an overview of experimental u s consumer price indexes the consumer price index cpi has come under intense scrutiny in recent years to help assess potential differences between what the cpi measures and how it is used for various purposes the bureau of labor statistics has created a series of experimental price indexes this article contrasts how the cpi is currently constructed with those experimental indexes specifically experimental cpps have been constructed for two population groups older americans and poor americans in addition experimental geometric mean and superlative indexes have been developed that move the cpi away from its traditional fixed market basket concept

liquidity effects and the monetary transmission mechanism several recent papers provide strong empirical support for the view that an expansionary monetary policy disturbance generates a persistent decrease in interest rates and a persistent increase in output and employment existing quantitative general equilibrium models which allow for capital accumulation are inconsistent with this view there does exist a recently developed class of general equilibrium models which can rationalize the contemporaneous response of interest rates output and employment to a money supply shock however a key shortcoming of these models is that they cannot rationalize persistent liquidity effects this paper discusses the basic frictions and mechanisms underlying this new class of models and investigates one avenue for generating persistence we argue that once a simplified version of the model in christiano and eichenbaum 1991 is modified to allow for extremely small costs of adjusting sectoral flow of funds positive money shocks generate long lasting quantitatively significant liquidity effects as well as persistent increases in aggregate economic activity

monopolistic competition in the spirit of chamberlin a general model this paper develops a model of large group chamberlinian monopolistic competition in which 1 there are many firms producing differentiated commodities 2 each firm is negligible in that it can ignore its impact on and hence reactions from other firms 3 free entry leads to zero profit of operating firms but 4 each firm faces a downward sloping demand curve the existence of a monopolistically competitive equilibrium is established in a companion paper more particular questions such as whether the market provides too many or too few products are addressed for a special case of the model

product variety informative advertising and price competition abstract in many product categories consumer tastes are diverse and firms use finely targeted advertising to inform consumers about their products this article proposes a model of informative advertising that allows for diverse consumer tastes and multiple competing firms using this framework the authors analyze how diversity in consumers tastes informative advertising and improvements in advertising technology may influence prices first informative advertising can lead to lower prices if consumer valuations are high however if consumer valuations are low informative advertising can lead to higher prices second when consumer valuations are high price increases with greater diversity in tastes though this result reverses if consumer valuations are low third improvements in advertising technology lead to higher levels of advertising when consumer valuation is high but the opposite effect can occur when consumer valuation is low the authors relate these theoretical findings to previous e

second best subsidies in monopolistic competition abstract in the spence dixit stiglitz model of monopolistic competition an output or input subsidy is welfare improving under competitive conjecture the significance of this result is that it holds even when the subsidy exacerbates the potential problem of excess product diversity

interpreting the macroeconomic time series facts the effects of monetary policy existing theory and evidence on the effects of monetary policy are reviewed substantial room for disagreement among economists remains new evidence based on multivariate time series studies of several countries is presented while certain patterns in the data consistent with effective monetary policy are strikingly similar across countries others particularly the tendency of interest rate increases to predict high inflation are harder to reconcile with effective monetary policy

index decomposition analysis applied to co2 emission studies index decomposition analysis ida was first extended from energy consumption to energy related co2 emission studies in 1991 since then many studies have been reported covering various countries and emission sectors however unlike the case of energy consumption studies a comprehensive literature survey that focuses specifically on emission studies has so far not been reported in this paper we attempt to fill this gap by reviewing 80 papers appearing in peer reviewed journals from 1991 to 2012 in this application area the first part of this paper deals with the developments with regard to the ida approaches used by researchers and the scope and focus of their studies in the second part the empirical results reported in the surveyed studies are analyzed consolidated and presented by emission sector the objective is to reveal the relative contributions of key effects on changes in the aggregate carbon intensity and this is done by emission sector and by country the findings of both parts are useful in understanding the development of ida in the application area of emission study as well as the key drivers of aggregate carbon intensities in the past and their possible future developments

nominal price rigidity money supply endogeneity and business cycles abstract this paper investigates the ability of nominal price rigidity to explain the co movement of inflation with the cyclical component of output observed in the post war u s data a dynamic general equilibrium model is constructed with the introduction of monopolistic competition and nominal price rigidity in a standard real business cycle model allowing for an endogenous money supply rule it is then demonstrated that sticky price models can explain the observed associations between movements in inflation and output much better than flexible price models this result depends little on whether money supply is assumed to be endogenous or not

