fact in theory consistent demand systems it is total ex penditure rather than disposable income that is allocated across goods we find that this general framework leads to a well specified data coherent demand system which is a quadratic extension of the popu lar almost ideal model of angus s deaton and john muellbauer 1980 the micro level estimates are shown to be sensitive to the treatment of endogeneity of total expen diture and to the specification of interaction terms with household characteristics in ad dition this specification is also shown to possess many attractive features for the evaluation of aggregate models

on modeling and interpreting the economics of catastrophic climate change with climate change as prototype example this paper analyzes the implications of structural uncertainty for the economics of low probability high impact catastrophes even when updated by bayesian learning uncertain structural parameters induce a critical tail fattening of posterior predictive distributions such fattened tails have strong im plications for situations like climate change where a catastrophe is theoretically possible because prior knowledge cannot place sufficiently narrow bounds on overall damages this paper shows that the economic consequences of fat tailed structural uncertainty along with unsureness about high temperature damages can readily outweigh the effects of discounting in climate change policy analysis

commitment and the adoption of a common currency in contrast to mundell s inquiry on the optimality of currency areas this article aims to understand under what circumstances a pareto dominant monetary union will be established using a multicountry overlapping generations model we highlight gains from monetary union arising from reduced transactions costs and lower inflation despite these gains countries acting independently will impose barriers to exchange through local currency restrictions thereby creating transactions costs and providing an incentive for inflation therefore the gains from monetary union are most likely to be lost without collective effort