balancing terrorism and natural disasters defensive strategy with endogenous attacker effort in this paper we apply game theory to identify equilibrium strategies for both attacker and defender in a fully endogenous model of resource allocation for countering terrorism and natural disasters the key features of our model include balancing protection from terrorism and natural disasters and describing the attacker choice by a continuous level of effort rather than a discrete choice i e attack or not interestingly in a sequential game increased defensive investment can lead an attacker to either increase his level of effort to help compensate for the reduced probability of damage from an attack or decrease his level of effort because attacking has become less profitable this can either reduce or increase the effectiveness of investments in protection from intentional attack and can therefore affect the relative desirability of investing in protection from natural disasters

pollution abatement and balanced growth the analysis of endogenous growth models with pollution often concentrates on steady state trajectories under the assumption that the steady state is in some sense stable in the present note we provide examples showing that this issue should be dealt with carefully we use the rebelo ak model augmented with a stock of pollutants causing a negative externality it is found that optimal growth is not necessarily balanced contrary to the outcome of the standard rebelo model moreover the existence of the externality may affect long run optimal growth rates

questioning the empirical basis of the environmental kuznets curve for co2 new evidence from a panel stationarity test robust to multiple breaks and cross dependence abstract this paper investigates the time series properties of per capita co2 emissions and per capita gdp levels for a sample of 86 countries over the period 1960 2000 for that purpose we employ a state of the art panel stationarity test which incorporates multiple shifts in level and slope thereby controlling for cross sectional dependence through bootstrap methods our analysis renders clear cut evidence that per capita gdp levels are nonstationary for the world as a whole while per capita co2 is found to be regime wise trend stationary the analysis of country groups shows that for africa and asia per capita co2 is best described as nonstationary while per capita gdp appears stationary around a broken trend in addition we find evidence of regime wise trend stationarity in both variables for the country groups consisting of america europe and oceania the results of our analysis carry important implications for the statistical modelling of the environmental kuznets curve for co2 since the differing order of integration in both variables for the world as a whole and for africa and asia calls into question the validity of panel cointegration techniques which assume that both variables are nonstationary and cointegrated with one another cointegration techniques would not be appropriate either for the case of america europe and oceania which are characterised by per capita gdp and co2 emissions being stationary around a broken trend similar conclusions are reached when we analyse country groups based on levels of development failure to properly characterise the time series properties of the data by not controlling for an unknown number of structural breaks and for cross sectional dependence could be responsible for the fragility and lack of robustness surrounding the estimation of environmental kuznets curves

how might nature value man abstract while much time and effort is spent attempting to quantify environmental services for inclusion in the economic system no one seems to ask how nature might value us an ecological accounting process is devised to accommodate ecosystem flows allowing for the computation of ecological prices and leading to the calculation of net ecosystem output and the efficiency of its production the process is somewhat similar to economic accounting but allows us to consider the ecosystem as open conforming to thermodynamic laws examples such as intervention to reduce soil erosion illustrate how humans might be appreciated by the ecosystem in some instances the net output might be higher with some human presence than with no human presence

towards a genuine exchange value of nature interactions between humans and nature in a principal agent framework abstract this paper discusses the potential for modeling nature and man in an exchange economy we will firstly be outlining the need for exchange values in addition to the usual human evaluation of nature secondly we will be reviewing some basic exchange economy ideas arguing that these ideas can be adopted to a mutually beneficial exchange between humans and nature thirdly in a formal model we will show how the assumption that a civic society can be adapted to a principal agent approach whereby humans are the principal and nature is the agent issues such as property rights an objective concerning nature and services to be exchanged will be introduced this will include the derivation of a behavioral equation for nature as anticipated by humans fourthly a principal agent framework delivers a mutually beneficial exchange such as land for labor and given property rights derived genuine exchange values are interpreted as relative prices reflecting human and natural objectives fifthly the aforementioned problem will be extended to a world with undefined property rights and hints will be given to how this world can be modeled potential applications conflicting questions such as human welfare versus fitness of nature and the distribution of rights will be discussed

optimal investment policies with exhaustible resources an information based model an information based model of the optimal control type is developed using concepts from information theory to explore the dynamics of fossil resource exhaustion and the phenomenon of substitution by other forms of capital and technological knowledge all exhaustible resources stocks and forms of capital and knowledge are taken to be equivalent to forms of information in the physical sense it is shown that with optimal policies the planning period or cycle has several distinct phases with different optimal investment patterns the model has two important qualitative implications 1 economic growth rates are inherently discontinuous and 2 the model predicts an evolutionary structural change viz the creation of a new sector in response to the progressive exhaustion or obsolescence of previously essential resources or capital stocks a multiperiod extension is suggested leading to a tentative explanation for the kondratieff long wave phenomenon

