26,799 research outputs found
The role of the wealth distribution on output volatility
We explore the link between wealth inequality and business cycle fluctuations in a two-sector neoclassical growth model with endogenous labor and heterogeneous agents. Assuming that wealth inequality is described by the distribution of shares of capital, we show that in the most plausible situations wealth equality is a stabilizing factor. In particular, when wealth is Pareto distributed and preferences generate non-linear absolute risk tolerance indices, a rise in the Gini index may only be associated to a rise in volatility. When individual preferences are such that the individual absolute risk tolerance indices are linear, as with HARA utility, even a low level of taste heterogeneity ensures that a rise in inequality may not reduce volatility, and this independently of the wealth distribution. Finally, we note that such a clear result is at odd with the existing related literature.
The role of the wealth distribution on output volatility
We explore the link between wealth inequality and business cycle fluctuations in a two-sector neoclassical growth model with endogenous labor and heterogeneous agents. Assuming that wealth inequality is described by the distribution of shares of capital, we show that in the most plausible situations wealth equality is a stabilizing factor. In particular, when wealth is Pareto distributed and preferences generate non linear absolute risk tolerance indices, a rise in the Gini index may only be associated to a rise in volatility.When individual preferences are such that the individual absolute risk tolerance indices are linear, as with HARA utility, even a low level of taste heterogeneity ensures that a rise in inequality may not reduce volatility, and this independently of the wealth distribution.Finally, we note that such a clear result is at odd with the existing related literature.Wealth Inequality, Pareto distribution, Gini index, Elastic Labor Supply, Macroeconomic Volatility, Endogenous Equilibrium Business Cycles.
Why is productivity procyclical? Why do we care?
Productivity rises in booms and falls in recessions. There are four main explanations for this procyclical productivity: (i) procyclical technology shocks, (ii) widespread imperfect competition and increasing returns, (iii) variable utilization of inputs over the cycle, and (iv) resource reallocations. Recent macroeconomic literature views this stylized fact of procyclical productivity as an essential feature of business cycles because each explanation has important implications for macroeconomic modeling. In this paper, we discuss empirical methods for assessing the importance of these four explanations. We provide microfoundations for our preferred approach of estimating an explicitly first-order approximation to the production function, using a theoretically motivated proxy for utilization. When we implement this approach, we find that variable utilization and resource reallocations are particularly important in explaining procyclical productivity. We also argue that the reallocation effects that we identify are not "biases" -- they reflect changes in an economyâs ability to produce goods and services for final consumption from given primary inputs of capital and labor. Thus, from a normative viewpoint, reallocations are significant for welfare; from a positive viewpoint, they constitute potentially important amplification and propagation mechanisms for macroeconomic modeling.Productivity ; Business cycles
Structure of Triadic Relations in Multiplex Networks
Recent advances in the study of networked systems have highlighted that our
interconnected world is composed of networks that are coupled to each other
through different "layers" that each represent one of many possible subsystems
or types of interactions. Nevertheless, it is traditional to aggregate
multilayer networks into a single weighted network in order to take advantage
of existing tools. This is admittedly convenient, but it is also extremely
problematic, as important information can be lost as a result. It is therefore
important to develop multilayer generalizations of network concepts. In this
paper, we analyze triadic relations and generalize the idea of transitivity to
multiplex networks. By focusing on triadic relations, which yield the simplest
type of transitivity, we generalize the concept and computation of clustering
coefficients to multiplex networks. We show how the layered structure of such
networks introduces a new degree of freedom that has a fundamental effect on
transitivity. We compute multiplex clustering coefficients for several real
multiplex networks and illustrate why one must take great care when
generalizing standard network concepts to multiplex networks. We also derive
analytical expressions for our clustering coefficients for ensemble averages of
networks in a family of random multiplex networks. Our analysis illustrates
that social networks have a strong tendency to promote redundancy by closing
triads at every layer and that they thereby have a different type of multiplex
transitivity from transportation networks, which do not exhibit such a
tendency. These insights are invisible if one only studies aggregated networks.Comment: Main text + Supplementary Material included in a single file.
Published in New Journal of Physic
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