money and capital abstract the effects of money anticipated inflation on capital formation is a classic issue in macroeconomics previous papers adopt reduced form approaches putting money in the utility function or imposing cash in advance but using otherwise frictionless models we follow instead a literature that tries to be explicit about the frictions making money essential this introduces new elements including a two sector structure with centralized and decentralized markets stochastic trading opportunities and bargaining these elements matter quantitatively and numerical results differ from findings in the reduced form literature the analysis also reduces a gap between microfounded monetary economics and mainstream macro

cooperative and noncooperative r d in duopoly with spillovers contrary to the usual assumption made in most oligopoly models relations among firms are seldom of a wholly cooperative or noncooperative type in many situations they compete in some fields while they cooperate in others an important example is the case of cooperative research efforts bringing fierce competitors together two types of agreement are observed first r d cooperation can take place at the so called precompetitive stage companies share basic information and efforts in the r d stage but remain rivals in the market place 1 a second type of agreement involves an extended collusion between partners creating common policies at the product level the usual justifications of this extension are the difficulties of protecting intellectual property the idea is then to allow partners who have achieved inventions together to also control together the processes and products which embody the results of their collaboration in order to recuperate jointly their r d investments 2 what could be expected from these types of agreement is a reduction in r d expenditures because of less wasteful duplication and a reduction of total production because of more reprinted from the american economic review 78 5 1133 1137 1988 center for operations research econometrics 1348 louvain la neuve belgium we are grateful to jean

using industrial ecology and strategic management concepts to pursue the sustainable development goals abstract the subjectivity complexity and often competing interests of sustainable development have limited the effectiveness of integrating these important ideas into mainstream business strategy with the adoption of the un sustainable development goals sdgs in january 2016 there are now global sustainability benchmarks that apply across diverse sectors and national contexts allowing public and private organizations to orient and evaluate their activities strategies and business outcomes however it is not directly apparent where the advantage for business lies in pursuit of these actions within the prevailing economic paradigm highlighting the need for new analytical frameworks and tools industrial ecology ie has been successfully used in engineering practice for decades and has been suggested as a method that can provide the concepts and methods necessary to bridge the gap between traditional business practice and sustainable development to test this literature bridging the fields of industrial ecology business strategy and sustainable development was collected and analyzed using the textual analysis software leximancer the analysis showed that while the sdgs are primarily aimed at the national level they also hold relevance for business through innovation partnerships and strategic positioning inter alia the analysis found that the integration of ie and business strategy is highly relevant for three of the sdgs but captures elements of all 17 to varying degrees ie has a strong focus on innovation and its potential in new markets products and business models ie is also consciously aimed at the efficient use of energy and resources ideas that are relevant to mitigating adapting and building resilience in a changing future but are also relevant to traditional concepts of business strategy and competitive advantage this paper shows that through the combination of ie and strategic management theory commercial organizations can positively contribute to the sustainable development goals while building competitive advantage

credit and inflation under borrowerʼs lack of commitment here we investigate the existence of credit in a cash in advance economy where there are complete markets but for the fact that agents cannot commit to repay their debts defectors are banned from the credit market but they can use money balances for saving purposes without uncertainty deflation crowds out credit completely the equilibrium allocation however is efficient if the government deflates at the time preference rate efficiency can also be restored with positive inflation for any non negative inflation rate below the optimal level the volume of credit and the real interest rate increase with inflation our results hold when idiosyncratic uncertainty is introduced and households are sufficiently impatient but in one instance efficiency cannot be restored if the deflation rate is nearby the rate of time preference our numerical examples suggest that the optimal inflation rate is not too large for reasonable levels of patience and risk aversion finally we present a framework where the use of money arises endogenously and show that it is tantamount to our cash in advance framework our results hold in this modified environment