information order and knowledge in economic and ecological systems implications for material and energy use abstract ecological and economic systems are open systems that require energy to change the thermodynamic states of materials from naturally occurring to more valued forms these changes are accompanied by information flows and changes in the order of systems and their surroundings in this paper thermodynamics is used to assess these system changes and relate them to the knowledge present in a system particular emphasis is given to 1 the fundamental relationships among material energy and information flows and changes in order and knowledge 2 the role of equilibrium and non equilibrium thermodynamics in assessing system change 3 the increasing role of material and energy flows through economic systems and 4 the necessity for improved societal valuation of these flows

thermodynamic constraints on optimal depletion of copper and aluminum in the united states a dynamic model of substitution and technical change abstract the paper proposes a methodology to integrate concepts from thermodynamics into economic models of optimal natural resource use and to empirically determine relationships between changes in thermodynamic states of materials and the use of high quality energy sources the integration is aimed at an assessment of technologies substitution and technical change based on economic concepts that do justice to fundamental physical constraints a model of natural resource use and production has been developed that combines econometric time series analysis with dynamic modeling techniques the model explicitly includes thermodynamic constraints on i the process of separating minerals from crude ore ii smelting processes iii substitution among inputs and iv endogenous technical change in mining smelting and refining based on empirical information the model has been simulated to assess outer limits of feasible resource savings in copper and bauxite mining smelting and refining in the united states conclusions are drawn for the evaluation of products and effluents from mining smelting and refining operations with regard to changes in the physical resource base and environmental quality

on the value of exposure and secrecy of defense system first mover advantage vs robustness abstract it is commonly accepted in the literature that when facing with a strategic terrorist the government can be better off by manipulating the terrorist s target selection with exposing her defense levels and thus moving first however the impact of terrorist s private information may significantly affect such government s first mover advantage which has not been extensively studied in the literature to explore the impact of asymmetry in terrorist s attributes between government and terrorist on defense equilibrium we propose a model in which the government chooses between disclosure sequential game and secrecy simultaneous game of her defense system our analysis shows that the government s first mover advantage in a sequential game is considerable only when both government and terrorist share relatively similar valuation of targets in contrast we interestingly find that the government no longer benefits from the first mover advantage by exposing her defense levels when the degree of divergence between government and terrorist valuation of targets is high this is due to the robustness of defense system under secrecy in the sense that all targets should be defended in equilibrium irrespective of how the terrorist valuation of targets is different to government we identify two phenomena that lead to this result first when the terrorist holds a significantly higher valuation of targets than the government s belief the government may waste her budget in a sequential game by over investing on the high valued targets second when the terrorist holds a significantly lower valuation of targets the government may incur a higher expected damage in a sequential game because of not defending the low valued targets finally we believe that this paper provides some novel insights to homeland security resource allocation problems

a physical view of sustainability abstract we assume that natural ecological communities tend to maximize the amount of stored biomass on a given area thereby creating the highest sustainable rate of entropy formation possible from that area we take this climax condition to define sustainability human intervention through agriculture reduced the ecosystem in given areas to a juvenile state a state which seems to produce entropy at a lower rate than that of the natural climax condition the gap in entropy production rates between the natural and the agricultural system would eventually be overcome by the direct and indirect use of fossil fuels these fossil fuels are consumed much faster than they are being formed and therefore a social structure based on their extensive use cannot be sustainable what type of social structure does meet our definition of sustainability that is what style and size of social activity will generate entropy at a rate no greater than that of the climax ecosystem in a particular area during the last two decades studies of economic activities and their environmental repercussions were limited to the possible costs and benefits of pollution control and to the economically optimal extraction rates of mineral resources the intrusion of human activities into the environment became increasingly apparent through the depletion of natural resource stocks and decreasing environmental quality in the 1990s sustainability of the socio economic system within the global ecosystem has become the pressing issue although research is increasingly concerned with the question of sustainability a definition based on physically measurable evidence is missing such a definition is proposed in this paper and an example application is given for a particular area

a theory of economic growth with material energy resources and dematerialization interaction of three growth mechanisms the nature of energy and material resources in a non optimizing growth theory framework is clarified this involves two modifications of the conventional theory firstly multiple feedback mechanisms or growth engines are identified such that the impact of the cost of production through demand on growth is accounted for secondly a production function distinguishes between resource use technical efficiency and value creation the resulting model is analytically solved under the condition of a constant growth rate given model complexity numerical experiments are performed as well providing relevant insights to the academic and political debates on environmental kuznets curves and dematerialization