a new approach to decomposition of economic time series into permanent and transitory components with particular attention to measurement of the business cycle abstract this paper introduces a general procedure for decomposition of non stationary time series into a permanent and transitory component allowing both components to be stochastic the permanent component is shown to be a random walk with drift and the transitory or cyclical component is a stationary process with mean zero the decomposition methodology which depends only on past data and therefore is computable in real time is applied to the problem of measuring and dating business cycles in the portwar u s economy we find that measured expansions and contractions are of roughly equivalent duration and that our dating of cyclical episodes tends to lead the traditional nber dating and to a lesser extent the growth cycle chronology of zarnowitz and boschan 1977

price and variety in the spokes model the spokes model of nonlocalized spatial competition provides a new analytical tool for dierentiated oligopoly and a representation of spatial monopolistic competition an increase in the number of rms leads to lower equilibrium prices when consumers have relatively high product valuations but surprisingly to higher equilibrium prices for in termediate consumer valuations new entry alters consumer and social welfare through price market expansion and matching eects with free entry the market may pro vide too many or too few varieties from a social welfare perspective and the equilibrium price remains above marginal cost even when the number of rms is arbitrarily large

comparing structural decomposition analysis and index to analyze and understand historical changes in economic environmental employment or other socio economic indicators it is useful to assess the driving forces or determinants that underlie these changes two techniques for decomposing indicator changes at the sector level are structural decomposition analysis sda and index decomposition analysis ida for example sda and ida have been used to analyze changes in indicators such as energy use co2 emissions labor demand and value added the changes in these variables are decomposed into determinants such as technological demand and structural effects sda uses information from input output tables while ida uses aggregate data at the sector level the two methods have developed quite independently which has resulted in each method being characterized by specific unique techniques and approaches this paper has three aims first the similarities and differences between the two approaches are summarized second the possibility of transferring specific techniques and indices is explored finally a numerical example is used to illustrate differences between the two approaches

equilibrium with product differentiation tive consumer formulations is used to examine the properties of single and multiple price equilibria conditions under which decreases in the intensity of consumer preferences reduce price are given it is shown that with certain types of demand curves entry can eliminate price cost markups even given product differentiation if competition is localized it is demonstrated that entry does not affect the markup finally the effect of spurious product differentiation on price is examined

stochastic trends and economic fluctuations are business cycles mainly the result of permanent shocks to productivity this paper uses a long run restriction implied by a large class of real business cycle models identifying permanent productivity shocks as shocks to the common stochastic trend in output consumption and investment to provide new evidence on this question econometric tests indicate that this common stochastic trend cointegration implication is consistent with postwar u s data however in systems with nominal variables the estimates of this common stochastic trend indicate that permanent productivity shocks typically explain less than half of the business cycle variability in output consumption and investment copyright 1991 by american economic association

explaining saving investment correlations national saving and investment rates are highly positively correlated in virtually all countries this is puzzling as it apparently implies a low degree of international capital mobility this paper shows that the observed positive correlation between national saving and investment rates arises naturally within a quantitatively restricted equilibrium model with perfect mobility of financial and physical capital the model is consistent with the fact that saving investment correlations are larger for larger countries but are still substantial for small countries further the model is consistent with the finding that current account deficits tend to be associated with investment booms copyright 1993 by american economic association

structural shocks and the comovements between output and interest rates stylized facts on u s output and interest rates have so far proved hard to match with simple dsge models i estimate covariances between output nominal and real interest rate conditional on structural shocks since such evidence has largely been lacking in previous discussions of the output interest rate puzzle conditional on shocks to technology and monetary policy the results square with simple models moreover permanent inflation shocks accounted for the counter cyclical and inversely leading behavior of the real rate during the great inflation 1959 1979 over the great moderation 1982 2006 technology shocks were more dominant and the real rate has been pro cyclical

true monopolistic competition as a result of imperfect information the paper restates hart s 1985a 1985b definition of large group monopolistic competition distinguishes it from oligopolistic competition and raises the question of whether there are reasonable circumstances that give rise to true monopolistic competition as defined the purpose is to show that consumers imperfect information may create conditions that will turn an otherwise oligopolistic market into a truly monopolistically competitive one