trade policy mix ipr protection and r d subsidies this paper analyses strategic r d policy under circumstances where intellectual property rights protection resulting from firms r d investment is not perfect by examining policy choices wherein a government chooses both r d subsidies and ipr protection levels simultaneously we show that it is optimal for a government to adopt sufficiently weak ipr protection and to subsidize r d investments of domestic firms inducing r d investment of foreign rival firms will increase the profits of domestic firms ce memoire analyse une politique strategique de r d quand la protection des droits de propriete intellectuelle dpi qui decoulent d investissements en r d par les entreprises est imparfaite en examinant les choix de politiques par lesquels un gouvernement definit simultanement les niveaux de subventions pour la r d et de protection de la propriete intellectuelle on montre qu il est optimal pour un gouvernement d adopter une protection des dpi suffisamment faible et de subventionner les investissements en r d des entreprises nationales susciter un accroissement des investissements en r d des entreprises etrangeres rivales devrait augmenter les profits des entreprises nationales

rules and discretion with noncoordinated monetary and fiscal policies the time inconsistency of optimal monetary policy is due to the effects of tax distortions thus the issue of how to improve upon the time consistent suboptimal monetary policy is related to that of the coordination of monetary and fiscal policy we present a model with three players the central bark the fiscal authority and wage setters in which distortionary taxes are explicitly modelled we show that binding commitments to monetary rules are not necessarily welfare improving if monetary and fiscal policy are not coordinated we also examine the effects of different degrees of independence of the central bank

tax structure and growth are some taxes better than others using pooled cross sectional data from 23 oecd countries between1965 and 1990 i find evidence that the tax structure affectseconomic growth specifically the proportion of tax revenueraised by taxing personal income has a negative correlation witheconomic growth this result is robust to a rigorous sensitivityanalysis where i control for other plausible growth determinantsin a systematic manner also there is some empirical evidencethat tax progressivity measured in terms of the long run incomeelasticity of tax revenue is associated with low economicgrowth

investment and the nominal interest rate the variable velocity case investment and the nominal interest rate the variable velocity case evan f koenig models treating money either as a consumer good or as a producer good are encompassed by a model in which both households and firms use money as a buffer between receipts and expenditures a rise in nominal interest rates increases resources devoted to intermediation while discouraging purchases financed from accumulated cash if investment is financed from contemporaneous earnings there is a tendency to substitute out of consumption and into investment when interest rates are high greater resources devoted to intermediation generate a negative wealth effect the net impact on investment is ambiguous i introduction the relationship between investment and the nominal interest rate in an economy where the cash balances of households and firms are rigidly linked to their respective expenditures has been examined by koenig 1987b in such an economy the nominal interest rate acts like a tax on agents purchases as a result households are inclined to save rather than spend when the nominal interest rate is relatively high provided that at the margin firms are able to finance at least some of their capital spending out of contemporaneous earnings this increase in desired saving is only partially offset by a decrease in desired investment realized investment is thus greatest when the nominal interest rate is high in comparison to its own moving average a short run tobin effect this paper extends koenig s analysis to the case in which households and firms at a cost in terms of real resources are able to increase the velocity of money in this context it is shown that the short run tobin effect may be reversed intuitively when the nominal interest rate is high consumption of financial services by households and firms may rise to such an extent that any decline in the consumption of nonfinancial goods and services is overwhelmed reducing the resources available for investment as in the earlier paper i allow for the possibility that some fraction 1 u of firms investment expenditures can be financed from contemporaneous earnings unless u equals zero there is a stockman effect 1981 a tendency for investment to be depressed whenever the nominal interest rate is expected to be higher on average in the future than it has been in the past when u equals unity so all investment must be financed out of accumulated assets the money balances of the representative firm can be interpreted as an argument of its production function regardless of the value of u the money balances of households may be thought of as an argument along with gross household spending of an indirect utility function thus both of the most frequently used methods of modeling the role of money as an argument of the household utility function and as an argument of the production function are special cases of the model developed here this is a substantially less restrictive framework than that employed by fischer 1979 sweeney 1984 cohen 1985 and obstfeld 1985 each of whom has also examined the effects of anticipated policy in an economy where the velocity of money is variable 1 section ii discusses the utility and profit maximization problems facing households and firms respectively and shows how the behavior of economic agents is affected by the presence of real costs of financial management a dynamic analysis is undertaken in section iii and it is shown that the short run tobin effect may operate in reverse a summary concludes the paper throughout agents are assumed to possess perfect foresight ii the model preliminary analysis intuition imagine a world in which each household receives wage and dividend income at discrete intervals but desires to purchase and consume output continuously through time