simple solutions to the initial conditions problem in dynamic nonlinear panel data models with unobserved heterogeneity i study a simple widely applicable approach to handling the initial conditions problem in dynamic nonlinear unobserved effects models rather than attempting to obtain the joint distribution of all outcomes of the endogenous variables i propose finding the distribution conditional on the initial value and the observed history of strictly exogenous explanatory variables the approach is flexible and results in simple estimation strategies for at least three leading dynamic nonlinear models probit tobit and poisson regression i treat the general problem of estimating average partial effects and show that simple estimators exist for important special cases copyright 2005 john wiley sons ltd

looking behind mortgage delinquencies abstract delinquency rates for mortgages originated before and after the financial crisis are examined using a novel and large panel obtained by merging data from tax records and credit registers first we estimate the selection into the mortgage market using an exogenous index of local credit supply as exclusion restriction second controlling for selection we estimate the impact of income shocks on the delinquency rate we find that since 2008 the selection process has led to the halving of the delinquency rate conditional on the creation of a new mortgage job losses nearly double the delinquency risk estimates uncorrected for selection are severely downward biased

what happens during recessions crunches and busts we provide a comprehensive empirical characterization of the linkages between key macroeconomic and financial variables around business and financial cycles for 21 oecd countries over the period 1960 2007 in particular we analyse the implications of 122 recessions 113 28 credit contraction crunch episodes 114 28 episodes of house price declines busts 245 61 episodes of equity price declines busts and their various overlaps in these countries over the sample period our results indicate that the interactions between macroeconomic and financial variables can play a major role in determining the severity and duration of a recession specifically we find evidence that recessions associated with credit crunches and house price busts tend to be deeper and longer than other recessions stijn claessens m ayhan kose and marco e terrones

liquidity constrained markets versus debt constrained markets this paper compares two different models in a common environment the first model has liquidity constraints in that consumers save a single asset that they cannot sell short the second model has debt constraints in that consumers cannot borrow so much that they would want to default but is otherwise a standard complete markets model both models share the features that individuals are unable to completely insure against idiosyncratic shocks and that interest rates are lower than subjective discount rates in a stochastic environment the two models have quite different dynamic properties with the debt constrained model exhibiting simple stochastic steady states while the liquidity constrained model has greater persistence of shocks

niche diversification in environmental ecological economics abstract this paper is devoted to the identification and comparison of the niches of neoclassical environmental economics nee and ecological economics eco it is presented in four sections section 1 argues that the existing literature does not make the differences and relations between the sister disciplines neatly transparent section 2 critically examines the antecedents of the subjects with reference to three structural dimensions such as scarcity perception problem solving orientation and range of integration section 3 collates the elements and reformulates the definitions section 4 is coda on the essay the divide between the paradigms which came to the surface during the 1960s became prominent through the growth controversy of the subsequent decade the controversy over the need for change of economic theory to cope with the growing intensity of environmental uncertainty makes the disciplines sore about each other the neoclassical paradigm comprising of elements like relative scarcity allocative approach market correction and technological optimism characterises nee the distinguishing characteristics of eco include thermodynamic irreversibility absolute scarcity economy ecosystem symbiosis biophysical approach ecological stewardship and prudent pessimism the niches are competitive and complementary in some respects and thus provide a unique example of fruitful niche diversification within environmental ecological economics we have a feeling that the economics profession can trace out the interface of the disciplines in some policy areas and raise the effectiveness of prescriptions so that this academic species diversity can serve humankind to its full potential

personal bankruptcy and credit supply and demand this paper examines how personal bankruptcy and bankruptcy exemptions affect the supply and demand for credit while generous state level bankruptcy exemptions are probably viewed by most policy makers as benefiting less well off borrowers our results using data from the 1983 survey of consumer finances suggest that they increase the amount of credit held by high asset households and reduce the availability and amount of credit to low asset households conditioning on observable characteristics thus bankruptcy exemptions redistribute credit toward borrowers with high assets interest rates on automobile loans for low asset households also appear to be higher in high exemption states

welfare implications of the bankruptcy reform act of 1999 abstract in recent years personal bankruptcy has become an important issue to consumers creditors and legislators alike over 40 billion dollars of unsecured debt were discharged in 1998 by 1 44 million households these losses have led legislators to propose a variety of changes in bankruptcy law the most important and recent of which is the bankruptcy reform act of 1999 ba99 i develop a dynamic stochastic general equilibrium model of personal bankruptcy to investigate the trade off between the consumption smoothing role of bankruptcy and the interest rate and deadweight costs it imposes i find that stringent means tests would reduce filing rates only slightly and would have only modest welfare consequences on the other hand the elimination of bankruptcy altogether is found to have substantial benefits this result is robust to income shock persistence and to stringency in the application of means tests

