ESTIMATION AND TESTING AN ADDITIVE PARTIALLY LINEAR MODEL IN A SYSTEM OF ENGEL CURVES

The form of the Engel curve has long been a subject of discussion in appliedeconometrics and until now there has no been definitive conclusion about its form. In this paperan additive partially linear model is used to estimate semiparametrically the effect of totalexpenditure in the context of the Engel curves. Additionally, we consider the non-parametricinclusion of some regressors which traditionally have a non linear effect such as age andschooling. To that end we compare an additive partially linear model with the fullynonparametric one using recent popular test statistics. We also provide the p-values computedby bootstrap and subsampling schemes for the proposed test statistics. Empirical analysis basedon data drawn from the Spanish Expenditure Survey 1990-91 shows that modelling the effectsof expenditure, age and schooling on budget share deserves a treatment better than that adoptedin simple semiparametric analysis.Engel curve, expenditure, nonparametric estimation, marginal integration

A comment on the cost of capital for investments with non-homogeneous components

In this paper, the expression for the cost of capital is derived when net and replacement investments exhibit differences in their effective prices due to a different fiscal treatment. It is shown that, contrary to previous results in the literature, the cost of capital should be constructed under an opportunity cost criterion rather than a historical one. This result has some important economic consequences, since the optimizing firm will take into account not only the effective price for the new investments but also consider the opportunity cost of replacing them.grants on net investments, cost of capital

Non-constant discounting in finite horizon: The free terminal time case

This paper derives the HJB (Hamilton-Jacobi-Bellman) equation for sophisticated agents in a finite horizon dynamic optimization problem with non-constant discounting in a continuous setting, by using a dynamic programming approach. A simple example is used in order to illustrate the applicability of this HJB equation, by suggesting a method for constructing the subgame perfect equilibrium solution to the problem. Conditions for the observational equivalence with an associated problem with constant discounting are analyzed. Special attention is paid to the case of free terminal time. Strotzs model (an eating cake problem of a nonrenewable resource with non-constant discounting) is revisited.naive and sophisticated agents, observational equivalence, non-constant discounting, free terminal time

A note on the coincidence between Stackelberg and Nash equilibria in a differential game between government and firms

In Navas and Mar n-Solano (2008) the coincidence between Nash and Stackelberg equilibria for a modified version of the differential game model first proposed by Lancaster (1973) was proved. However, important restrictions on the value of the parameters of the model were included, in order to obtain an interior solution. In this paper we extend the previous result, in the limit when the discount rate is equal to zero, by eliminating the restrictions and taking into account corner solutions.optimal profit taxation, nash/stackelberg equilibria, time consistency

User cost of capital with delayed investment grants

The usual assumption when considering investment grants is that grant payments are automatic when investments are undertaken. However, evidence from case studies shows that there can exist some time lag until funds are received by granted firms. In this paper the effects of delays in grant payments on the optimal investment policy of the firm are analyzed. It is shown how these delays lead not only to a higher financing cost but to an effective reduction in the investment grant rate, and in some cases, how benefits from investment grants could be canceled due to interactions with tax effects.user cost of capital, delayed grant payments

Effect on signal-to-noise ratio of splitting the continuous contacts of cuff electrodes into smaller recording areas.

BackgroundCuff electrodes have been widely used chronically in different clinical applications. This neural interface has been dominantly used for nerve stimulation while interfering noise is the major issue when employed for recording purposes. Advancements have been made in rejecting extra-neural interference by using continuous ring contacts in tripolar topologies. Ring contacts provide an average of the neural activity, and thus reduce the information retrieved. Splitting these contacts into smaller recording areas could potentially increase the information content. In this study, we investigate the impact of such discretization on the Signal-to-Noise Ratio (SNR). The effect of contacts positioning and an additional short circuited pair of electrodes were also addressed.MethodsDifferent recording configurations using ring, dot, and a mixed of both contacts were studied in vitro in a frog model. An interfering signal was induced in the medium to simulate myoelectric noise. The experimental setup was design in such a way that the only difference between recordings was the configuration used. The inter-session experimental differences were taken care of by a common configuration that allowed normalization between electrode designs.ResultsIt was found that splitting all contacts into small recording areas had negative effects on noise rejection. However, if this is only applied to the central contact creating a mixed tripole configuration, a considerable and statistically significant improvement was observed. Moreover, the signal to noise ratio was equal or larger than what can be achieved with the best known configuration, namely the short circuited tripole. This suggests that for recording purposes, any tripole topology would benefit from splitting the central contact into one or more discrete contacts.ConclusionsOur results showed that a mixed tripole configuration performs better than the configuration including only ring contacts. Therefore, splitting the central ring contact of a cuff electrode into a number of dot contacts not only provides additional information but also an improved SNR. In addition, the effect of an additional pair of short circuited electrodes and the "end effect" observed with the presented method are in line with previous findings by other authors

Heterogeneous discounting in consumption-investment problems. Time consistent solutions

In this paper we analyze a stochastic continuous time model in finite horizon in which agents discount the instantaneous utility function and the final function at constant but different instantaneous discount rates of time preference. Within this context we can model problems in which, when the time t approaches to the final time, the valuation of the final function increases compared with previous valuations in a way that cannot be explained by using a unique constant or a variable discount rate. We derive a dynamic programming equation whose solutions are time-consistent Markov equilibria. For this class of time preferences, we study the classical consumption and portfolio rules model (Merton, 1971) for CRRA and CARA utility functions for time- consistent agents, and we compare the different equilibria with the time-inconsistent solutions. The introduction of stochastic terminal time is also discussed.dynamic programming, consumption and portfolio rules, heterogeneous discounting, time consistency

Time Consistent Pareto Solutions in Common Access Resource Games with Asymmetric Players

In the analysis of equilibrium policies in a dierential game, if agents have different time preference rates, the cooperative (Pareto optimum) solution obtained by applying the Pontryagin's Maximum Principle becomes time inconsistent. In this work we derive a set of dynamic programming equations (in discrete and continuous time) whose solutions are time consistent equilibrium rules for N-player cooperative dierential games in which agents dier in their instantaneous utility functions and also in their discount rates of time preference. The results are applied to the study of a cake-eating problem describing the management of a common property exhaustible natural resource. The extension of the results to a simple common property renewable natural resource model in innite horizon is also discussed.cooperative solutions, dierential games, asymmetric players, resource games, time-inconsistency, heterogeneous discount rates