liquidity constraints in a monetary economy this article presents a microfounded model of money with a consumption and an investment market we consider an economy in which only part of the investment returns can be pledged a liquidity constraint arises when the pledgeable part of the returns are not enough to pay for investment costs we show that when the liquidity constraint is binding agents may make a cash downpayment and money can perform two roles as a provider of liquidity services and exchange services the liquidity constraint constitutes a channel though which underinvestment occurs even at low inflation rates

growth and the effects of inflation abstract in this paper we study the relationship between the rate of increase of the money supply and the rate of growth of output in an economy we show that in some models of endogenous growth inflation has direct effects on the growth rate of the economy despite this the estimated welfare cost of inflation from calibrated examples is similar to that found in exogenous growth models

money as the mechanism of exchange abstract the existence and use of money remained an embarrassing puzzle for monetary analysis we observe over man s history that social groups without generally accepted media of exchange exhibit poor survival characteristics most social groups do not use assets or commodities at random in the execution of exchanges one observes that a small subset of assets is dominantly used in transactions these transaction dominating assets are usually referred to as money the literature contains many suggestive attempts to explain the emergence and role of money the classic writers made passing references in somewhat pictorial language to the extension markets and increasing labor productivity induced by the use of a general medium of exchange this idea has never been systematically developed however karl brunner 1971

bridging sustainable business model innovation and user driven innovation a process for sustainable value proposition design with an increasing population a growing middle class and increased resource use our current ways of living and doing business are unsustainable next to the implementation of innovative technology sustainable development based on innovative business models better understating of customer needs and behavioural change are crucial this research aims at combining principles from both sustainable business model innovation and user driven innovation to develop more successful radical and user centred sustainable value propositions sustainable business model innovation entails developing value propositions that create value for multiple stakeholders at the same time including customers shareholders suppliers and partners as well as the environment and society user driven innovation allows developing solutions that are meaningful for people and profitable for business by involving potential customers users and or other stakeholders in an experimental and iterative design process the study adopts a research through design methodology a qualitative research approach that uses design practice to inform research to this end a design project in the framework of the climate kic the largest european partnership addressing the challenge of climate change was investigated as a result this paper proposes a process for sustainable value proposition design which adopts a thorough dynamic and iterative perspective talking to stakeholders thinking about the problem testing the product service that leads to an actual sustainable value proposition and to a superior problem solution fit in practice managers are provided with an initial methodological framework for mapping and understanding the stakeholders in a broad sense including and especially users identifying their needs and interests and progressively combining them into a more meaningful and enriching value proposition

more on the inflation tax and the value of equity a cash in advance macro model is presented in which dividends are distributed at the end of each p eriod but where all other money receipts may be spent immediately on output and labor markets if money grows at a constant rate only th e real price of equity will be inversely related to inflation in the steady state if the money supply is allowed to grow at an increasing rate however agent welfare will decline

balance of payments crises in a cash in advance economy the author shows that a flexible prices sidrauski type model with a cash in advance constraint is capable of depicting some of the phenomena associated with a balance of payments crisis like the onesrecently observed in argentina and mexico current accounts deficits and appreciation of the real exchange rat e it is also shown that these phenomena become exacerbated as the rate of devaluation before the crisis occurs becomes smaller copyright 1987 by ohio state university press

investment matching and persistence in a modified cash in advance economy abstract we simulate and estimate a new keynesian search and matching model with sticky wages in which capital has to be financed with cash at least partially our objective is to assess the ability of this framework to account for the persistence of output and inflation observed in the data we find that our setup generates enough output and inflation persistence with standard stickiness parameters the key factor driving these results is the inclusion of investment in the cia constraint rather than any other nominal or real rigidity the model reproduces labor market dynamics after a positive increase in productivity hours fall nominal wages hardly react and real wages go up with some delay regarding money supply shocks we investigate the conditions under which our model specification generates the liquidity effect a fact which is absent in most sticky price models

