consumer demand for food diversity evidence for germany abstract whereas a large number of empirical studies have been devoted to analysing consumer demand for specific products much less attention has been paid to the household s demand for product variety the number of different products consumed in a specific time period this paper analyses consumer demand for food variety in germany the econometric analysis of 4632 households suggests that variety significantly increases with income and the number of children aged between 7 and 17 years and is significantly higher if the family lives in larger cities in east germany and the housekeeping person is not additionally working full time a single male household consumes a significantly smaller number of different food products the significant and positive impact of household income on food variety is in line with the hypothesis that consumption evolves along a hierarchical order as income increases

macroeconomics with endogenous markups and optimal taxation i augment a flexible price dynamic general equilibrium model with any symmetric intratemporal preferences over a variety of goods supplied under monopolistic bertrand or cournot competition to derive implications for business cycle and market inefficiencies endogenous markups can magnify the impact of shocks on consumption and labor supply through intertemporal substitution mechanisms and the optimal fiscal policy requires a variable labor income subsidy and a capital income tax that converges to zero in the long run with an endogenous number of goods and strategic interactions entry also affects markups and the optimal fiscal policy requires also a tax on profits i characterize equilibrium and efficient market structures and derive optimal tax rules for a variety of preferences including a new type of general additive preferences that nest direct indirect implicit and homothetic additivity

the consumption real exchange rate anomaly with extensive margins abstract this paper investigates a consumption real exchange rate anomaly from the open macroeconomics literature known as the backus smith puzzle we both analytically and quantitatively examine how an expansion of trade along extensive margins can contribute to the puzzle s resolution our argument is based on 1 a wealth effect due to changes in the number of product varieties 2 statistical inefficiency in measuring the number of product varieties and 3 market incompleteness contrary to complete asset markets which in general feature overly strong risk sharing properties changes in the number of product varieties under incomplete markets may produce a wealth effect under high trade elasticity since statistical agencies systematically fail to capture the welfare impact arising from that changes data consistent terms of trade and real exchange rates tend to appreciate due to this positive wealth effect this provides a realistic correlation between data consistent real exchange rates and consumption

welfare analysis of uniform entry tax in a general equilibrium model with heterogeneous industries abstract this paper examines whether uniform entry taxes across all industries can improve welfare in a monopolistic competition model with multiple groups of differentiated goods which vary in parameters including their elasticity of substitution and taste for variety the results show that even if taste for variety is high and monopoly power is weak in some industries the uniform tax rate on entries across all industries can improve welfare when the weighted average of taste for variety over all industries is low and when the weighted average of the lerner index of monopoly power over all industries is high

market distortions and local indeterminacy a general approach we provide a methodology to study the role of market distortions on the emergence of indeterminacy and bifurcations it consists in introducing general specifications for the elasticities of the crucial functions defining the aggregate equilibrium dynamics of the model this allows us to study how market distortions influence the range of values for the elasticity of input substitution under which local indeterminacy and bifurcations occur highlighting the main channels and classes of distortions responsible for indeterminacy most of the specific market imperfections considered in the related literature are particular cases of our framework comparing them we obtain several equivalence results in terms of local dynamic properties applying this methodology to the woodford 30 framework we find that distortions in the capital market per se do not play a major role we further show that for empirically plausible values of elasticity of substitution between inputs indeterminacy requires a minimal degree of distortions this degree seems to be high under output market distortions while with labor market distortions the required degree is empirically plausible