liquidity loanable funds and real activity abstract this paper develops a general equilibrium model of two traditional explanations of the monetary black box linking money and real activity the liquidity effect and the loanable funds effect these effects are modeled with a monetary production economy in which central bank injections of cash are funnelled into the economy through the credit market since only borrowers have direct access to the newly injected cash monetary injections cause nominal interest rates to fall if firms are borrowers then monetary injections also increase current and future real activity

drivers of greenhouse gas emissions in the baltic states a structural decomposition analysis since the mid 1990s three baltic states have significantly increased their per capita gross domestic product gdp and at the same time have managed to keep the co2 equivalent co2e emissions low we used structural decomposition analysis to identify the drivers of change for co2e emissions in these countries between 1995 and 2009 a period that includes the collapse of the soviet union restructuring and economic growth and the great recession the results show that final demand has been the main driving force for increasing emissions in the baltic states and would have caused an 80 64 and 143 emission increase in estonia latvia and lithuania respectively all other factors kept constant this increase has been partly offset by a declining emission intensity of the economy especially in latvia and lithuania whereas in estonia which has one of the highest emission intensities in europe a shift in consumption patterns towards low carbon consumption items and a decarbonizing economic structure were the main balancing factors it is likely that the baltic states will experience a continuation of economic growth given their relatively low per capita gdp which is less than half of the european union average thus adequate carbon policies are paramount

the behavior of the real rate of interest this paper presents new facts regarding the behavior of the ex ante real rate of interest these facts are notably different from conventional wisdom about the cyclical properties of the real rate in particular we find that the ex ante real rate is contemporaneously positively correlated with gdp and positively correlated with lagged cyclical output there is also evidence that high real rates are associated with strong cyclical output one quarter into the future our results generally are not sensitive to the estimation methodology but are quite sensitive to the price series used this sensitivity is especially true for the consumer price index thus we find evidence of specification uncertainty we also find that real rate behavior varies over different sample periods and that the cyclical properties of the ex ante and ex post real rates are not identical therefore inferring ex ante real rate behavior using ex post data is inappropriate this paper presents new facts regarding the behavior of the ex ante real rate of interest these facts are notably different from conventional wisdom about the cyclical properties of the real rate in particular we find that the ex ante real rate is contemporaneously positively correlated with gdp and positively correlated with lagged cyclical output there is also evidence that high real rates are associated with strong cyclical output one quarter into the future stylized facts presented in stock and watson 1999 are exactly the opposite and we investigate the reasons for these differences we do this by looking across a wide variety of constructed real rate series these series are obtained by using a number of different methodologies for estimating expected inflation using several different price series and looking over different time periods our results generally are not sensitive to the estimation methodology but are quite sensitive to the price series used this sensitivity is especially true for the consumer price index cpi thus we

consistent conjectures in monopolistic competition abstract models of monopolistic competition such as dixit and stiglitz and spence typically assume firms take market variables as parametric this conjectural variation corresponds to chamberlin s large group approximation although these models need not have a large number of firms the present note following perry shows that consistent conjectures about the size and number of rivals can provide a more satisfactory basis for this assumption

economic drivers of greenhouse gas emissions in china abstract for china greenhouse gas emissions increased by 0 075 gigatons gt in the period of 1995 2000 and increased by 4 23 gt from 2000 to 2009 then reached the amount of 8 61 gt in 2009 different from the traditional analysis focused on accounting sectors greenhouse gas emissions under the production based responsibility this paper investigates sectoral ghg emissions in china in the period of 1995 2009 from the perspective of consumption based and income based responsibility we found that different metrics yield very different ghg emission responsibilities the sector of electricity gas and water supply has the highest ghg emissions responsibility based on the production and income metrics while the sector of construction is the largest emitter under the consumption metric in the light of the key driver analysis of ghg emissions from 1995 to 2009 based on the consumption metric the change in the final demand volume is the largest driver of increase in china s consumption based ghg emissions 17 18 gt the changes in the production structure and the final demand structure are other contributors 0 53 gt 1 46 gt the improvement to the intensity of ghg emissions is the main force for ghg emissions mitigation 14 86 gt according to the income metric the contributions of input volume changes input structure changes and ghg intensity changes are similar to the effects of consumption based responsibility 19 11 gt 1 13 gt 14 95 gt the difference is that the change in the production structure is another force that offset ghg increase 0 98 gt results in this paper can give some recommendation on mitigating ghg emissions in china for policy makers from production side demand side and supply side