the effects of import quotas on national welfare does money matter recent evidence shows that there is an increasing use of non tariff barriers to trade ntbs and especially of quantitative restrictions such as import quotas in the world economy to protect import competing industries see table i 1 international trade theory however has traditionally focused on the welfare effects of tariffs as well as on the equivalence between tariffs and quotas with little attention paid to the welfare implications of quotas the latter have basically been restricted within the traditional heckscher ohlin trade model where for the case of a small open economy import quotas always reduce welfare a few recent studies have attempted to fill in this gap in the literature for instance young 19 compares optimal tariffs and quotas for a large country in a stochastic environment neary 14 on the other hand investigates the welfare implications of tariffs quotas and voluntary export restraints under different assumptions on capital mobility finally chao hwang and yu 3 4 examine the welfare effects of import quotas under variable returns to scale although the existing literature has generated important policy implications most of the analysis has been conducted within a barter exchange framework it is well known however that the introduction of money can alter results obtained within a non monetary environment 2 accordingly this paper attempts to re examine the welfare effects of import quotas for a small monetary economy we develop a two sector trade model in which money enters the economy

long run neutrality high inflation and bank insolvencies in argentina and brazil abstract using long low frequency data on money and output over 1884 1996 for argentina and over 1912 1995 for brazil it is found that money is long run neutral but not long run superneutral with regard to real output a rise in money growth is associated with a decline in output the opposite of the tobin effect the introduction of dummy variables for 1930s or to capture recent periods of financial disruption associated with bank insolvencies does not restore long run superneutrality for either country however results indicate that bank insolvency episodes have a distinct and negative influence on output

trips trade and technology transfer a north south model of unintentional technology transfer is developed where the stringency of southern patent protection provides the institutional backdrop for a strategic game in a high tech goods market the appropriability regime is set endogenously and combines elements of imperfect southern patent protection with the protection afforded by market made northern technology masking less stringent protection of northern intellectual property can work much like other strategic trade policies therefore developed countries appear to be right in demanding discussion of intellectual property rights in gatt

search inflation and capital accumulation abstract this paper constructs a model to integrate the search monetary theory into a neoclassical growth model with divisible goods and money the model is used to examine the relationship between money growth and capital accumulation the framework uncovers a distinct extensive effect that an increase in the money growth rate increases the frequency of successful trades by increasing the number of agents in the market this positive extensive effect on the number of trades can dominate the conventional negative intensive effects of money growth on individuals labor input and real money balance in which case increasing the money growth rate increases aggregate capital and output

blue carbon knowledge gaps critical issues and novel approaches blue carbon the carbon stored and sequestered in mangrove forests seagrass meadows and tidal salt marshes is considered a cost effective means to achieve positive climate change mitigation and adaptation outcomes blue carbon is therefore of considerable interest to the scientific and policy communities and is frequently discussed in relation to carbon markets and climate finance opportunities this paper identifies peer reviewed and gray literature documents that discuss blue carbon in the context of finance and market mechanisms the document set is analyzed both quantitatively and qualitatively and the principal scientific economic regulatory social and management issues that emerge are discussed the study reveals that 1 the blue carbon literature is dominated by technical and policy commentary with a dearth of research into practical social considerations and a stark absence of private sector perspectives 2 there is confusion over the nature and role of important concepts including private and public sector finance and instruments and 3 understanding of the important issues of investment priorities and risk considerations is also limited this paper therefore identifies gaps in the blue carbon literature clarifies critical concepts and issues and proposes novel pathways for blue carbon research and project development

a comparison of optimal tariffs and welfare under no lobbying domestic lobbying and domestic foreign lobbying whether and what type of the lobbying induced trade policies can improve the domestic welfare we show that as compared to the case of no lobbying and the case of domestic lobbying the domestic foreign lobbying may achieve the lowest tariff and may also realise the highest welfare for the domestic country our finding provides a theoretical explanation to the prevalent lobbying competition between asian firms and us firms in usa recently we argue that the domestic foreign lobbying may contribute to a freer trade in the domestic country and lobbying competition may be one of the strongest forces pushing for trade liberalisation

sources of variation in international real interest rates this paper analyses the effects of inflation on ex post real interest rates in an international framework a dynamic factor model is estimated in which real interest rates are influenced by real interest and inflation factors that are common to all the countries and by country specific factors we find that the source of domestic inflation is an important determinant of the effect of inflation on real interest rates a common inflation factor has a negative effect on ex post real interest rates lending support to a form of the mundell tobin effect in international real interest rates and that a country specific inflation factor tends to have a positive effect