modeling secrecy and deception in a multiple period attacker defender signaling game abstract in this paper we apply game theory to model strategies of secrecy and deception in a multiple period attacker defender resource allocation and signaling game with incomplete information at each period we allow one of the three possible types of defender signals truthful disclosure secrecy and deception we also allow two types of information updating the attacker updates his knowledge about the defender type after observing the defender s signals and also after observing the result of a contest if one occurs in any given time period our multiple period model provides insights into the balance between capital and expense for defensive investments and the effects of defender private information such as defense effectiveness target valuations and costs and also shows that defenders can achieve more cost effective security through secrecy and deception possibly lasting more than one period in a multiple period game this paper helps to fill a significant gap in the literature in particular to our knowledge no past work has studied defender secrecy and deception in a multiple period game moreover we believe that the solution approach developed and applied in this paper would prove useful in other types of multiple period games

state dependence serial correlation and heterogeneity in intertemporal labor force participation of married women a dynamic search framework is developed to analyze the intertemporal labor force participation behavior of married women using longitudinal data to allow for a rich dynamic structure the sensitivity to alternative distributional assumptions is evaluated using linear probability and probit models the dynamic probit models are estimated using maximum simulated likelihood msl estimation to overcome the computational difficulties inherent in maximum likelihood estimation of models with nontrivial error structures the results find that participation decisions are characterized by significant state dependence unobserved heterogeneity and negative serial correlation in the error component the hypothesis that fertility decisions are exogenous to women s participation decisions is rejected when dynamics are ignored however there is no evidence against this hypothesis in dynamic model specifications women s participation response is stronger to permanent than current nonlabor income reflecting unobserved taste factors

a game theoretic model for resource allocation among countermeasures with multiple attributes abstract we study a strategic two player sequential game between an attacker and defender the defender must allocate resources amongst possible countermeasures and across possible targets the attacker then chooses a type of threat and a target to attack this paper proposes a model for determining optimal resource allocation by combining game theory with a simple multi attribute utility model given a set of possible attributes representing goals or preferences we allow each player to choose a weight for each attribute where the subset of attributes with nonzero weights represents that player s preferences every countermeasure is given a score for its effectiveness at both mitigating the effects of an attack in terms of each attribute and reducing the probability of the success of an attack furthermore the consequences of each possible attack are scored in terms of each attribute the multi attribute utility aspect of this model uses these scores along with the players weights to form the basis of the utility or disutility for each player we find that i the zero sum game where the attacker s and defender s weights are identical results in the worst losses for the defender ii in general cases the defender s equilibrium strategy has the result of making the attacker indifferent between multiple attacks and iii the use of target independent countermeasures i e countermeasures which operate at national levels as opposed to operating at differing levels for each target can increase the cost effectiveness of countermeasures

multi objective stackelberg game model for water supply networks against interdictions with incomplete information abstract water supply networks are infrastructures pivotal to economic development and living standards of which the increasing complexity and interdependencies have brought challenges for the protection and enhancement of water supplies we address the problem on how to defend water supply networks with hydraulic characteristics against an interdictor by building a multi objective stackelberg game model with incomplete information in this model the defender and the interdictor both considered as rational players choose a subset of network components to defend or interdict based on their payoffs the defender with incomplete information on the interdictor s efforts initiates to trade off the two objectives of maximizing the expected network satisfaction rate and of minimizing defense efforts whereas the interdictor with no information on network operational capacity follows to trade off the objectives of minimizing the expected network efficiency and of minimizing interdiction efforts the algorithm of determining the final optimal defense strategies is presented which consists of three steps 1 develop the strategy sets by the assessments of network vulnerability and resilience 2 analyze the equilibrium through a nested heuristic genetic algorithm and 3 determine the final optimal defense strategy based on the minimax regret approach a case study of d town water supply network demonstrates the practical significance of the proposed approach furthermore the impacts of the incomplete information are analyzed to provide suggestions on the defense strategy making

economy and environment a theoretical essay on the interdependence of economic and environmental systems preface notation guide 1 introduction part i the physical economy environment system 2 closed physical systems a model 3 structure and time in the physical system 4 technological change and the environmental constraints to physical growth part ii the economic system 5 the price system 6 prices property and the environment 7 economic conflict and environmental change part iii environmental strategies in an evolutionary economy environment system 8 time uncertainty and external effects 9 the market solution 10 the stationary state 11 conclusions references index

unsecured debt with public insurance from bad to worse abstract in u s data income interruptions the receipt of public insurance and the incidence of personal bankruptcy are all closely related the central contribution of this paper is to evaluate bankruptcy protection and public insurance in a unified setting where each program alters incentives in the other our analysis delivers two striking conclusions first we find that u s personal bankruptcy law is an important barrier that prevents the public insurance system from improving welfare second contrary to popular belief we find that increases in the generosity of public insurance will lead to more not less bankruptcy