interdependent international relations and the expansion of ethanol production and consumption the brazilian perspective abstract the global production and consumption of ethanol are expected to increase the growing interdependence of markets and nations producers and consumers of biofuels has led actors to seek and devise mechanisms intended to develop the sector this paper aims to analyze the interdependent international relations between brazil and other ethanol biofuel producer and consumer countries to do so the paper explores the theory of complex interdependence and the game theory a quali quantitative study was conducted involving the application of two questionnaires to experts on biofuels and documentary analysis aided by qda miner software the results show that brazil shares highly interdependent relations with the united states an intermediate degree of interdependence with europe and a low degree of interdependence with china the dimensions of those interdependent relations can be ranked according to importance in the following order first the political then the economic technical and finally the social environmental dimensions a number of actions can be envisaged that could lead ethanol to achieve an increasingly strategic position in the diversification of the energy matrix in different countries technological efforts to improve production efficiency the creation of globally integrated policies designed to provide security and develop the production and consumption infrastructure the reduction of international tariffs on the product and the transformation of ethanol into a global commodity with a large number of countries buying and selling the product this paper faced the challenge of integrating approaches and concepts from two complex theoretical areas complex interdependence theory and game theory the research methodology and the insights gained from the ethanol case contribute to the literature on the applicability of these two theoretical approaches

the refoundation of the symmetric equilibrium in schumpeterian growth models abstract we provide a refoundation of the symmetric growth equilibrium characterizing the research sector of vertical r d driven growth models we argue that the usual assumptions made in this class of models leave the agents indifferent as to where targeting research hence the problem of the allocation of r d investment across sectors is indeterminate by introducing an contamination of confidence in the expected distribution of r d investment we prove that the symmetric structure of r d investment is the unique rational expectations equilibrium compatible with ambiguity averse agents adopting a maxmin strategy

the extensive margin and monetary policy abstract the creation of new firms referred to as the extensive margin is a significant but overlooked dimension of monetary policy a monetary var documents that monetary policy has significant effects on firm creation an analytically tractable model combining sticky prices and firm entry shows that entry alters the transmission of monetary policy innovations acting much like a type of investment in more standard models monetary policy rules that offset the uncertainty of productivity shocks can raise the mean level of entry and thereby welfare suggesting a new motivation for stabilization policy

taste for diversity and the optimality of economic growth abstract we disentangle the taste for diversity in consumption present in endogenous growth models with expanding product variety from the elasticity of substitution between consumption goods this seriously affects the welfare analysis of the model if taste for diversity is relatively small the market rate of growth may be suboptimally large

globalization and specialization abstract the popular dixit stiglitz ethier framework proposes that globalization increases the menu of intermediate goods available to downstream firms and that gains from specialization raise welfare unambiguously this study shows that both results depend critically on the assumption that demand elasticities are invariable the more general framework presented here provides two main insights first whether specialization rises or falls depends ultimately on the shape of the cost function and second globalization can actually reduce welfare in the case when specialization falls

the growth of income and energy consumption in six developing countries this paper reexamines the inter temporal link between energy consumption and income in six developing countries with diverse economic backgrounds and energy statistics in a production function framework we employ the generalized variance decompositions and generalized impulse response techniques to see if the growth of income and energy consumption contains considerable information to predict each other in all countries energy appears as an essential factor of production results indicate that energy may be a relatively more important input than labor and or capital in some countries hence neutrality of energy does not seem to hold

industry equilibrium with outside financing and moral hazard implications for market integration abstract in this paper we study industry equilibrium under the assumptions that 1 firms need outside financing and 2 they have a moral hazard problem in taking potentially excessive risks we characterize an industry equilibrium with credit rationing where firms choose not to take risks and compare this to the industry equilibrium in the absence of credit rationing in both cases we show that competition increases and prices decline as markets integrate however in markets with credit rationing there is typically more exit a smaller decline in prices and most strikingly the market value of the industry increases rather than decreases

the welfare cost of one size fits all patent protection to analyze the welfare gain from allowing for differentiated patent protection across sectors this study develops a two sector quality ladder growth model in which patent breadth is a policy variable and derives optimal patent breadth under two patent regimes we show that a uniform optimal patent breadth is a weighted average of sector specific optimal patent breadth and b sector specific optimal patent breadth is larger in the sector that has a larger market size and more technological opportunities to derive the optimal policy we allow for an arbitrary path of patent breadth and derive the optimal path by solving a stackelberg differential game we find that the optimal path of patent breadth under each patent regime is stationary time consistent and subgame perfect finally we perform a numerical investigation and find that even a moderate degree of asymmetry across sectors can generate a significant welfare cost of uniform patent protection