the economics of product variety a survey demand for variety may arise from a taste for diversity in individual consumption and or from diversity in tastes even when each consumer chooses a single variant the full degree of variety potentially demanded will not in general be supplied because scale economies even to a small degree mean that the potential welfare or revenue gain from greater variety must be balanced against the lower unit production costs with fewer variants the economics of product variety consists essentially in analysing the effect of this balance in different situations and comparing the degree of product variety for different market structures with each other and with the optimum the survey commences with the work on market structures with single product firms generalized monopolistic competition tracing modern developments in both the chamberlinian and hotelling traditions the latter has been particularly fruitful due to the expansion of the original locational ideas into virtual spaces in product characteristics the emphasis in recent work on product variety has been on multiproduct firms in both monopolistic and oligopolistic structures including strategic market preemption although most work has been in a full information context there have been advances in product variety under imperfect information either by consumers to properties of the firms products or firms as to consumers demands

production growth and business cycles ii new directions abstract this paper outlines new directions for investigations of real business cycle models consideration of stochastic growth of exogenous and endogenous forms analysis of suboptimal outcomes arising due to externalities of distorting taxes and implications of labor market heterogeneity

how well does the is lm model fit postwar u s data postwar u s time series for money interest rates prices and gnp are characterized by a multivariate process driven by four exogenous disturbances those disturbances are identified so that they can be interpreted as the four main sources of fluctuations found in the is lm phillips curve model money supply money demand is and aggregate supply shocks the dynamic properties of the estimated model are analyzed and shown to match most of the stylized predictions of the model the estimated decomposition is also used to measure the relative importance of each shock to interpret some macroeconomic episodes and to study sources of permanent shocks to nominal variables

what fisher knew about his relation we sometimes forget abstract expected consumption growth increases the real interest rate as one tries to smooth consumption over time we demonstrate that placing it in the fisher relation 1 is consistent with the euler equation governing the purchase of nominal bonds 2 explains observed procyclicality of the real interest rate 3 is supported empirically and 4 provides an alternative method for estimating the consumer s degree of relative risk aversion

money prices interest rates and the business cycle the mechanisms governing the relationship of money prices and interest rates to the business cycle are the most studied and most disputed topics in macroeconomics in this paper we first document key empirical aspects of this relationship we then ask how well three benchmark rational expectations macroeconomic models a real business cycle model a sticky price model and a liquidity effect model account for these central facts while the models have diverse successses and failures none can account for the fact that real and nom inal interest rates are inverted leading indicators of real economic activity that is none of the models captures the post war u s business cycle fact that a high real or nominal interest rate in the current quarter predicts a low level of real economic activity two to four quarters in the future i introduction the positive correlation of monetary aggregates and real economic activity over the course of many business cycles is a key empirical fact about the u s economy indeed the dynamic dimension of this covariation is so strong and stable that a monetary variable has long been included in the commerce department s index of leading economic indica tors while this pattern of cyclical comovement is widely agreed upon its interpretation is not some macroeconomists view money as purely passive with a positive response to varying levels of economic activity producing the positive correlation others view changes in the quantity of money as an important perhaps dominant source of economic fluctua tions frequently the real effects of monetary changes are suggested to arise from frictions in commodity labor or financial markets in economic theories that describe the influence of these frictions the transmission mechanism from monetary changes to real activity is typically viewed as involving interest rates and the price level the primary goal of this paper is to evaluate three models that explain the link between money prices interest rates and the business cycle we do this in three steps first we docu ment the cyclical behavior of these variables in the united states over the postwar period second we construct three quantitative rational expectations models of macroeconomic activity i a real business cycle model with endogenous money ii a model of commodity market frictions with mon etary non neutralities arising from gradual adjustment of goods prices and iii a model of financial market frictions with monetary non neutralities arising from gradual adjust ments of portfolios finally we compare the models predic tion for the business cycle behavior of money prices and interest rates with the data in exploring the predictions of these models we take the stock of money to be one of several exogenous variables in the system all of our models are capable of generating a forecasting role for money relative to real economic activity similar to that found in the u s data in the real business model monetary changes can forecast real activity because productivity is related to many underlying sources of shocks and because these real shocks also affect the money stock in the models with sticky prices and liquidity effects short hand names for the models with frictions in the com modity and financial markets monetary changes have an additional direct positive effect on aggregate output the outline of the paper is as follows section ii describes the data and documents its business cycle characteristics section iii outlines the three macroeconomic models and develops the particular quantitative versions of the models used in our analysis our main empirical results are pre sented in section iv and section v summarizes our results and concludes