readjustment potentials in industrial energy efficiency and structure abstract with the availability of input output data for 1977 it is possible to analyze the short run effects of the 1974 energy price increase as well as other factors on the energy efficiency of the industries of the economy such an analysis is conducted here using a number of measures derived through the energy input output model attention is focused on patterns of energy use changes in energy intensities through time and the factors which underlie these changes a specific measure of the degree to which energy substitution is attributable to changes in direct and indirect energy requirements is developed and estimated results show that large changes in the economy s overall industrial energy requirements are not observed between 1963 and 1977 however for individual fuels large changes in intensity values are not at all uncommon among industries

courts and banks effects of judicial enforcement on credit markets the cost of enforcing contracts is a key determinant of market performance we document this point with reference to the credit market in a model of opportunistic debtors and inefficient courts according to the model improvements in judicial efficiency should reduce credit constraints and increase lending with an ambiguous effect on interest rates that depends on banking competition and on the type of judicial reform these predictions are supported by panel data on italian provinces in provinces with longer trials or large backlogs of pending trials credit is less widely available

an empirical analysis of personal bankruptcy and delinquency this article uses a new dataset of credit card accounts to analyze credit card delinquency personal bankruptcy and the stability of credit risk models we estimate duration models for default and assess the relative importance of different variables in predicting default we investigate how the propensity to default has changed over time disentangling the two leading explanations for the recent increase in default rates a deterioration in the risk composition of borrowers versus an increase in borrowers willingness to default due to declines in default costs even after controlling for risk composition and economic fundamentals the propensity to default significantly increased between 1995 and 1997 standard default models missed an important time varying default factor consistent with a decline in default costs debt issued by consumers is an understudied asset class there has been particularly little academic study of recent trends in default on this debt between 1994 and 1997 the number of personal bankruptcy filings in the united states rose by about 75 the 1 35 million filings in 1997 represented well over 1 of u s households delinquency rates on credit cards rose almost as sharply federal reserve bank of cleveland 1998 the resulting losses to lenders amounted to a sizable fraction of the interest payments they collect potentially raising the average cost of credit these trends in default both in bankruptcy and delinquency are especially surprising in light of the strong economy over the period they provide an unusually rich source of variation to test the stability of models that forecast personal default and of credit risk models more generally there are two leading explanations for these trends first the risk composition of borrowers might have worsened under the risk effect less

production and environmental resources a prelude to an evolutionary framework the paper advances a framework to study the evolution of technology and institutions it is based on two simple tenets first the quality and quantity of environmental resources are defined and constrained by the regime of technology and institutions second the character and extent of innovations are informed and limited by the regime as well the framework is contrasted with neoclassical and ecological economics while the framework assimilates ideas from both paradigms it departs from them by stressing the importance of the technological institutional regime tir the two views ignore in different ways the significance of tir 46 the neoclassical program conceives the flow of innovations as tir independent while the ecological agenda regards the fund of resources as tir independent 1 consequently both camps fail to provide an endogenous account of the observed punctuated character of the evolution of tir neoclassical economists maintain that as a resource depletes its price rises which induces switching to a cheaper one encourages exploration or spurs invention harold barnett and chandler morse 7 11 state that nature imposes particular scarcities not an inescapable general scarcity the responses to environmental resource limitation are supposedly singular activities stripped from any underpinning regime the neoclassical disregard of tir heuristically resembles the fable of marie antoinette s folly in response to the scarcity of bread at the eve of the french revolution she advised according to legend buying cake instead ecological economists offer a different view of resource limits 48 for herman daly 21 8 nature really does impose an inescapable general scarcity while neoclassical economists emphasize relative limitation scarcity pricing ecological economists stress malthusian general limitation for ecological economists substitution can solve relative allocation but cannot solve general limitation general limitation can be avoided only if economic activity proceeded within certain boundaries or as put by martin o connor 69 within appropriate cyclical structure of resource transformations under the motto sustainable development a low pace production activity supposedly enables a population to replicate indefinitely ecological economists conceive

grazing the commons an empirical analysis of externalities subsidies and sustainability abstract an empirical means of measuring externalities in the fifty states of the us is presented and the relationship between externalities subsidies and sustainability is investigated firms seeking to maximize profits create externalities thus securing implicit internal subsidies the subsidies are generally supported by those less well off and the socioeconomic energy and environmental indicators of the public sector worsen as externalities and subsidies increase implicit subsidies due to externalities in pollution control energy consumption and taxes are quantified the amount of subsidy is calculated by state and statistically compared to socioeconomic energy environmental and economic variables poverty unemployment and income disparity are found to increase significantly while income economic development attractiveness energy efficiency and environmental quality decline with increasing externalization across states an empirical method of operationalizing sustainability is presented and the relationship of sustainability to subsidies is investigated and found to be significant and negative recommendations are presented for minimizing the effects of externalities