welfare ranking ad valorem and specific tariffs under monopolistic competition actual trade and tariff policy prefers ad valorem tariffs to specific tariffs yet in this paper we show that in a setting of monopolistic competition realizing a given restriction on imports via a specific tariff would generate more consumer utility than obtaining the same restriction via an ad valorem tariff jel classification f12 un classement en terme de bien etre des droits de douane ad valorem et specifiques quand on est en regime de concurrence monopolistique les politiques commerciales en vigueur pref rent les droits de douane ad valorem aux droits de douane specifiques or ce memoire montre que dans un contexte de concurrence monopolistique reduire les importations par le truchement d un droit de douane specifique genere plus d utilite pour le consommateur que les memes restrictions obtenues par le truchement d un droit de douane ad valorem

firm entry markups and the monetary transmission mechanism abstract two business cycle models with endogenous firm and product entry are estimated by matching impulse responses to a monetary policy shock the competition effect implies that entry lowers desired markups and dampens inflation under translog preferences where the substitutability between goods depends on their number we find evidence of such an effect that model generates more countercyclical markups than dixit and stiglitz 1977 monopolistic competition model where price stickiness is the only source of markup fluctuations in contrast a model with strategic interactions between oligopolistic firms cannot generate an empirically relevant competition effect and is statistically equivalent to the dixit stiglitz model

taste for variety and optimum production patterns in monopolistic competition abstract many positive and normative results in models using the monopolistic competition framework of the dixit stiglitz spence type depend on the value of an important parameter the taste for variety in these models however the taste for variety is linked in a close but arbitrary manner to the degree of market power of monopolistic competitors in this paper we make a simple modification to the basic model which clearly disentangles taste for variety and market power we then show how this changes the usual comparisons between social optimum and market outcomes

labor market dynamics when un employment is a social norm this paper proposes a new keynesian model with search and matching frictions in the labor market that can account for the cyclicality and persistence of vacancies unemployment job creation inflation and the real wage after a monetary shock motivated by evidence from psychology unemployment is modeled as a social norm the norm is defined here as the belief that individuals in society prioritize or should prioritize the search for gainful employment whereas those who do not are perceived as outside the norm and consequently stigmatized households pressure the unemployed to find jobs the fewer unemployed workers there are the more supporters the norm has and therefore the greater the pressure and psychological cost experienced by each jobseeker as this psychological cost is procyclical it hinders the wage from absorbing most of the effect of the shock thus the model is able to capture the high volatility of vacancies and unemployment observed in the data accounting for the shimer puzzle the paper also departs from the literature by introducing price rigidity in the labor market inducing additional inertia and persistence in inflation and the real wage after a monetary shock the model s responses after a monetary shock are in line with the responses obtained from a var on us data

social construction and physical nihilation of the keystone xl pipeline lessons from international relations theory abstract if a prime goal of energy policy is to achieve energy security why is there a controversy over the proposed keystone xl pipeline designed to deliver new supplies of oil from within north america this viewpoint seeks answers in the debate over the underlying purposes of energy policy how does one answers the question what do we want from energy policy perceptions of feasible answers and policy options change over time as witnessed in the 1970s analogous shifts in opinion are changing today s policy debates and widening the contradictions in policy purposes attention to the existence of these contradictions without illusions is necessary to meet the policy challenges of the future effectively

tariffs in monopolistic competition models with leisure consumption trade off abstract this note introduces a leisure consumption trade off into monopolistic competition models resulting in ambiguous welfare effects of tariff protection a small tariff is welfare reducing when the terms of trade effect is smaller than an international returns to scale effect

