the cross euler equation approach to intertemporal substitution in import demand this paper addresses the empirical dilemma in identifying and estimating the parameters governing the intertemporal elasticity of substitution ies for import demand we propose a new concept the cross euler equation for overcoming this empirical dilemma ies parameters are estimated by exploiting the cointegrating restriction implied by the cross euler equation further by comparing the ies estimates from the cross euler equation to those from the standard euler equation we test the hypothesis whether import demand is affected by nuisance factors using the us data we found imported goods consumption to be robust against nuisance factors but not for domestic goods copyright 2005 john wiley sons ltd

optimal supervision with moral hazard abstract this paper adopts the principal supervisor agent hierarchy model pioneered by tirole tirole j 1986 hierarchies and bureaucracies on the role of collusion in organizations journal of law economics and organization 2 181 214 to analyze the optimal architecture of supervision we consider a principal who encounters a double moral hazard problem in particular we examine the endogenously determined supervisory effort and the possibility of untruthful revelation of supervisor s message the degree of accuracy for this endogenously chosen information architecture hinges upon the supervisory technology the supervisor s reservation utility and the agent s production technology besides though the principal s welfare would be lowered when the possibility of untruthful revelation is taken into account we find that his desired supervisory effort level may be enhanced instead

optimal strategic oil stockpiling and import tariffs the case of china abstract as two of the most important instruments for dealing with the issues of energy supply security strategic petroleum reserves sprs and oil import tariffs have been proven effective in developed countries while china is currently building up its strategic oil reserves to ensure energy security it is of great importance to investigate china s optimal oil stockpiling policies while taking into account the possibility of imposing an import tariff or quota which can also be used for alleviating the energy insecurity of an oil importing country employing a dynamic programming framework this paper examines the optimal spr policies and oil import tariffs or quotas for china and the interactions between the two instruments under different scenarios for the world oil market the results show that the combination of optimal tariffs and spr policies can substantially reduce the expected oil insecurity cost for china the effect is larger when the probability that a disruption will continue is higher

a cost function analysis of import demand for nigeria the article uses a translog cost function to examine the substitution relations among capital labour and imports the results show that capital has a substitute relation with domestic labour and import however labour and import have complementary relationship the implication of this finding is that liberalization policies if pursued vigorously could impart positively on the demand for labour in addition it suggests that economic growth could be enhanced through trade liberalization

a model based on stochastic dynamic programming for determining china s optimal strategic petroleum reserve policy china s strategic petroleum reserve spr is currently being prepared but how large the optimal stockpile size for china should be what the best acquisition strategies are how to release the reserve if a disruption occurs and other related issues still need to be studied in detail in this paper we develop a stochastic dynamic programming model based on a total potential cost function of establishing sprs to evaluate the optimal spr policy for china using this model empirical results are presented for the optimal size of china s spr and the best acquisition and drawdown strategies for a few specific cases the results show that with comprehensive consideration the optimal spr size for china is around 320 million barrels this size is equivalent to about 90 days of net oil import amount in 2006 and should be reached in the year 2017 three years earlier than the national goal which implies that the need for china to fill the spr is probably more pressing the best stockpile release action in a disruption is related to the disruption levels and expected continuation probabilities the information provided by the results will be useful for decision makers

dynamics of the trade balance and the terms of trade in ldcs the s curve abstract in their analysis of the dynamic behavior of terms of trade and the trade balance backus kehoe and kydland found that the lead and lag correlation between these two variables is s shaped for a set of oecd countries furthermore they show that this s curve can be replicated by a two country dynamic general equilibrium model surprisingly the s curve also describes the dynamic relationship between terms of trade and the trade balance for a large set of ldcs this s curve can also be reproduced by a small open economy model which captures some important features of ldc economies the s curve is unexpectedly robust to variations in the key parameters of the model the model also captures the business cycle properties of the ldc data