the relation between price and marginal cost in u s industry an examination of data on output and labor input reveals that some u s industries have marginal cost well below price the conclusion rests on the finding that cyclical variations in labor input are small compared with variations in output in booms firms produce substantially more output and sell it for a price that exceeds the costs of the added inputs the paper documents the disparity between price and marginal cost where marginal cost is estimated from annual variations in cost it considers a variety of explanations of the findings that are consistent with competition but none is found to be completely plausible

reconsidering monetary policy an empirical examination of the relationship between interest rates and nominal gdp growth in the u s u k germany and japan abstract the rate of interest the price of money is said to be a key policy tool economics has in general emphasised prices this theoretical bias results from the axiomatic deductive methodology centring on equilibrium without equilibrium quantity constraints are more important than prices in determining market outcomes in disequilibrium interest rates should be far less useful as policy variable and economics should be more concerned with quantities including resource constraints to investigate we test the received belief that lower interest rates result in higher growth and higher rates result in lower growth examining the relationship between 3 month and 10 year benchmark rates and nominal gdp growth over half a century in four of the five largest economies we find that interest rates follow gdp growth and are consistently positively correlated with growth if policy makers really aimed at setting rates consistent with a recovery they would need to raise them we conclude that conventional monetary policy as operated by central banks for the past half century is fundamentally flawed policy makers had better focus on the quantity variables that cause growth

the energy intensity in lithuania during 1995 2009 a lmdi approach abstract the measurement assessment and effective mitigation of energy intensity compose a foremost objective of contemporary energy policy although the european union eu member states have been experiencing the convergence in energy efficiency indicators lithuania acceded to the eu in 2004 still remains peculiar with relatively high energy intensity our study therefore is aimed at analyzing the energy intensity trends in lithuanian economy as a whole as well as in separate economic sectors the investigation covers the period of 1995 2009 the logarithmic mean divisia index was applied for decomposition analysis our analysis has shown that energy efficiency falls during economic downturn in order to facilitate these challenges the lithuanian government as well as business should opt for increasing energy efficiency in the most problematic sectors of transport and services in addition the analysis of legal acts namely national energy efficiency programme for 2006 2010 and energy efficiency action plan for 2010 2016 was taken into consideration some suggestions thus were offered for successful implementation of strategic goals outlined in the aforementioned strategic documents

the time varying behaviour of real interest rates a re evaluation of the recent evidence a time varying parameter model with markov switching conditional heteroscedasticity is employed to investigate two sources of shifts in real interest rates 1 shifts in the coefficients relating the ex ante real rate to the nominal rate the inflation rate and a supply shock variable and 2 unconditional shifts in the variance of the stochastic process the results underscore the importance of modelling continual change in the ex ante real rate in terms of other economic variables rather than relying on a statistical characterization that permits only a limited number of discrete jumps in the mean of the process copyright 1999 john wiley sons ltd

real business cycles a new keynesian perspective the debate over the source and propagation of economic fluctuations rages as fiercely today as it did 50 years ago in the aftermath of keynes s the general theory and in the midst of the great depression today as then there are two schools of thought the classical school emphasizes the optimization of private economic actors the adjustment of relative prices to equate supply and demand and the efficiency of unfettered markets the keynesian school believes that understanding economic fluctuations requires not just studying the intricacies of general equilibrium but also appreciating the possibility of market failure on a grand scale

value of an additional firm in monopolistic competition the paper develops a model of monopolistic competition in which the satisfaction levels consumers get from products are independently and identically distributed potential substitution among products then generates demand curves through the mechanism of order statistics the value of extra variety can be calculated directly pareto lognormal and beta distributions are investigated using numerical integration some but not all cases support the argument that the optimal number of firms exceeds the equilibrium number