the effect of a common currency on the volatility of the extensive margin of trade abstract this paper studies the effects of the european monetary unification on the volatility of the extensive margin of trade first we highlight empirical novel facts about the effects of monetary unification we build country level measures of the extensive margin of intra emu exports and describe how their volatilities evolved over time we show that the adoption of a common currency has been associated with an increase of the volatility of the extensive margin of exports for most countries and a decrease in the volatility of the extensive margin of exports for germany second we address this question theoretically and build a two country version of the model of ghironi and melitz 2005 with endogenous entry heterogenous firms endogenous tradability endogenous labor supply and sticky prices we compare the volatility of the extensive margin of trade under fixed exchange rates and in a monetary union monetary unification does imply an increase in the volatility of the extensive margin of trade for pre emu followers such as france or the netherlands and a decrease in the volatility of the extensive margin of trade for the leader germany this pattern is qualitatively consistent with the data but arises only if monetary policy responds moderately to output

reducing household electricity demand through smart metering the role of improved information about energy saving abstract the international roll out of residential smart meters has increased considerably in recent years the improved consumption feedback provided and in particular the installation of in house displays has been shown to significantly reduce residential electricity demand in some international trials this paper attempts to uncover the underlying drivers of such information led reductions by exploring two research questions first does feedback improve a household s stock of information about potential energy reducing behaviours and second do improvements in such information help explain the demand reductions associated with the introduction of smart metering and time of use tariffs data is from a randomised controlled smart metering trial ireland which also collected extensive information on household attitudes towards energy conservation and self reported stocks of information related to energy saving as with previous results in ireland we find that participation in a smart metering programme with time of use tariffs significantly reduces demand although treated households also increased their self reported energy reducing information such improvements are not correlated with demand reductions in the short run given this result it is possible that feedback and other information provided in the context of smart metering are mainly effective in reducing and shifting demand because they act as a reminder and motivator

strategic procurement openness and market structure abstract we examine strategic procurement behaviour by governments and its effect on market structure in sectors such as defence and pharmaceuticals where the government is the dominant consumer in a world economy with trade between producer countries and between producers and non producers we use a modified dixit stiglitz utility function with an independent taste for variety there is free entry and exit by firms but by anticipating their participation constraint governments can indirectly choose the number of domestic firms and their size through its choice of procurement price unlike the standard model with no independent taste for variety and no external sector of non producer countries there are incentives for subsidies openness impacts on industrial structure and procurement coordination between producer countries affects firm numbers

on monopolistic competition and optimal product diversity workers rents also matter in the dixit stiglitz model of monopolistic competition entry of firms is socially too small other authors have shown that excess entry is also a possibility with other preferences for diversity we sow that workers rents also contribute to explain excess entry through a general equilibrium mechanism larger wages indeed raises the aggregate earnings and firms sales and profits which entices too many firms to enter we discuss the possibility of over provision of varieties by comparing the equilibrium to unconstrained and constrained social optima and to other regulatory frameworks where wages are not controlled

market structure cost asymmetries and fiscal policy effectiveness abstract imperfectly competitive macroeconomic models typically assume a symmetric equilibrium with identical firms despite the fact that most industries are characterised by substantial degrees of firm heterogeneity we examine how inter firm efficiency gaps affect fiscal policy effectiveness under monopolistic competition

peak electricity demand and social practice theories reframing the role of change agents in the energy sector abstract demand managers currently draw on a limited range of psychology and economic theories in order to shift and shed peak electricity demand these theories place individual consumers and their attitudes behaviours and choices at the centre of the problem this paper reframes the issue of peak electricity demand using theories of social practices contending that the problem is one of transforming technologically mediated social practices it reflects on how this body of theory repositions and refocuses the roles and practices of professions charged with the responsibility and agency for affecting and managing energy demand the paper identifies three areas where demand managers could refocus their attention i enabling co management relationships with consumers ii working beyond their siloed roles with a broader range of human and non human actors and iii promoting new practice needs and expectations it concludes by critically reflecting on the limited agency attributed to change agents such as demand managers in dominant understandings of change instead the paper proposes the need to identify and establish a new group of change agents who are actively but often unwittingly involved in reconfiguring the elements of problematic peaky practices