the smoot hawley tariff a quantitative assessment in the two years after the imposition of the smoot hawley tariff in june 1930 the volume of u s imports fell over 40 to what extent can this collapse of trade be attributed to the tariff itself versus other factors such as declining income or foreign retaliation partial and general equilibrium assessments indicate that the smoot hawley tariff itself reduced imports by 4 8 ceteris paribus although the combination of specific duties and deflation further raised the effective tariff and reduced imports an additional 8 10 a counterfactual simulation suggests that nearly a quarter of the observed 40 decline in imports can be attributed to the rise in the effective tariff i e smoot hawley plus deflation

optimal strategic petroleum reserve policies a steady state analysis a simple model is presented which allows us to determine the optimal size fillup and drawdown rates for a strategic petroleum reserve spr under a variety of supply and demand conditions the optimal policy variables are determined by minimizing an analytic expression which we derive for the expected insecurity cost rate to the u s due to uncertainty in supply of imported oil the oil market is modeled in terms of an elastic demand curve and two levels of supply which alternate according to a stationary continuous time markov process the spr policy is characterized by a fixed fillup rate up to the reserve s capacity when supply is at its normal level and a fixed drawdown rate during shortages the insecurity cost rate being minimized includes consumer welfare loss due to price hikes reserve holding cost and capital appreciation of the reserve base case results and sensitivity analysis are presented and compared to results obtained by previous approaches these comparisons suggest that the proposed model can reasonably approximate the more computationally demanding stochastic dynamic programming formulation the main advantage of the new approach is that it permits extensive sensitivity analysis which is important given the quality of the data

the dynamic optimizing approach to import demand a structural model abstract the conventional import demand equations are generally regarded as static and its empirical specifications are often criticized as ad hoc this paper derives a tractable structural import demand equation from the dynamic optimizing intertemporal approach

optimal path for china s strategic petroleum reserve a dynamic programming analysis abstract this paper proposes a dynamic programming model to explore the optimal stockpiling path for china s strategic petroleum reserve before 2020 the optimal oil acquisition sizes in 2008 2020 under different scenarios are estimated the effects of oil price risks and elasticity value on inventory size are further investigated it is found that the optimal stockpile acquisition strategies are mainly determined by oil price and total inventory costs while oil supply disruption is not considered china s optimal stockpile acquisition rate increases from 19 2 to 52 million barrels from 2008 to 2020 if an oil supply disruption occurs the oil acquisition rate will be reduced significantly however it may not be a good strategy to interrupt oil reserve activities in order to minimize the total costs for the entire planning period

consumption import prices and the demand for imported consumer durables a structural econometric investigation this paper derives and estimates a rational expectations optimizing model of the demand for imported consumer durable goods the author is unable to reject the essential empirical implications of the model and obtain sensible estimates of the price and income elasticities of the demand for imported consumer durables copyright 1996 by mit press

intertemporal substitution imports and the permanent income model abstract we examine the importance of intertemporal substitution in u s import consumption using a model of permanent income that allows for random preference shocks and additive separability the latter feature allows us to take two estimation approaches in the first approach we show that there is a cointegrating restriction imposed by the first order conditions of the model which allows us to estimate the intertemporal elasticity of imported and domestic goods consumption in the second approach we estimate the euler equations using generalized method of moments this approach however requires us to place some restrictive assumptions on the model that are not required for the first estimation approach thus the two different approaches allow an assessment of the severity of these restrictive assumptions which are often imposed in the literature

an empirical analysis of the dynamic programming model of stockpile acquisition strategies for china s strategic petroleum reserve abstract the world s future oil price is affected by many factors the challenge therefore is how to select optimal stockpile acquisition strategies to minimize the cost of maintaining a reserve this paper provides a new method for analyzing this problem using an uncertain dynamic programming model to analyze stockpile acquisition strategies for strategic petroleum reserve using this model we quantify the impact of uncertain world oil price on optimal stockpile acquisition strategies of china s strategic petroleum reserve for the period 2007 2010 and 2011 2020 our results show that the future stockpile acquisition is related to oil prices and their probability and if not considering the occurrence of oil supply shortage china should at least purchase 25 million barrels when world oil price is at an optimal level the optimal price of stockpile acquisition of every year has a stronger relationship with the probability of high price and the optimal expected price and size of stockpile acquisition is different in each year