the rise of risk based pricing of mortgage interest rates in italy abstract this paper assesses how much mortgage interest rates in italy are priced on credit risk as proxied by the probability of household mortgage delinquency estimated using the eu silc database owing to data availability we restrict the analysis of mortgage pricing to italian households consistent with the more widespread use of credit scoring estimates indicate that italian lenders have increasingly priced mortgage interest rates on household credit risk for mortgages granted between 2000 and 2007 we find that a 1 point increase in the probability of default is associated with a 21 basis point rise in mortgage interest rates lower than the 38 basis point premium edelberg 2006 estimated for the us at the end of the 1990s

a robust optimization approach to inventory theory we propose a general methodology based on robust optimization to address the problem of optimally controlling a supply chain subject to stochastic demand in discrete time this problem has been studied in the past using dynamic programming which suffers from dimensionality problems and assumes full knowledge of the demand distribution the proposed approach takes into account the uncertainty of the demand in the supply chain without assuming a specific distribution while remaining highly tractable and providing insight into the corresponding optimal policy it also allows adjustment of the level of robustness of the solution to trade off performance and protection against uncertainty an attractive feature of the proposed approach is its numerical tractability especially when compared to multidimensional dynamic programming problems in complex supply chains as the robust problem is of the same difficulty as the nominal problem that is a linear programming problem when there are no fixed costs and a mixed integer programming problem when fixed costs are present furthermore we show that the optimal policy obtained in the robust approach is identical to the optimal policy obtained in the nominal case for a modified and explicitly computable demand sequence in this way we show that the structure of the optimal robust policy is of the same base stock character as the optimal stochastic policy for a wide range of inventory problems in single installations series systems and general supply chains preliminary computational results are very promising

self organization and sustainability energetics of evolution and implications for ecological economics abstract in the 1920s alfred lotka suggested that evolution results both in an increasing total energy flow through the biosphere and in increasing energy efficiency of biological processes later authors attempted to generalize lotka s conjectures and to transform them into general evolutionary laws these laws are derived from the laws of thermodynamics and it is frequently argued that they also apply to the development of economic systems in the present paper an alternative interpretation of the lotka principles is suggested which starts from the self organization of dissipative structures self organization concepts from ecological and evolutionary economics are integrated on this basis energetic regularities in evolutionary processes are interpreted as emergent properties of competitive self organization given the close relationship between energy dissipation in economic processes and various environmental problems thermodynamic effects of economic evolution are of practical policy relevance the evolutionary perspective taken here implies that policy measures toward sustainable development will primarily have to affect the kinds of innovative behavior triggered in competitive processes

the household bankruptcy decision personal bankruptcy filings have risen from 0 3 percent of households per year in 1984 to around 1 35 percent in 1998 and 1999 transforming bankruptcy from a rare occurrence to a routine event lenders lost about 39 billion in 1998 due to personal bankruptcy filings but economists have little understanding of why households file for bankruptcy or why filings have increased so rapidly until very recently studying the household bankruptcy decision was very difficult because no household level data set existed that included information on bankruptcy filings in this paper we use new data from the panel study of income dynamics which includes information on bankruptcy filings to estimate a model of households bankruptcy decisions we find support for the strategic model of bankruptcy which predicts that households are more likely to file when their financial benefit from filing is higher our model predicts that an increase of 1 000 in households financial benefit from bankruptcy would result in a 7 percent increase in the number of bankruptcy filings our model also predicts that if the 1997 national bankruptcy review commission s proposed changes in bankruptcy exemption levels were implemented there would be a 16 percent increase in the number of bankruptcy filings each year but if the 100 000 cap on homestead exemptions recently passed by the u s senate were adopted our model predicts that there would be only a negligible effect on the number of filings we find little support for the nonstrategic model of bankruptcy which predicts that households file when adverse events occur which reduce their ability to repay finally controlling for state and time fixed effects our model shows that households are more likely to file for bankruptcy if they live in districts with higher aggregate filing rates

the existence and persistence of household financial hardship a bayesian multivariate dynamic logit framework we investigate the existence and persistence of financial hardship at the household level using data from the british household panel survey our modelling strategy makes three important contributions to the existing literature on household finances firstly we model nine different types of household financial problems within a joint framework allowing for correlation in the random effects across the nine equations secondly we develop a dynamic framework in order to model the persistence of financial problems over time by extending our multi equation framework to allow the presence or otherwise of different types of financial problems in the previous time period to influence the probability that the household currently experiences such problems our third contribution relates to the possibility that experiencing financial problems may be correlated with sample attrition we model missing observations in the panel in order to allow for such attrition our modelling framework allows us to identify any persistence in financial problems over time as well as any interdependence that may exist between different types of financial problems our findings reveal interesting variations in the determinants of experiencing different types of financial problems including demographic and regional differences our findings also highlight persistence in experiencing financial problems over time as well as the role that saving on a regular basis can play in mitigating current financial problems