fiscal policy monopolistic competition and finite lives abstract this paper studies the short run transitional and long run output effects of permanent and temporary shocks in public consumption under various financing methods to this end a dynamic macroeconomic model for a closed economy is developed which features a perfectly competitive final goods sector and a monopolistically competitive intermediate goods sector finitely lived households consume final goods supply labor and save part of their income amongst the findings for a permanent rise in public consumption are i monopolistic competition increases the absolute value of the balanced budget output multiplier ii positive long run output multipliers are obtained only if the generational turnover effect is dominated by the intertemporal labor supply effect iii short run output multipliers under lump sum tax financing are smaller than long run output multipliers if labor supply is elastic and iv bond financing reduces the size of long run output multipliers as compared to lump sum tax financing and may give rise to non monotonic adjustment paths if labor supply is sufficiently elastic and the speed of adjustment of lump sum taxes is not too high temporary bond financed fiscal shocks are shown to yield i permanent effects on output and ii negative long run output multipliers

a review of time use models of residential electricity demand residential electricity demand in most european countries accounts for a major proportion of overall electricity consumption the timing of residential electricity demand has significant impacts on carbon emissions and system costs this paper reviews the data and methods used in time use studies in the context of residential electricity demand modelling it highlights key issues which are likely to become more topical for research on the timing of electricity demand following the roll out of smart metres

is there always too little research in endogenous growth with expanding product variety abstract it is generally believed that models of endogenous growth with expanding product variety typically yield a too low level of research we show here that this result is due to the implicit choice of a particular value for a crucial parameter once this parameter is set free one finds that too much research can occur as well

explaining shifts in uk electricity demand using time use data from 1974 to 2014 abstract peaks in electricity demand generate significant negative environmental and economic impacts as a result recent policy and research attention has focused on the potential for temporal flexibility of demand especially in the context of intermittent low carbon generation much of this work emphasises the need to understand what makes up the peak and to engineer solutions to meet this normal consumption however today s patterns of temporal consumption may only be a snapshot of continuing change this paper uses uk household time use survey data to analyse change in temporal patterns of activities over the last 40 years to shed light on apparent temporal shifts in overall uk electricity demand the results highlight long term evolution in when and where people work travel eat use media and carry out social activities in particular they suggest that changing patterns of labour market participation may be contributing to shifts in food related personal home care and media activities which correlates with shifts in electricity demand we conclude that both stable and dynamic social structures and forms of organisation have direct implications for policy debates around current and future flexible demand side solutions

the institutionalisation of trust in the international climate regime abstract in the extensive literature on international environmental co operation trust is usually treated in terms of compliance and verification mechanisms on the assumption that there will always be incentives for parties to international agreements to cheat or to free ride indeed the establishment of adequate assurances that such behaviour will be detected and punished is frequently the sine qua non of agreement in the first place technical and legal compliance mechanisms have developed rapidly in environmental treaty making over the last two decades the climate regime is no exception and its provisions in this regard are briefly described and analysed however it will be argued that the development of trust amongst the parties goes well beyond formal compliance and depends upon the institutionalised relationships often amongst officials and technical experts that have grown up since the negotiations for a climate treaty commenced in the late 1980s

measuring the progress and impacts of decarbonising british electricity abstract britain s ambitious carbon targets require that electricity be immediately and aggressively decarbonised so it is reassuring to report that electricity sector emissions have fallen 46 in the three years to june 2016 their lowest since 1960 this paper analyses the factors behind this fall and the impacts they are having the main drivers are demand falling 1 3 per year due to efficiency gains and mild winters gas doubling its share to 60 of fossil generation due to the carbon price floor and the dramatic uptake of wind solar and biomass which now supply up to 45 of demand accounting conventions also play their part imported electricity and biomass would add 5 and 2 to emissions if they were included the pace of decarbonisation is impressive but raises both engineering and economic challenges falling peak demand has delayed fears of capacity shortage but minimum net demand is instead becoming a problem the headroom between inflexible nuclear and intermittent renewables is rapidly shrinking with controllable output reaching a minimum of just 5 9 gw as solar output peaked at 7 1 gw 2015 also saw britain s first negative power prices the highest winter peak prices for six years and the highest balancing costs

