Comparative Statics by Adaptative Dynamics and the Correspondence Principle

This paper formalizes the relation between comparative statics and the out-of-equilibrium explanation for how a system evolves after a change in parameters. The paper has two main results. First, an increase in an exogenous parameter sets o learning dynamics that involve larger values of the endogenous variables. Second, equilibrium selections that are not monotone increasing in the exogenous variables must be predicting unstable equilibria. Moreover, under some conditions monotone comparative statics and stability are equivalent.

THE RHETORIC OF DUALITY

Agricultural economistsÂ’' view of duality has often assumed the characteristics of an ambivalent relation. During the eighties, several authors published papers which put in doubt this or that aspects of duality. This study emphasizes the notion that duality is a time-honored approach suitable for solving problems that can be expressed mathematically. Contrary to many assertions that appeared in the agricultural economics literature, duality does not seem to suffer from any theoretical limitations any more than does the formulation of the primal problem. The article presents two problems that can be solved with dual methods. The authors are incapable of deriving the same results using primal approach.Research Methods/ Statistical Methods,

Classical Turnpike Theory and the Economics of Forestry

Classical turnpike theory, as originally conceived by Samuelson, pertains to optimal growth theory over a large but infinite time horizon with given initial and terminal stocks. In this paper, we present two turnpike results in the context of the economics of forestry with given initial and terminal forest configurations. Our results depart from the general theory in that they pertain to a transitional production set which does not satisfy the assumptions of inaction and free disposal, and rely on a recently-discovered non-interiority assumption on concave (not necessarily differentiable) benefit functions that implies, and is implied by, the asymptotic convergence of good programs.

Extended Second Welfare Theorem for Nonconvex Economies with Infinite Commodities and Public Goods

This paper is devoted to the study of nonconvex models of welfare economics with public goods and infinite-dimensional commodity spaces. Our main attention is paid to new extensions of the fundamental second welfare theorem to the models under consideration. Based on advanced tools of variational analysis and generalized differentiation, we establish appropriate approximate and exact versions of the extended second welfare theorem for Pareto, weak Pareto, and strong Pareto optimal allocations in both marginal price and decentralized price forms

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

Advances in Spatial Theory and Dynamics

This book originates from two meetings, set apart in time but closely connected by continuing collaborative efforts between researchers in an international network. The first of these meetings took place at IIASA in October 1984, organized by IIASA's Regional Issues Project under the title "Dynamic Analysis of Spatial Development". About half of the papers in this volume were presented at that meeting. These contributions have been elaborated and revised considerably during the preparation of this volume, and can now be regarded as mature papers embracing the frontiers of spatial and economic dynamics. Another set of contributions was presented during the European Summer Institute in Regional Science held at the University of Umea in June 1986. The Summer Institute was organized by CERUM in collaboration with the Departments of Economics and Geography at the same university. The contributions have been drawn from the sessions on technological change, nonlinear dynamics in spatial networks and infrastructure development. This is reflected in the three parts of the volume (1) Competition, specialization and technological change, (2) Spatial interaction, (3) Urban and regional infrastructure

A Comparative Analysis of 30 Bonus-Malus Systems

The automobile third party insurance merit-rating systems of 22 countries are simulated and compared, using as main tools the stationary average premium level, the variability of the policyholders\u27 payments, their elasticity with respect to the claim frequency, and the magnitude of the hunger for bonus. Principal components analysis is used to define an “Index of Toughness” for all systems