the shifts in lead lag properties of the u s business cycle we document shifts in the lead lag properties of the u s business cycle since the mid 1980s specifically 1 the well known inverted leading indicator property of real interest rates has completely vanished 2 labor productivity switched from positively leading to negatively lagging output and labor inputs over the cycle and 3 the unemployment rate shifted from lagging productivity negatively to leading positively many contemporary business cycle models produce counterfactual cross correlations revealing that popular frictions and shocks provide an incomplete account of business cycle comovement determining the underlying sources of these shifts in the lead lag properties and their consequences for macroeconomic forecasts is therefore a promising direction for future research jel e24 e32 e43

product differentiation heterogeneous labor and non homotheticity statics and dynamics the problem of product diversity and product differentiation under chamberlinian monopolistic competition has been attracting a great deal of attention recently instrumental to this is perhaps the discovery of the dixit stiglitz utility function 7 in conjunction with revived interest in scale economies the d s utility function framework has been useful to make general equilibrium analysis tractable and facilitate obtaining many interesting results scale economies provide an additional appealing feature to the results the application to other fields notably to international trade theory is impressive thus dixit norman 6 265 wrote the large volume of intra industry trade estimated at 50 of world trade by grubel lloyd 8 can only be understood in the context of product differentiation and economies of scale this line of research reached a culmination with the work of helpman krugman 13 this paper develops a general equilibrium model of monopolistic competition with nonhomothetic production and economies of scale and develops comparative statics and dynamics the lack of homotheticity enters through different types of labor skilled and unskilled the paper investigates two types of dynamic processes one leading to the chamberlinian tangency solution and the other leading to a stable allocation of skilled and unskilled labor in the economy unlike virtually all studies on this topic we have not postulated that the chamberlinian tangency solution or the zero profit condition prevails at the outset of their analysis instead we investigate whether or not the chamberlinian process of achieving the tangency solution via entry or exit of firms depending of course on profits and losses of firms in the industry is indeed stable under a general equilibrium framework with certain assumptions although this result may look intuitively obvious it may be contrasted to a different result obtained elsewhere by us 3 another problem that we are concerned with is the allocation of skilled labor and unskilled labor consider the economy which consists of manufacturing sector x and food sector y

theory of the firm in relation to exchange rates import substitution and export neoclassical theory deals with the profit maximizing beheviour of the firm in a closed economy once an open economy condition is introduced the impact of the exchange rate on the cost and price parameters of the firm and consequently its import substitution and export decisions becomes relevant a model is presented with case studies in which given the exchange rate the firm seeks to determine the optimal level of import substitution output and export with the objective of maximizing its profit in today s competitive world when countries are liberalizing and moving towards an open trade regime the influence of exchange rates on the decision making processes of firms is bound to be significant an approach which provides them with a methodology for spelling out their options and making optimal choices is therefore of considerable practical interest

kaya identity for analysis of the main drivers of ghg emissions and feasibility to implement eu 20 20 20 targets in the baltic states abstract the kaya identity relates the greenhouse gas ghg emissions to energy use economic growth and population growth therefore it can be applied to decompose ghg emissions with respect to the latter terms european union eu has established the main targets of sustainable energy development in energy and climate package 20 20 20 eu member states conformed to achieve in 2020 ghg emission reduction by 20 comparing with year 1990 level to achieve 20 of renewable energy sources res in final energy consumption and to reduce energy intensity by 20 compared to year 2005 level as all of these targets are interrelated and have to be achieved together it is very important to track the changes of ghg emissions in eu member states alongside the changes in energy intensity and increase in the share of renewables in final energy consumption the kaya identity and decomposition analysis allow the linking of changes in ghg emissions to changes in energy intensity and carbon intensity of energy which directly reflects the increase of the share of renewables in final energy consumption the impact of gdp growth on ghg emissions is also assessed by kaya identity the paper applies a novel approach in tracking progress achieved in implementing 20 20 20 targets by employing kaya identity and shapley value for decomposition analysis the conducted analysis showed that policies to increase energy efficiency are the most important drivers of ghg emission reduction and achieving eu 20 20 20 targets in baltic states though the share of res has increased significantly in baltic states its impact on ghg emissions reduction per capita in baltic states was insignificant therefore more emphasis on energy efficiency policies is necessary as they are the most effective measures for achieving ghg emission reduction targets