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

foreign technology spillovers and r d policy the authors study the appropriate domestic r d policy in an asymmetric duopoly with r d rivalry and technological spillovers from the more advanced firm a foreign and a home firm compete over two periods on r d and output initial foreign r d lowers the cost of home s subsequent r d improvements the optimal policy balances the strategic incentive to reduce initial foreign r d with the spillover incentive to increase it if discounted home profits increase decrease with higher initial foreign r d the spillover strategic effect dominates a tax subsidy to first period home r d is appropriate copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the capital inflows problem revisited a stylized model of southern cone disinflation in the late 1970s countries in latin america s southern cone initiated attempts to lower domestic inflation rates through the progressive reduction of a preannounced rate of exchange rate devaluation the stabilization programs gave rise to massive capital inflows real exchange rate appreciation and current account deficits this paper develops a stylized intertemporal framework in which the effects of a credible preannounced disinflation scheme can be studied it is shown that even when agents have perfect foresight and markets clear continuously the capital inflows phenomenon and the associated real appreciation may result while unanticipated permanent inflation changes are neutral in the paper anticipated inflation is neutral only in exceptional circumstances a preannounced disinflation operates by altering the path of an expenditure based real domestic interest rate that depends on expected changes in the prices of liquidity services and nontradable consumption goods

equilibria under monetary and fiscal policy interactions in a portfolio choice model abstract this paper studies how the presence of income taxes changes the properties of general equilibrium models with monetary and fiscal policy interactions it is found that from a global perspective the only policy regime that leads to a unique equilibrium is one where fiscal policy is active i e the fiscal theory of the price level regime in sims 1994 from a local perspective there are three regimes in particular and relative to the previous literature following leeper 1991 a new third regime exists where a passive fiscal rule combined with a passive monetary rule can still deliver determinacy where the same area of the parameter space would lead to multiple solutions if taxes were lump sum to obtain the size of the new regime the paper characterizes analytically the extent to which tax cuts are self financing and how the distortionary tax laffer curve looks near the steady state in the new regime monetary and fiscal backstops are brought into play so as to rule out off equilibrium dynamics and inflation can temporarily increase in order to increase seigniorage revenues with this flexibility the monetary policy is consistent with the real debt remaining bounded and the arithmetic that follows is monetarist and unpleasant in the sense of sargent and wallace 1981

trips trade and growth a two country model of endogenous growth is employed to assess the importance of intellectual property rights to trade growth and technology transfer the paper provides theoretical results linking the intellectual property rights regime to trade patterns aggregate r d worldwide growth and aggregate welfare measures failure to provide patent protection for foreign made innovations forces innovators to employ less than the best practice research technologies reduces aggregate r d activities worldwide effectively eliminates technology transfer across countries and reduces worldwide growth copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

dynamic behavior of capital accumulation in a cash in advance model abstract this paper analyzes the dynamic behavior of capital accumulation in stockman s cash in advance model if the cash in advance constraint applies only to consumption then money is superneutral along the transition path as well as in the long run alternatively if the cash in advance constraint applies to gross investment as well as consumption then a permanent increase in the rate of monetary growth reduces the steady state capital stock the effect on the speed of adjustment depends on the sign of a certain simple function of the parameters of preferences and technology

financial assets inflation hedges and capital utilization in developing countries an extension of mckinnon s complementarity hypothesis in a highly influential book mckinnon 1973 proposed that interest rate liberalization and low inflation can promote capital accumulation and economic growth in developing countries an important aspect of mckinnon s work is his formal argument that money broadly defined to include both cash and bank deposits and physical capital are more likely to be complements than substitutes under conditions of financial repression where interest rate controls or high inflation reduce the real yield on money balances to low or even negative levels mckinnon chapter 6 mckinnon s formal analysis assumes that household firms and other small enterprises in financially repressed developing economies are faced with significant capital indivisibilities and have no access to credit so that they are forced to accumulate substantial amounts of noncapital assets before undertaking productive investments under financial repression accumulation of inflation hedges commodity inventories for example may be the least cost method of building up these noncapital asset balances required for lumpy investments in physical capital even inflation hedges may have negative returns e g due to high storage costs thereby further reducing potential capital accumulation in this situation an increased yield to money balances via interest rate liberalization or lower inflation can lower the cost of accumulating funds for physical capital purchases so that increased money balances may be associated with a more rapid rate of capital accumulation and hence economic growth mckinnon s complementarity hypothesis thus emphasizes the use of cash and deposit balances as a conduit for physical capital accumulation by credit constrained enterprises however as noted by drake 1980 p 66