international capital mobility amongst the major industrialised countries too little or too much this paper examines capital flows among the major industrialized countries with a view to assessing m feldstein and c horioka s 1980 claim that international capital mobility is limited it argues that saving investment correlation tests are inherently flawed and proposes an alternative methodology for testing the degree of international capital mobility it finds that capital flows have been excessive in the sense that they are driven by speculative forces rather than by economic fundamentals copyright 1995 by royal economic society

cointegration aggregate consumption and the demand for imports a structural econometric this paper uses a two good version of hall s 1978 representative agent permanent income model to derive a structural import demand equation for nondurable consumer goods under the identification restriction that taste shocks are stationary the model is shown to imply that log imports log domestic goods and the log relative price of imports are co integrated the data decisively reject the null hypothesis that imports the relative price of imports and the consumption of home goods are not co integrated we employ the non linear least squares technique recently proposed by phillips and loretan 1990 to estimate the parameters of the import demand equation the long run price elasticity of import demand is estimated to be 0 95 the elasticity of import demand with respect to a permanent increase in real spending is estimated to be 2 20 these estimates fall within the range reported in studies by helkie and hooper 1986 cline 1989 and the many studies surveyed by goldstein and kahn 1985 the message of this paper is that at least for non durable consumer goods it is possible to interpret the traditional import demand equation as a co integrating regression and to interpret the price and expenditure elasticities estimated from such a trade equation as a co integrating vector estimates of the co integrating vector can be used to recover estimates of the utility parameters of the representative household the similarity between the ols and phillips loretan estimates of the parameters suggests that the simultaneous equation bias is not large this abstract was borrowed from another version of this item

contractual contingencies and renegotiation in a dynamic model of asymmetric information between the owner of a firm and a manager we investigate the optimal set of contingencies on which an incentive contract should depend when renegotiation is possible in particular we characterize the circumstances in which the contracting parties find it desirable to deliberately restrict what the owner can monitor thereby limiting the contractible contingencies our findings thus provide an endogenous explanation for contract simplicity in contrast to those based on transactions costs or bounded rationality

oil stockpiles and import reductions a dynamic programming approach this paper analyzes oil stockpiling policies using models in which u s policy choices are restricted to just two instruments stockpiles and disruption tariffs the model considers the influence of u s and in general oecd import demands upon the opec price for oil and the duration and severity of oil disruptions induced by disturbances among the opec nations our development is based upon a probabilistic view of disruptions analyzed by applying dynamic programming

the effects of macroeconomic stability on foreign trade an analysis for spain 1986 2000 two main factors underlie the rebirth of interest in the study of the influence of the real exchange rate on trade the reduction of its volatility and the current trend towards price stability the objective of this study is to analyse the effects of the process of nominal convergence required of the european member states for the fulfilment of monetary integration on foreign trade flows the case of spain which is especially interesting in this context is studied for the period 1986 to 2000 the results of estimating the aggregate functions of the export and import of goods shows how macroeconomic stability has altered the behaviour of trade with respect to the two basic determinants income and prices how it has caused a significant structural change in the real exchange rate and finally how it has laid the explanatory bases for transactions in the twenty first century with the single currency the euro

demand for medical care consumption and cointegration abstract this paper considers a generalized version of grossman s health capital model and derives a cointegration restriction the restriction is tested using aggregate us data and the results are consistent with the prediction of the model

strategic oil stockpiling for energy security the case of china and india abstract compared with the developed countries the developing countries could be more vulnerable to oil supply disruptions due to their lack of strategic petroleum reserves sprs several developing countries including china and india are establishing their sprs to ensure energy security in the common world oil market one country s spr decisions can be affected by the decisions of other countries this paper investigates the spr policies of china and india two of the largest developing countries in a game theoretic framework where the interactions between the two countries are taken into account the results show that players equilibrium stockpiling strategies and total expected costs could vary significantly with the initial oil market state stockpile acquisition capacity and the probabilities for disruptions to persist

collusion delegation and supervision with soft information this paper derives an equivalence principle between organizational forms of supervisory and productive activities we consider an organization with an agent privately informed on his productivity and a risk averse supervisor getting signals on the agent s type in a centralized organization the principal can communicate and contract with both the supervisor and the agent however these two agents can collude against the principal in a decentralized organization the principal only communicates and contracts with the supervisor who in turn sub contracts with the agent we show that the two organizations achieve the same outcome we discuss this equivalence and provide various comparative statics results to assess the e ciency of supervisory structures