a policy utility dislocation model based on prospect theory a case study of promoting policies with low carbon lifestyle abstract a low carbon lifestyle is an inevitable choice for mitigating climate change however in the actual situation where policy makers and policy target groups are separated from each other low carbon lifestyle changes are often manifested as individual strong government actions behind which social actions are seriously lagging based on this observation in this study a concept of policy utility dislocation was developed and a policy utility dislocation model was constructed based on prospect theory numerical simulation showed that policy utility dislocation can be reduced by increasing the proportion of residents environmental benefits government efforts and subsidies and reducing the cost of implementing a low carbon lifestyle for residents in particular when the environmental benefits of the government and residents accounted for 15 and 65 respectively or the subsidy coefficient was 2 the policy utility dislocation became zero in addition policy utility dislocation began to appear when the cost of implementing a low carbon lifestyle exceeded 3 this study enriches the connotation of policy utility and quantifies the policy utility dislocation and provides new ways to launch policies that promote low carbon lifestyles

market r d allocations when research paths are product specific a compared to the social optimum individual firms undertook too little rd b too many firms entered the competition to undertake rd2 c if the elasticity of demand were sufficiently low aggregate rd

a time varying natural rate of interest for the euro area abstract we estimate a time varying natural rate of interest tvnri for a synthetic euro area over the period 1979q1 2004q4 using a small macroeconomic model broadly following a methodology developed by laubach and williams 2003 measuring the natural rate of interest the review of economics and statistics 85 4 1063 1070 for the united states the kalman filter simultaneously estimates the output gap and the natural rate of interest our identifying assumptions include a close relationship between the tvnri and the low frequency fluctuations of potential output growth the difference between the real rate of interest and its estimated natural level offers valuable insights into the monetary policy stance over the last two decades and a half

real business cycles in this paper we demonstrate how certain very ordinary economic principles lead maximizing individuals to choose consumption production plans that display many of the characteristics commonly associated with business cycles our explanation is entirely consistent with i rational expectations ii complete current information iii stable preferences iv no technological change v no long lived commodities vi no frictions or adjustment costs vii no government viii no money and ix no serial dependence in the stochastic elements of the environment we also provide a completely worked out example of the type of artificial economy we have in mind the time series properties of the example exhibit some major features of observed business cycles although this type of model may not be capable of explaining all of the regularities in actual business cycles we believe that it provides a useful well defined benchmark for assessing the relative importance of factors e g monetary disturbances

using scanner data to construct cp1 basic component indexes this article considers how scanner data could be used in constructing component indexes for the u s consumer price index one product coffee in two cities generates over 1 8 million observations in just over two years so coping with the sheer volume of data would be a challenge some other findings are 1 some aggregation of prices into unit value averages is necessary for practical reasons and to avoid bias 2 chained laspeyres indexes are very high 3 modified laspeyres indexes have some upward bias but much less than a true laspeyres index 4 fisher ideal or modified edgeworth indexes perform well and 5 aggregating prices across outlets to form city level unit values reduces the discrepancies between index number formulas

aggregation and imperfect competition on the existence of equilibrium we present a new approach to the theory of imperfect competition and apply it to study price competition among differentiated products the central result provides general conditions under which there exists a pure strategy price equilibrium for any number of firms producing any set of products this includes products with multi dimen sional attributes in addition to the proof of existence we provide conditions for uniqueness our analysis covers location models the characteristics approach and probabilistic choice together in a unified framework to prove existence we employ aggregation theorems due to prekopa 1971 and borell 1975 our companion paper caplin and nalebuff 1991 introduces these theorems and develops the application to super majority voting rules we present a new approach to the theory of imperfect competition and apply it to study price competition among differentiated products the central result is that there exists a pure strategy price equilibrium for any number of firms producing any set of products in addition to the proof of existence we provide conditions for uniqueness our model both unites diverse strands of the earlier literature and opens up uncharted areas for future analysis in particular we expand the traditional one dimensional framework to allow for multi dimen sional product differentiation our approach involves twin restrictions on consumer preferences one on individuals preferences the other on the distribution of preferences across society these are generalizations of the restrictions supporting 64 majority rule presented in caplin and nalebuff 1988 to prove existence we apply a new technique of aggregation this technique is valuable in a variety of other problems in the companion paper we use the aggregation result to generalize our earlier work on 64 majority rule and to characterize the relationship between the distribution of human capital and the distribution of income caplin and nalebuff 1991 there are additional applications in statistics and in search theory we begin with a brief review of the early literature on imperfect competition describing in more detail the existence problem and previous solutions section 3 presents our twin assumptions and shows that they cover many standard cases in section 4 we introduce the aggregation theorem and use it in the analysis of demand functions the proof of existence of equilibrium is in section

