Perfect equilibrium in a model of competitive arms accumulation

Equilibrium Theory

‘Living’ wage, class conflict and ethnic strife

We examine how group-specific differences in reservation wage, arising due to asymmetries in social entitlements, impact on distribution via the joint determination of class conflict between workers and employers, and ‘ethnic’ conflict among workers. We model a two-dimensional contest, where two unions, representing different sections of workers, jointly but non-cooperatively invest resources against employers in enforcing an exogenously given rent, while also contesting one another. The rent arises from a ‘living’ wage, set above reservation wage rates via labour regulations. We show that high reservation wage workers gain, and employers lose, from better social entitlements for low reservation wage workers. The latter however benefit, with employers and against the former, from weak labour regulations. When minority/immigrant workers are marginalized both in the labour market and in non-wage entitlements, improving job access and expanding ‘social support’ has contradictory effects on class and ethnic conflicts. ‘Trade unionism’, i.e. political articulation of shared economic interests alone, appears insufficient to temper ethnic conflicts among workers.Class conflict, Ethnic conflict, Living wage, Labour regulation, Social entitlement, Affirmative action, Distribution.

‘Living’ Wage, Class Conflict and Ethnic Strife

We examine how group-specific differences in reservation wage, arising due to asymmetries in social entitlements, impact on distribution via the joint determination of class conflict between workers and employers, and ‘ethnic’ conflict among workers. We model a two-dimensional contest, where two unions, representing different sections of workers, jointly but non-cooperatively invest resources against employers in enforcing an exogenously given rent, while also contesting one another. The rent arises from a ‘living’ wage, set above reservation wage rates via labour regulations. We show that high reservation wage workers gain, and employers lose, from better social entitlements for low reservation wage workers. The latter however benefit, with employers and against the former, from weak labour regulations. When minority/immigrant workers are marginalized both in the labour market and in non-wage entitlements, improving job access and expanding ‘social support’ has contradictory effects on class and ethnic conflicts. ‘Trade unionism’, i.e. political articulation of shared economic interests alone, appears insufficient to temper ethnic conflicts among workers.class conflict, ethnic conflict, living wage, labour regulation, social entitlement, affirmative action, Distribution

Institutional design and spatial (in)equality - the Janus face of economic integration

This paper analyzes within a spatial endogenous growth setting the impact of public policy coordination on agglomeration. Governments in each of the two symmetric regions provide a local public input that becomes globally effective due to integration. Micro-foundation of governmental behavior is based on three different coordination schemes: autarky, full or partial coordination. Scale effects act as agglomeration force and in addition to private capital agglomeration increase the concentration of the public input. Integration promotes dispersion forces with respect to the distribution of physical capital which are based on decreasing private returns. However, within the governments’ decision on the concentration of the public input, increasing integration reinforces agglomeration because it promotes the interregional productive use of the public input. Taking feedback effects between the private and the public sector into account leads to mutual reinforcement, hence agglomeration forces almost always dominate and the spreading equilibrium becomes unstable. If convergence is a separate (additional) political objective, it needs sustained additional political effort

'Living' wage, class conflict and ethnic strife

We examine how group-specific differences in reservation wage, arising due to asymmetries in social entitlements, impact distribution via the joint determination of class conflict between workers and employers, and 'ethnic' conflict among workers. We model a two-dimensional contest, where two unions, representing different sections of workers, jointly but non-cooperatively invest resources against employers in enforcing an exogenously given rent, while also contesting one another. The rent arises from a 'living' wage, set above reservation wage rates via labour regulations. We show that high reservation wage workers gain, and employers lose, from better social entitlements for low reservation wage workers. The latter however benefit, with employers and against the former, from weak labour regulations. When minority/ immigrant workers are marginalized both in the labour market and in non-wage entitlements, improving job access and expanding 'social support' has contradictory effects on class and ethnic conflicts. 'Trade unionism', i.e. political articulation of shared economic interests alone, appears insufficient to temper ethnic conflicts among workers

Information, expectations and macroeconomic policy.

PhDThe thesis is motivated by some important recent developments in macroeconomic theory and the theory of macroeconomic policy. A common theme emphasized throughout is the integration of rational expectations into macroeconomic policy evaluation and the sophism of conducting evaluations predicated on alternative expectations hypotheses. The application of rational expectations to optimal control theory inspires a game-theoretic paragigm for the derivation of optimal economic policies. This transform fundamentally the way in which economists should address the control problem. The recent proliferation of research in the area is subject to the first systematic investigation. The necessity for assimilating model uncertainty into the problem of policy evaluation is emphasized. This is made operational with respect to a particulaxly topical issue concerning the optimal choice of monetary instrument. A substantial part of the thesis is devoted to a rigorous exploration of the information structure conditioning expectations. Particular emphasis is on partial ignorance. An intelligent system can exploit statistical filtering techniques to extract the information content of certain economic variables. The thesis illustrates vividly the potentially critical dependence of the laws of motion of the system on the information structure. it calls for a detailed explication of that structure a3 a pre-requisite for any analysis and highlights properties of certain earlier treatments which are symptomatic of their neglect of this. Analytical work is combined with computer simulations of a larger econometric model. Higher order dynamics are the realised 3 consequences of asset accumulati6n and the government budget constraint. The issue of bond-financed deficit instability is subject to extensive testing and the implications of divergent e: cpectations mechanisms elicited

Tinbergen and Theil Meet Nash: Controllability in Policy Games

This paper generalizes the classical theory of economic policy to a static LQ-strategic context between n players. We show how this generalized version of controllability can profitably be used to deal with policy ineffectiveness issues and Nash equilibrium existence.Policy games, policy ineffectiveness, static controllability, Nash equilibrium existence

Is public co-ordination of investment in information security desirable?

This paper provides for the presentation, in an integrated manner, of a sequence of results addressing the consequences of the presence of an information steward in an ecosystem under attack and establishes the appropriate defensive investment responses, thus allowing for a cohesive understanding of the nature of the information steward in a variety of attack contexts. We determine the level of investment in information security and attacking intensity when agents react in a non-coordinated manner and compare them to the case of the system’s coordinated response undertaken under the guidance of a steward. We show that only in the most well-designed institutional set-up the presence of the well-informed steward provides for an increase of the system’s resilience to attacks. In the case in which both the information available to the steward and its policy instruments are curtailed, coordinated policy responses yield no additional benefits to individual agents and in some case they actually compared unfavourably to atomistic responses. The system’s sustainability does improve in the presence of a steward, which deters attackers and reduces the numbers and intensity of attacks. In most cases, the resulting investment expenditure undertaken by the agents in the ecosystem exceeds its Pareto efficient magnitude