Optimal Policy and Non-Scale Growth with R&D Externalities

An established result of the endogenous growth literature is that competitive equilibria in expanding-varieties models are suboptimal due to the rent-effect: monopolistic pricing drives the equilibrium quantity of each intermediate below the efficient level, implying that it is optimal to subsidize final producers. This paper shows that, if scale effects are eliminated by including R&D spillovers in the model, normative prescriptions change. Since the laissez-faire economy under-invests into R&D activity, the share of resources devoted to intermediates' production increases, and this reallocation effect contrasts the rent-effect. In many scenarios, including the polar case of logarithmic preferences, the reallocation effect surely dominates: the equilibrium quantity of each intermediate exceeds the optimal one, and the optimal policy consists of taxing final producers because fiscal authorities must internalize the overshooting mechanism generated by under-investment in R&D.Endogenous Growth, Scale Effects, R&D Externalities, Optimal Policy

Optimal Capital Income Taxation, Investment Subsidies and Redistribution in a Neoclassical Growth Model

In this paper I readdress the result that capital income taxes are bad instruments for pure redistribution and should be zero in the long run. In a neoclassical growth model a capital income cum investment subsidy tax, which is not distorting accumulation, is considered to investigate if net capital income taxes used for pure redistribution are zero in a long-run optimum. I find that capital income taxes may be nonzero, depending on the political power of those who receive redistributive transfers, the distribution of pre-tax factor incomes, and the intertemporal elasticity of substitution.Growth, Redistribution, Investment Subsidies, Capital Income Taxes

Optimal policy and non-scale growth with R&D externalities

An established result of the endogenous growth literature is that laissez-faire equilibria in expanding-varieties models are suboptimal due to the rent-effect: monopolistic pricing drives the equilibrium quantity of each intermediate input below the efficient level, implying that it is optimal to subsidize �final producers. This paper shows that, if scale effects are eliminated by introducing R&D spillovers, normative prescriptions change. Since the laissez-faire economy under-invests into R&D activity, the share of resources devoted to intermediates' production increases and this reallocation effect contrasts the rent-effect. In many scenarios, including the polar case of logarithmic preferences, the reallocation effect surely dominates. The equilibrium quantity of each intermediate exceeds the optimal level and the optimal policy consists of taxing, instead of subsidizing fi�nal producers because fi�scal authorities must redirect the extra-output generated by under-investment towards R&D activity.Endogenous Growth; Scale Effects; R&D Externalities; Optimal Policy;

The protein cost of metabolic fluxes: prediction from enzymatic rate laws and cost minimization

Bacterial growth depends crucially on metabolic fluxes, which are limited by the cell's capacity to maintain metabolic enzymes. The necessary enzyme amount per unit flux is a major determinant of metabolic strategies both in evolution and bioengineering. It depends on enzyme parameters (such as kcat and KM constants), but also on metabolite concentrations. Moreover, similar amounts of different enzymes might incur different costs for the cell, depending on enzyme-specific properties such as protein size and half-life. Here, we developed enzyme cost minimization (ECM), a scalable method for computing enzyme amounts that support a given metabolic flux at a minimal protein cost. The complex interplay of enzyme and metabolite concentrations, e.g. through thermodynamic driving forces and enzyme saturation, would make it hard to solve this optimization problem directly. By treating enzyme cost as a function of metabolite levels, we formulated ECM as a numerically tractable, convex optimization problem. Its tiered approach allows for building models at different levels of detail, depending on the amount of available data. Validating our method with measured metabolite and protein levels in E. coli central metabolism, we found typical prediction fold errors of 3.8 and 2.7, respectively, for the two kinds of data. ECM can be used to predict enzyme levels and protein cost in natural and engineered pathways, establishes a direct connection between protein cost and thermodynamics, and provides a physically plausible and computationally tractable way to include enzyme kinetics into constraint-based metabolic models, where kinetics have usually been ignored or oversimplified

Idiosyncratic uncertainty, capacity utilization and the business cycle

In a stochastic dynamic general equilibrium framework, we introduce the concept of variable capacity utilization (as opposed to the concept of capital utilization). We consider an economy where imperfectly competitive firms use a putty-clay technology and decide on their productive capacity level under uncertainty. An idiosyncratic uncertainty about the exact position of the demand curve facedby each firm explains why sorne productive capacities may remain idle in the sequel and why individual capacity utilization rates differ across firms. The capacity underutilization at the aggregate level thus hides a diversity of microeconomic situations. The variability of the capacity utilization allows for a good description of sorne of the main stylized facts of the business cycle, propagates and magnifies aggregate technological shocks and generates endogenous persistence (Le., the output growth rate displays positive serial correlation)

Defensive online portfolio selection

The class of defensive online portfolio selection algorithms,designed for fi nite investment horizon, is introduced. The Game Constantly Rebalanced Portfolio and the Worst Case Game Constantly Rebalanced Portfolio, are presented and theoretically analyzed. The analysis exploits the rich set of mathematical tools available by means of the connection between Universal Portfolios and the Game- Theoretic framework. The empirical performance of the Worst Case Game Constantly Rebalanced Portfolio algorithm is analyzed through numerical experiments concerning the FTSE 100, Nikkei 225, Nasdaq 100 and S&P500 stock markets for the time interval, from January 2007 to December 2009, which includes the credit crunch crisis from September 2008 to March 2009. The results emphasize the relevance of the proposed online investment algorithm which signi fi cantly outperformed the market index and the minimum variance Sharpe-Markowitz’s portfolio.on-line portfolio selection; universal portfolio; defensive strategy

Theory of Stochastic Optimal Economic Growth

This paper is a survey of the theory of stochastic optimal economic growth.International Development,

The First Conferences on the Theory of Economic Growth.

This paper presents the different conferences held around the subject of the theory of economic growth.ECONOMIC GROWTH ; ECONOMIC DEVELOPMENT ; ECONOMIC THEORY

Recursive Competitive Equilibrium

In this article we define a Recursive Competitive Equilibrium, provide an example and review the related literature. The article is an entry prepared for The New Palgrave: A Dictionary of Economics, 2nd Edition (Palgrave Macmillan: New York).