empirical analysis of optimal strategic petroleum reserve in china abstract the chinese government began to prepare for the establishment of strategic petroleum reserve in march 2004 therefore answering the question of what level of strategic petroleum reserve would be suitable for china s future economic development becomes essential using a decision tree model based on a cost function this paper quantifies china s optimal strategic petroleum reserve for the period 2005 2020 this approach provides a methodology reference for further quantified discussion on china s spr our results show that for economic development and security of the energy supply the strategic petroleum reserve should be the equivalent of 30 60 days of net oil import for an optimal solution when the oil price is 50 bbl with a reserve of an equivalent of 60 90 days of net oil import to have an optimal solution when oil price is 20 35 bbl

reducing petroleum consumption from transportation diesel fuels alone account for 60 percent of oil consumption the economic argument for seeking to reduce this level of consumption of petroleum based liquid ment for seeking to reduce this level of consumption of petroleum based liquid fuel begins with the externalities associated with high levels of u s consumption of fuel begins with the externalities associated with high levels of u s consumption of petroleum based fuels petroleum based fuels

a dynamic programming model of china s strategic petroleum reserve general strategy and the effect of emergencies abstract to protect the security of energy supply china is building national strategic petroleum reserve spr we present a dynamic programming model to determine the optimal stockpiling and drawdown strategies for china s spr under various scenarios focusing on minimizing the total cost of reserves in contrast to previous research the oil price given in our model is exogenous on a monthly instead of annual basis with a view to more realistic simulation of optimal strategies each year our model results show that in the case where stockpiling affects oil prices a given spr size will be achieved earlier than when stockpiling does not affect oil prices in different emergency conditions the optimal stockpiling and drawdown strategies of china s spr are very different when an emergency occurs the shock of stockpiling on the oil price per barrel could range 0 49 6 35 while the impact of drawdown on the oil price per barrel could range 6 22 to 0 48

a stochastic dynamic nash game analysis of policies for managing the strategic petroleum reserves of consuming nations in this paper we present a nash dynamic game model of interactions among oil inventory and tariff policies for oil importing countries the inventory policies consist of the rates for building up and drawing down strategic oil reserves while the tariff policies consist of setting tariffs as a function of the state of the world oil market the model represents a stochastic game in which countries are grouped into two players where each player in the game chooses its individual policies to maximize expected social welfare we use the model to present empirical results about the sizes of the stockpiles as a function of disruption probabilities tariff policies and cooperation versus noncooperation between nations in addition to results regarding the build up and draw down rates as a function of the amount of disruption or probability of future disruption our central conclusion is that build up and drawdown policies are essentially the same with or without international cooperation due to the current inventory limits on u s and foreign strategic petroleum reserves

real exchange rate assessment in the gcc countries a trade elasticities approach this article adopts new panel econometric methods to assess real exchange rate alignment with economic fundamentals in the countries of the gulf cooperation council gcc using a theoretical approach popularized by paul krugman in the late 1980s results from panel econometric applications of the krugman model yield low levels of real exchange rate undervaluation in the gcc countries although indicating persistence of undervaluation albeit statistically low into the medium term they also show that the recent real exchange rate undervaluation could be characterized as due to short run frictions and adjustment costs associated with continued depreciation of the us dollar to which gcc countries currencies are pegged further failure to find supporting evidence for the marshall lerner condition underscores the propriety of using fiscal policy rather than exchange rate policy to address recent inflationary pressures and help resolve lingering global financial imbalances

the effects of government expenditure on imports in the eurozone reconsidered evidence from panel data abstractthis study examines the impact of government expenditure on imports the empirical analysis is based on annual data of the euro area countries for the period 1995 2015 we employ econometric methods that mitigate heterogeneity and cross sectional dependence we provide empirical indications that the components of expenditure have different impact on imports demand the findings of this study indicate that the import context of government expenditure is lower than the import context of others expenditure components finally we find that an increase in government expenditure leads to an increase in imports this implies that ceteris paribus that it can lead to a deterioration of the trade balance