household debt repayment behaviour what role do institutions play despite the lively policy debate on rising household debt arrears and personal bankruptcy filings there is relatively little empirical evidence on the determinants of households debt repayment behaviour or on the incidence of arrears even less is known about how arrears compare between countries although debt levels are known to vary widely using data from the european community household panel we first show that arrears are frequently associated with subsequent adverse consequences such as future unemployment or bad health second we find that arrears are often precipitated by an adverse shock to the household s income or health but that there are large differences between countries in how households react to these events finally we show that these differences can be partly explained by local financial and judicial institutions as captured by contract enforcement and information sharing indicators in other words we show that while adverse shocks are highly important the extent to which they affect repayment behaviour depends crucially on the penalty for defaulting this finding suggests that although repayment problems often arise from a genuine inability to repay some households seem to behave strategically burcu duygan bump and charles grant

mortgage arrears regulation and institutions cross country evidence abstract using a newly constructed database for 26 countries over 2000 2014 we analyze cross country and within country differences in mortgage arrears we find that restrictive macro prudential policies in particular lower regulatory loan to value ratios are significantly associated with a lower share of mortgage arrears in total residential debt likewise better institutions are related with lower delinquency rates both directly and by enhancing the impact of macro prudential policies and the right to recourse we also find that the effect of macro prudential policies is conditioned by several mortgage market characteristics such as the maturity of loans interest rate fixity and tax deductibility of interest payments

sustainability economics where do we stand abstract environmental economics which is a branch of resource economics the environment as a scarce resource is essentially about market failures the costs of pollution and pollution abatement and the economics of regulation sustainability economics includes the problem of maintaining economic growth while reducing pollution and or its impacts with special attention to the linked problems of energy supply not to mention the supply other exhaustible resources climate change and most urgently fossil fuel consumption there is a need for integration of resource and environmental economics under a new rubric sustainability economics

is energy cost an accurate indicator of natural resource quality abstract the use of energy cost as an indicator of natural resource quality is examined energy cost is the direct and indirect energy used to produce a unit of a resource commodity different approaches to the role of energy in the economy are discussed and it is demonstrated theoretically that energy cost can give false indications of changes in resource quality this is because energy cost is only an accurate indicator of resource quality if either energy is the single primary factor of production and the economy can be represented by an input output model or if there is substitutability between the factors of production then marginal products must be proportional to the factors embodied energy these conditions are tested empirically using data from the us agricultural sector the results show that there is substitutability and marginal products are not proportional to embodied energy however the strong neoclassical assumption of price taking profit maximization can be rejected at a 5 level of significance though not at the 3 5 level the generality of the empirical results may be restricted due to data limitations but the theoretical framework can be applied to other data sets other resources and even other indicators

a dynamic hierarchical approach to understanding and managing natural economic systems the study of economic systems and their guidance towards sustainability can be enhanced by understanding how natural systems use materials and energy at various levels of system organization how these levels interrelate and how interrelationships change towards this end the paper introduces natural economics as an approach to understanding the dynamics of hierarchical systems we define the concepts of natural economics to facilitate the description and assessment of system change and present dynamic modeling as a method for empirical research and as a tool for management decision making we illustrate with empirical applications the use of dynamic modeling at various levels of system organization empirical illustrations range from dynamic models of simple physical systems of material transport energy degradation and self organized criticality to models of complex industrial systems such as us iron ore mining and steel production the insights derived from the natural economics approach are used to draw conclusions for the study and management of economy environment interactions

limits to substitution and irreversibility in production and consumption a neoclassical interpretation of ecological economics abstract there are many methodological approaches within ecological economics one of the principal modes of analysis is a modified version of the standard neoclassical model this paper examines the parallels which emerge between the ideas of some ecological economists concerning production and the ideas of others concerning consumption when these ideas are interpreted in the neoclassical paradigm it is well known that ecological economics is characterized by arguments concerning limits to substitution between inputs energy natural capital etc vs manufactured capital labor etc in production and the implications these have for sustainability however various authors have also expressed concerns regarding limits to substitution in consumption either between environmental assets and other goods or between basic needs commodities and other goods though the specific reasons for non substitution are different in the production and consumption cases the underlying theme is that individual commodities and other inputs have unique physical or other properties which make them poor substitutes ideas about irreversibility in production and economic development are also prominent in ecological economics likewise many authors have argued for similar irreversibilities in consumption behavior in analogy to the term technological change i coin the term preferential change to describe these phenomena the linking themes in this case are that the economy environment system is evolutionary in character and that external effects intended and unintended consequences of actions or processes imposed on other parties or resources are all pervasive