divisia monetary aggregates the great ratios and classical money demand functions king et al 1991 evaluate the empirical relevance of a class of real business cycle models with permanent productivity shocks by analyzing the stochastic trend properties of postwar u s macroeconomic data they find a common stochastic trend in a three variable system that includes output consumption and investment but the explanatory power of the common trend drops significantly when they add money balances and the nominal interest rate in this paper we revisit the cointegration tests in the spirit of king et al using improved monetary aggregates whose construction has been stimulated by the barnett critique we show that previous rejections of the balanced growth hypothesis and classical money demand functions can be attributed to mismeasurement of the monetary aggregates

the dynamics of a small open economy in response to monetary fiscal and productivity shocks abstract this paper evaluates empirically the relative importance of monetary and fiscal versus technology shocks in an open economy characterized by perfect international capital mobility the variance covariance matrix of these shocks is estimated a stochastic model is used to perform numerical simulations the results show that persistent shocks to productivity can reproduce several empirical regularities including the puzzling high correlation between national saving and investment remarkably well and that monetary and fiscal shocks play a minor role

on money and capital with durable goods abstract if expenditures on non durables are more heavily financed with money than expenditures on durables then after an increase in the inflation rate there will be capital deccumulation followed by capital accumulation money is superneutral in the long run

is corporate responsibility converging a comparison of corporate responsibility reporting in the usa uk australia and germany corporate social reporting while not mandatory in most countries has been adopted by many large companies around the world and there are now a variety of competing global standards for non financial reporting such as the global reporting initiative and the un global compact however while some companies e g henkel bhp johnson and johnson have a long standing tradition in reporting non financial information other companies provide only limited information or in some cases no information at all previous studies have suggested that there are country and industry specific differences in the extent of csr reports e g kolk et al 2001 business strategy and the environment10 15 28 kolk 2005 management international review45 145 166 maignan and ralston 2002 journal of international business studies33 3 497 514 however findings are inconclusive or contradictory and it is often difficult to compare previous studies owing to the idiosyncratic methods used in each study graafland et al 2004 journal of business ethics53 137 152 furthermore previous studies have relied mainly on simple measures such as word counts and page counts of reports to compare the extent of reporting that may not capture significant differences in the content of the reports in this article we seek to overcome some of these deficiencies by using textual analysis software and a more robust statistical method to more objectively and reliably compare the csr reports of firms in different industries and countries we examine a sample of leading companies in four countries us uk australia and germany and test whether or not membership of the global compact makes a difference to csr reporting and is overcoming industry and country specific factors that limit standardization we conclude that globalcompact membership is having an effect only in certain areas of csr reporting related to the environment and workers and that businesses from different countries vary significantly in the extent to which they promote csr and the csr issues that they choose to emphasize in their reports these country differences are argued to be related to the different institutional arrangements in each country

money inflation and investment abstract this paper analyzes an infinite horizon optimizing monetary growth model with endogenously determined income tax rates the technology is linear and random and preferences exhibit unitary relative risk aversion and a constant elasticity of substitution between real money balances and consumption an explicit solution for the rational expectations equilibrium is derived the relationship between the money growth rate and investment depends on the elasticity of substitution moreover maximizing welfare is inconsistent with choosing a money growth rule to maximize investment

money and specialization in a neoclassical growth model this paper studies the links between money specialization and capital accumulation in a neoclassical growth framework for tractability the transactions role of money is introduced through a cash in advance constraint in contrast to the standard cash in advance model an individual s reliance on money balances for transactions is endogenous through the choice of specialization although the cash in advance constraint only applies to consumption the model exhibits a reverse tobin effect we conclude by discussing the implications of the model for the welfare costs of inflation

money and output a test of reverse causation this paper attempts to explain the correlation between money and output at various leads and lags with a model in which money is largely neutral and endogenously responds to output money is endogenous because both monetary policy and deposit creation are endogenous parameters are selected according to the simulated moments estimation technique while the estimated model succeeds along some dimensions in matching properties of postwar u s data its failure to match key patterns of lead lag correlations seems to cast doubt on the ability of endogenous money determination by itself to quantitatively account for the observed money output correlations copyright 1996 by american economic association