adjustment costs and import demand behavior evidence from canada and the united states abstract in this paper we examine whether adjustment costs are a significant source of the observed sluggish adjustment of canadian and us import demand we use a simple model of a utility maximizing domestic consumer under the assumption of integrated forcing variables to examine the importance of adjustment costs this formulation of the problem allows us to exploit the recently developed theory of cointegration to estimate the structural parameters of the model using a two step methodology moreover the formulation incorporates an element of forward looking behaviour into the decision process a feature that is important if one assumes adjustment costs are a significant source of persistence in import demand adjustment the empirical results from a euler equation imply that adjustment costs in canada and the united states are important

a dynamic nash game model of oil market disruptions and strategic stockpiling in this paper we present and analyze a nash dynamic game model for investigating public and private sector oil inventory policies in unstable world oil markets conceptual results about the model include simple verifiable conditions for uniqueness and stability of solutions along with characterizations of optimal policies we also present results and discuss computational issues that arise in determining subgame perfect infinite horizon equilibria using a steady state policy iteration approach

wealth varying intertemporal elasticities of substitution evidence from panel and aggregate data abstract this paper constructs and estimates a model of consumer preferences in which the intertemporal elasticity of substitution ies of consumption expenditure rises with the level of wealth the purpose of this paper is to measure the effect that systematic variation in the ies of poor and rich consumers has on the ies of aggregate consumption expenditure we find economically significant differences in the ies of poor and rich consumers in indian panel data on the consumption of individual households we also find economically significant differences in the ies measured in aggregate time series data for the u s and india

the effects of trade liberalization on imports in selected developing countries abstract this paper analyses the impact of the reduction of tariff and nontariff barriers on the imports of 22 selected developing countries utilizing dynamic panel data techniques domestic income and relative prices are found to be significant determinants of import growth in addition the results indicate that import duties reduce import growth but the effect varies according to the region and the type of trade policy regime existing in the country the results also show that the elimination of trade policy distortions has a strong positive impact on import growth finally it is found that income and price elasticities are higher as a result of trade policy reform

a note on the estimation of import trade demand functions this paper compares six alternative methods of computing the import demand function we use a sample of 33 countries from 1995 1 to 2016 3 and brand new information on import contents made available by wiod preferred models take into account the separate effects of each final demand component contrary to some recent studies we observe that private expenditure is the main driver of import variations

energy security coping with multiple supply risks this study starts from the observation that today s western trading nations are exposed to multiple risks of energy supplies eg simultaneous shortage of oil and gas supplies to cope with these risks both oil and gas can be stockpiled adopting the viewpoint of a policy maker who aims at minimizing the expected cost of security of supply optimal simultaneous adjustments of oil and gas stocks to exogenous changes such as an increase in the probability of supply disruption are derived against this benchmark one dimensional rules such as oil reserves for 90 days turn out to be not only suboptimal but also to suggest adjustments exacerbating suboptimality

on the optimal level of a small country s strategic petroleum reserve abstract decisions relating to a country s strategic petroleum reserve must take into account the level of risk inherent in its petroleum imports the cost resulting from any shortfall in the import level the cost of storage and finally the effects of stockpiling transactions on the sensitive spot oil markets of course small countries need not take into account their effect on the global market a fact that drastically simplifies their decision problem we present such a simple decision model for a small country s petroleum reserve which in addition to the above factors take into account the uncertainty of the country s refining capacity a complete analytical treatment is feasible for this model and a specific numerical example is presented for the case of greece

intertemporal substitution in import demand abstract this paper investigates the role of intertemporal substitution in us import demand using a model of import consumption based on the permanent income hypothesis estimation of the model yields an intertemporal elasticity for consumer imports which is close to 0 8 an estimate which may include importers purchase and inventory responses to the real interest rate the implied relative price elasticity of import consumption is also estimated to be close to one these results indicate that consumption imports may respond to changes in their intertemporal price as well as changes in their price relative to that of domestic substitutes