ecological pricing and economic efficiency abstract there is a need to accurately account for the contributions of environmental assets to the overall economy such accounting would permit policies that allow protection of important natural resources and aid the analytic process to determine an accurate basis for a sustainable economy the aim is to develop an accounting framework for ecology that is sufficiently consistent with the economic framework that the two can be fruitfully combined with appropriate definitions of the flows the two systems can be connected into a common framework no single measure of the system productivity and efficiency can be given for the combined system however until the ecosystem metabolism can be converted into economic terms this could be done with a series of economic valuation techniques ecological prices could then be estimated and a single measure of ecological economic output could be given with the net combined system input and output now in common terms a technical system efficiency measure can logically be proposed because human activity inevitably involves dissipation such emissions would now have a monetary price because such emissions are irrecoverable the total output of the combined system is greater than it is under the current definition giving rise to a technical system wide efficiency measure

redistributive taxation and personal bankruptcy in u s states abstract personal bankruptcy regulation and redistributive taxes and transfers vary considerably across u s states and over time our hypothesis is that both policies are imperfect substitutes in insuring consumption of risk averse agents in incomplete markets exploiting data variation over time for 18 u s states for the period 1980 2003 we find considerable support for this hypothesis redistributive taxation and bankruptcy exemptions are negatively correlated and both policies are associated with more equal consumption growth

a blotto game with incomplete information we consider a blotto game with incomplete information a pure strategy symmetric monotonic bayesian equilibrium is found and its properties are discussed

dynamic valuation of delinquent credit card accounts this paper introduces a dynamic model of the stochastic repayment behavior exhibited by delinquent credit card accounts based on this model we construct a dynamic collectability score dcs that estimates the account specific probability of collecting a given portion of the outstanding debt over any given time horizon the model integrates a variety of information sources including historical repayment data account specific and time varying macroeconomic covariates as well as scheduled account treatment actions two model identification methods are examined based on maximum likelihood estimation and the generalized method of moments the latter allows for an operational statistics approach combining model estimation and performance optimization by tailoring the estimation error to business relevant loss functions the dcs framework is applied to a large set of account level repayment data the improvements in classification and prediction performance compared to standard bank internal scoring meth

sustainability analysis of a society based on exergy studies a case study of the island of samso denmark abstract the danish island samso has since 1997 initiated a process through which the island should reach a state where it would be able to supply its own energy such a situation was reached since 2005 after having established 21 windmills and the island is now a net exporter of electricity to the danish power network at the same time the buildings in the more habituated areas were connected to 4 district heating plants which generate heat from combustion of straw in some cases combined with supplementary inputs from photo thermal devices meanwhile certain activities on the island such as running the ferries cars factories and heating in more distant areas are still dependent on significant input of fossil fuels the inhabitants have recently stated a wish to move on towards being independent of fossil fuels in 2030 and carbon neutral during the next decades as a consequence the idea came up to develop a method for the sustainability analysis of a society which would assist in governing the transitional process in the direction of increasing sustainability therefore a framework has been developed based on the concept exergy that may reveal where large consumptions are taking places such areas are likely to be sensible targets for action or at least increased attention basic methods have been developed that allows to account for infrastructure transfers inputs and outputs and consumption in terms of exergy and taking into account whether the exergy storages or flows can be considered to be renewable or not the framework has been developed for six societal sectors the energy sector the public sector the private households the agricultural sector the industry commerce and trade sector and nature nature is here considered an activity that provides the society with an exergy that may also be of value to our societies often referred to as ecosystem services based on the estimated amount of infrastructure and transfers inputs and outputs a number of sustainability indicators have been developed that may be monitored over time and which may serve to indicate whether potential measures undertaken also lead the society in the right direction an attempt to evaluate the potential importance of wastes has also been carried out as in organic waste could play an important role in acquiring the amount of bio diesel required to run the ferries in the future the results demonstrate that the already existing overhead in production of electricity leaves the island with many options and a great opportunity to be independent of fossil fuels in near future in fact it might well be that socio economical perspectives will turn out to be the more severe obstacles in the transition process adjacent to this work a carbon model has also been set up to reveal the consequence of proposed measures and strategies to the carbon budget of the island jorgensen and nielsen 2014

lying for strategic advantage rational and boundedly rational misrepresentation of intentions starting from hendricks and mcafee s 2000 example of the allies decision to feint at calais and attack at normandy on d day this paper models misrepresentation of intentions to competitors or enemies allowing for the possibility of bounded strategic rationality and rational players responses to it yields a sensible account of lying via costless noiseless messages in many cases the model has generically unique pure strategy sequential equilibria in which rational players exploit boundedly rational players but are not themselves fooled in others the model has generically essentially unique mixed strategy sequential equilibria in which rational players strategies protect all players from exploitation