optimal monetary policy with endogenous entry and product variety deviations from long run price stability are optimal in the presence of endogenous entry and product variety in a sticky price model in which price stability would be optimal otherwise long run inflation deflation is optimal when the benefit of variety to consumers falls short of exceeds the market incentive for creating that variety the desired markup price indexation exacerbates this mechanism plausible preference specifications and parameter values justify positive long run inflation rates however short run price stability around this non zero trend is close to optimal even in the presence of endogenously time varying desired markups that distort the intertemporal allocation of resources

the ramsey model with monopolistic competition and general preferences abstract i extend the ramsey model of consumption and growth to general preferences over a variety of goods supplied under monopolistic competition and derive the implications for markup variability and macroeconomic dynamics the model delivers a modified euler equation that affects the short run dynamics of consumption when the relative risk aversion is decreasing monopolistic competition generates countercyclical markups and compared to perfect competition magnifies the impact of shocks on consumption through new intertemporal substitution mechanisms

on time inconsistency a technical issue in stackelberg differential games abstract stackelberg differential games are useful settings in which optimal government policies can be studied this paper argues that the analysis of these games involves a key technical issue in particular we question the necessity for optimality of one boundary condition invoked in existing literature the issue is of key interest because the boundary condition is largely responsible for the time inconsistency results previously obtained we show that the boundary condition is not necessary in some cases as a result our finding undermines the credibility of the existing conclusions journal of economic literature classification numbers c61 e62 h21

what determines aggregate returns to scale abstract this paper develops a unified framework that incorporates four features important in existing models with increasing returns fixed costs decreasing marginal costs product variety and market power when fixed costs are not allowed to vary and profits are imposed to be zero in every period only the degree of returns to variety determines the degree of aggregate increasing returns to scale when fixed costs respond to changes in aggregate activity or the zero profit condition does not hold in the short run aggregate returns depend not only on product variety but also on diminishing marginal costs or market power the degree of market power however does not affect input prices which are critical to determine the uniqueness of equilibrium

the relationship between energy consumption energy prices and economic growth time series evidence from asian developing countries this paper estimates the causal relationships between energy consumption and income for india indonesia the philippines and thailand using cointegration and error correction modelling techniques the results indicate that in the short run unidirectional granger causality runs from energy to income for india and indonesia while bidirectional granger causality runs from energy to income for thailand and the philippines in the case of thailand and the philippines energy income and prices are mutually causal the study results do not support the view that energy and income are neutral with respect to each other with the exception of indonesia and india where neutrality is observed in the short run c 2000 elsevier science b v all rights reserved jel classifications c22 q43 q48

efficiency gaps love of variety and international trade we develop a general equilibrium monopolistic competition model of trade with technical heterogeneity among firms and countries with free entry technical asymmetries between firms result in the endogenous determination of the equilibrium average efficiency of the industry we show that trade reduces increases the minimum efficiency required to survive in the more less efficient country this has important welfare implications 1 contrary to the constant elasticity of substitution homogeneous firms model trade affects welfare even when there is no love of variety 2 there are circumstances in which trade liberalization leads to a loss of consumer welfare

the dynamic effects of currency union on trade abstract the response of trade to a monetary union is a dynamic process an empirical study of the european monetary union finds that the extensive margin of trade in new goods responded several years ahead of emu implementation and ahead of overall trade volume a dynamic rational expectations trade model shows that early entry of new firms in anticipation is explainable as a rational forward looking response to news the model helps identify which types of trading frictions are reduced by a currency union and shows how new entry can be affected by uncertainty about emu

optimal taxation with imperfect competition and aggregate returns to specialization in this paper we explore the proposition that in economies with imperfect competitive markets the optimal capital income tax is negative and the optimal tax on firms profits is confiscatory we show that if the total factor productivity as well as the measure of firms or varieties are endogenous instead of fixed then the optimal fiscal policy can lead to different results the government faces a trade off between the fixed costs that the society pays for the

allocational efficiency with heterogeneous firms disentangling love of variety and market power we analyze allocational efficiency and first best industrial policy in monopolistic competition when love of variety is disentangled from market power and firms are heterogeneous