aggregate imports and expenditure components in the uk an empirical analysis this paper examines the long run relationship between uk aggregate imports and the macroeconomic components of final expenditure using the johansen multivariate cointegration analysis it is found that there are significant differences between the long run elasticities of import demand with respect to the different components of final expenditure over the period 1972 to 1990 an error correction model is proposed for short run forecasting of uk aggregate imports the short run model appears to track the data well

drivers of export demand a focus on the giips countries this study investigates the drivers of export demand in the peripheral economies of the euro area namely greece ireland italy portugal and spain giips for the period between 1980 and 2012 recently several authors have pointed out that changes in trade export shares are not associated with major terms of trade disturbances rather they are the result of other underlying factors commonly defined as non price competitiveness starting from this premise the study extends the traditional imperfect substitute trade model to include a measure of non price competitiveness real capital stock the latter is a measure of a country s total resource base and captures the presence of product differentiation and product innovation the results show a significant link between export demand and cumulative investments in the short term giips exports are dominated by the movements of worldwide real income while changes in price and non competitiveness take longer to affect export performance in the long run all three variables play a significant role in pushing exports

the functional form of the aggregate import demand equation italy 1960 1980 abstract the authors investigate the functional form of the aggregate import demand equation in italy by using the box and cox transformation and a non linear full information maximum likelihood procedure instead of the two step procedure usually followed

import demand in heterogeneous panel setting to study the elasticities of import demand function a heterogeneous panel is built with data of 40 countries and using panel unit root tests im et al 1997 and panel cointegration tests pedroni 2004 the model is tested with two previously used activity variables gdp and gdp minus export for a performance comparison to estimate elasticities use is made of two modified panel versions of fmols and dols developed by pedroni 1996 2000 2001 the tests prove that gdp outperforms gdp minus exports as an activity variable in the cointegration context fmols and dols give close results when individual estimates are done when between dimension estimators are used conflicting results are obtained then the sample is split into developed and developing countries and it is shown that income elasticity in developing countries are not different than unity on average and are higher than in developed countries contradicting previous literature results

import demand in heterogeneous panel data with cross sectional dependence we investigate the long run income and price elasticity of import demand functions with a heterogeneous unbalanced panel of 34 countries over the period 1985 q1 2018 q3 to estimate world elasticit

asset prices exchange rates and the current account this paper analyses the role of asset prices in comparison to other factors in particular exchange rates as a driver of the us trade balance it employs a bayesian structural var model that requires imposing only a minimum of economically meaningful sign restrictions we find that equity market shocks and housing price shocks have been major determinants of the us current account in the past accounting for up to 30 of the movements of the us trade balance at a horizon of 20 quarters by contrast shocks to the real exchange rate have been less relevant explaining about 9 and exerting a more temporary effect on the us trade balance our findings suggest that large exchange rate movements may not necessarily be the key element of an adjustment of today s large current account imbalances and that in particular relative global asset price changes could be a potent source of adjustment

arm s length relationships we show that lowering the cost of acquisition of information that a principal obtains about the performance of an agent may make it more difficult for the principal to commit to threats hence it will weaken incentives and can therefore be counterproductive this phenomenon is explored in a framework where improving the quality of information makes a commitment not to renegotiate less credible applications to the theory of the firm are briefly explored

present value tests of an intertemporal model of the current account abstract this paper first demonstrates that in a simple intertemporal open economy model the current account is equal to the expected decline of the present discounted value of net output of a country net output is defined as gross domestic product less the sum of investment plus government spending it then uses econometric methods for present value models to analyze the current account for four countries in two of these countries the model does a satisfactory job of explaining the current account

intertemporal substitution in import demand and habit formation to study non durable import demand we extend previous work done by clarida 1994 and ceglowski 1991 by considering a two good version of the lifecycle model in which we introduce time non separability in the households preferences the model is estimated using quarterly data for the usa and france using the information contained in the observed stochastic and deterministic trends we derive a cointegration restriction used to estimate curvature parameters of the instantaneous utility function the remaining parameters are estimated in a second step by gmm the constancy of the different parameters is investigated in both the long and the short run habit formation turns out to be an important factor of import demand c 1998 john wiley sons ltd