the sensitivity of strategic and corrective r d policy in oligopolistic industries abstract we evaluate the case for r d subsidies in export sectors when the outcome of r d is uncertain and the product market is oligopolistic when r d reduces expected costs in the particular sense of first order stochastic dominance a national strategic basis for r d subsidies exists whether firms choose prices or quantities this must be balanced against a corrective incentive to tax r d whenever the number of domestic firms exceeds one however when r d increases the riskiness of the cost distribution as well the results may switch there emerges a strategic incentive to tax and a corrective incentive to subsidize r d

anticipated inflation and the capital stock in a cash in advance economy abstract an economy is constructed in which the steady state capital stock is inversely related to the rate of inflation as a result that is directly opposite the usual conclusion

strategic investment with asymmetric spillovers this paper investigates the implications of asymmetric spillovers on noncooperative strategic investments in a duopoly with quadratic pay offs a unique equilibrium in the announcement of the leader follower role exists in the case where one firm absorbs large spillovers while the other at most is able to receive only small spillovers the leader in this equilibrium is the firm that absorbs the large spillovers other asymmetries in initial costs or efficiency in research and development do not affect this outcome

the stock market monetary policy and economic development author affiliation edgar a ghossoub department of economics university of texas at san antonio san antonio tx 78249 usa e mail edgar ghossoub utsa edu robert r reed dagger department of economics finance and legal studies 200 alston hall university of alabama tuscaloosa al 35487 e mail rreed cba ua edu corresponding author acknowledgment we thank two anonymous referees and the co editor kent kimbrough for their insightful comments 1 introductiona vast amount of research in macroeconomics studies the role of financial markets for economic development for example king and levine 1993 document that active banking systems help economies achieve higher rates of growth 1 in addition to banking systems other measures of financial development are important notably levine and zervos 1998 conclude that stock market liquidity promotes activity 2 however minier 2003 identifies nonlinearities in the relationship between stock market activity and growth in particular minier concludes that there are threshold effects from financial development to economic performance beyond a threshold level of financial development growth and stock market activity are positively related however the correlation is not observed in countries with small stock markets consequently access to a stock market may result in a significant increase in economic activity or it may have little impact 3in addition to the stage of financial development monetary policy also affects the development process while initial studies indicate that inflation is generally associated with slower economic progress more recent research concludes that the effects of monetary policy vary across countries bae and ratti 2000 observe that higher rates of money growth are correlated with lower levels of output in argentina and brazil in contrast bullard and keating 1995 point out that inflation may be associated with an increase in output in low inflation countries in particular the recent work of ahmed and rogers 2000 finds evidence of a tobin effect for the united states 4 5why does the impact of financial development vary across countries furthermore why does the effect of monetary policy also differ across countries in this article we demonstrate that the impact of financial development depends on the services provided by various financial markets that is the economic functions of banks may be substantially different than stock markets although different types of financial markets fulfill unique allocative functions there has been surprisingly little attention devoted to studying the ways in which asset markets collectively interact from a general equilibrium perspective 6 furthermore previous work does not address how the role of monetary policy depends on the extent of financial market development we attempt to fill this gap by developing a monetary growth model that incorporates money bank deposits and equity 7 as in schreft and smith 1998 spatial separation and limited communication create a role for money and commercial banks in our economy young individuals are subject to random relocation shocks as money is the only asset that can cross locations relocated agents must liquidate all their asset holdings into currency thus random relocation is analogous to the liquidity preference shocks in diamond and dybvig 1983 as a result our model illustrates the risk pooling role of financial intermediaries in contrast to banks we consider that the stock market promotes economic development by establishing a market in which capital can be transferred across time for example this may reflect specialization of factor inputs to illustrate such ideas we consider the following motivation individuals in the economy have specialized production technologies