a network city model of spatial competition abstract in this paper we analyze a spatial bertrand oligopoly model called network city model firms compete directly and simultaneously with all other firms in the model we allow for heterogeneous product differentiation heterogeneous constant marginal costs of production and heterogeneous consumer densities we show that the equilibrium is unique and easily computable our model is more general than the existing spatial models and more importantly our model provides a spatial microfoundation for the traditional linear demand functions in a differentiated bertrand oligopoly

monopolistic competition in the spirit of chamberlin special results the idea of large group monopolistic competition was first introduced by chamberlin in i 933 although a large literature has developed on this topic since that time it can be argued that few of the models which have been formulated really capture monopolistic competition in chamberlin s sense in a companion paper to this one hart i 983 a model was presented which it was claimed did satisfy the desiderata of large group monopolistic competition specifically the model had the property that i there were many firms producing differentiated commodities 2 each firm was negligible in the sense that it could ignore its impact on and hence reactions from other firms 3 free entry led to zero profit of operating firms but 4 each firm faced a downward sloping demand curve and hence equilibrium price exceeded marginal cost the model of hart i983 was quite general and only such issues as the existence and limiting properties of equilibrium were considered the purpose of the present paper is to analyse a special case of this model in greater detail and to consider in this context the old question of whether too few or too many brands are produced under monopolistic competition before embarking on the analysis however let me briefly indicate why i believe that there is a need for a new model of monopolistic competition further discussion of this may be found in hart i983 in the last few years a sizeable literature has developed on imperfect competition and product differentiation see for example dixit and stiglitz i977 lancaster i979 salop i979 and spence i976 in much of this literature see for example spence i976 markets of fixed finite size are considered where the entry of firms is limited by the existence of set up costs under these conditions only a finite number of firms can operate and hence firms will not be negligible in the sense of 2 in addition due to the integer problem operating firms will generally make strictly positive profits i e 3 is violated models of

transitory variation in investment and output abstract although the permanent income model is a cornerstone of macreoconomics the evidence for its assumption that output has a transitory component is mixed this paper documents transitory variation in gnp the story centers on the variation in investment relative to consumption consumption behaves like a random walk in the long term investment moves one for one with consumption in the near term however investment takes strong transitory swings away from the random walk it shares with consumption these surges in investment relative to consumption are not offset by government expenditures transitory variation in investment thus becomes transitory variation in gnp

accounting for the cyclical dynamics of income shares over the business cycle labor s share of output is negatively but weakly correlated with output and it lags output by about four quarters profit s share is strongly procyclical it neither leads nor lags output and its volatility is about four times that of output despite the importance of understanding the dynamics of income shares for understanding aggregate technology and the degree of competition in factor markets macroeconomics lacks models that can account for these dynamics this paper constructs a model that can replicate those facts we introduce costly entry of firms in a model with frictional labor markets and find a link between the ability of the model to replicate income shares dynamics and the ability of the model to amplify and propagate shocks that link is a countercyclical real interest rate a well known fact in u s data but a feature that models of aggregate fluctuations have had difficulty achieving

irrationality and monopolistic competition an evolutionary approach this paper shows that a monopolistically competitive equilibrium can evolve without purposive profit maximization specifically this paper formulates a precise evolutionary dynamic model of an industry where there is continuous entry of firms that randomly select their output levels on entry and fix their output levels thereafter firms exit the industry if they fail to pass the survival test of making nonnegative wealth this paper shows that the industry converges in probability to the monopolistically competitive equilibrium as the size of each firm becomes infinitesimally small relative to the market as the entry cost becomes sufficiently small and as time gets sufficiently large consequently in the limit the only surviving firms are those producing at the tangency of the demand curve to the average cost curve and no potential entrant can make a positive profit by entry