anticipation of future consumption a monetary perspective we adapt the monetary model sidrauski 1967 to study the hypothesis of anticipation of future consumption we assume that anticipation of future consumption affects an agent s instantaneous utility and that all effects of future consumption on current well being are captured by the stock of future consumption monetary policy effectiveness is thereby reduced and a zero nominal lower interest rate and thus the friedman rule is destabilizing given this we can derive a just stable equilibrium nominal interest rate with matching definitions for inflation and monetary growth we demonstrate that these implied lower bounds match their historical analogues well

inflation and welfare in the steady state this is a paper on expected inflation and welfare in steady state equilibrium the demand for money is an inventory demand with an endogenous payment period the clower constraint is not imposed higher inflation reduces welfare by reducing consumption as people devote more of their real income to maintaining lower average money holdings high inflation does not necessarily promote an increase in the capital stock the mundell tobin effect is absent the policy conclusion is standard deflate at the rate of time preference because capital is held socially optimal consumption falls short of its golden rule level if inside money is allowed it drives out fiat money and welfare is again at a maximum

money capital and the pigou effect abstract the effect of inflation on the capital stock is considered in an overlapping generations framework with a cash in advance constraint on consumption expenditures the adjustment mechanism underlying the model is that of a traditional model with the real balance effect on savings

measuring the contribution of durable goods to the welfare cost of inflation in this paper we measure the contribution of durable goods to the welfare cost of inflation in the context of an endogenous growth model with durable and nondurable goods where purchases of the latter require only a partial cash payment compared with the former unlike existing measures our proposed welfare measure is computationally efficient and relatively easy to implement we find that durability adds a significant component to the welfare costs of inflation

international r d rivalry and industrial strategy this paper presents a theory of government intervention which provides an explanation for industrial strategy policies such as r d or export subsidies in imperfectly competitive international markets domestic net welfare is improved by the capture of a greater share of the output of rent earning industries although the subsidy ridden noncooperative international equilibrium is jointly suboptimal behaviour of governments and firms is modelled as a three stage subgame perfect nash equilibrium the assumption that the government is the first player in this game allows it to influence equilibrium outcomes by altering the set of credible actions open to firms

the speed of convergence and alternative government financing abstract in this paper we are concerned with the speed of convergence in the sidrauski monetary optimizing model sidrauski am econ rev 57 1967 534 in which the steady state capital stock is not influenced by a change in public spending the paper studies how different the speed of convergence to the steady state is affected by a change in government spending under the various ways of financing in exploring the transitional adjustment to the public policy shock it will be convenient to focus upon the degree of relative risk averse

a dynamic specific factors model with money when the capital stock is endogenously chosen by optimizing households the predictions of the static specific factors model are modified an increase in tariffs unambiguously increases real wages whereas an expansion of the labor force does not reduce wages capital and land are not only factors of production but also assets and their shares in the household s portfolio are determined by features of the supply side time preference and inflation an increase in inflation reduces the capital stock but its impact on the price of land is ambiguous because of opposite movements in the inflation tax and in land rents

anticipated inflation and rates of return in a search theoretic monetary model abstract how does anticipated inflation of fiat money affect the real return of a near money an asset with real value used to mediate trades this essay studies a search model in which decentralized trade takes place under a fixed bargaining rule the essay analytically studies the comparative statics of a near money s real return as it varies with inflation the effects diverge markedly over the parameter space there exist parameters for which higher inflation lowers the real asset return as suggested by asset substitution theories there also exist parameters for which inflation has the opposite effect

interest rates in a credit constrained economy when households face credit constraints in an economy with inside as well as outside money stationary equilibrium real interest rates are below the household rate of time preference they also depend significantly upon household risk aversion the demand for inside versus outside money bank costs bank reserves inflation and the marginal productivity of capital and capital depreciation rates in addition changes in financial variables affect per capita capital and output to a greater extent when households are credit constrained copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

cooperative and noncooperative r d in duopoly with spillovers erratum in our article published in this review volume 78 no 5 december 1988 pp 1133 37 we have shown that in the presence of sufficient spillovers of the r d benefits duopolists cooperating in r d but not in the output spend more on r d than noncooperating firms at both stages and also produce more output closest to the socially optimal level a second symmetric result is that for small spillovers duopolists cooperating neither in r d nor in output spend more on r d and produce more output than cooperative firms however this result has been obscured by an obvious inequality inversion and other typos implying a modification in the conclusions indeed in fn 13 on p 1135 one should have that x x iff