Debt stabilization in a Non-Ricardian economy

In models with a representative infinitely lived household, tax smoothing implies that the steady state of government debt should follow a random walk. This is unlikely to be the case in overlapping generations (OLG) economies, where the equilibrium interest rate may differ from the policy maker's rate of time preference. It may therefore be optimal to reduce debt today to reduce distortionary taxation in the future. In addition, the level of the capital stock in these economies is likely to be suboptimally low, and reducing government debt will crowd in additional capital. Using a version of the Blanchard-Yaari model of perpetual youth, with both public and private capital, we show that it is optimal in steady state for the government to hold assets. However, we also show how and why this level of government assets can fall short of both the level of debt that achieves the optimal capital stock and the level that eliminates income taxes. Finally, we compute the optimal adjustment path to this steady state

Learning and Visceral Temptation in Dynamic Savings Experiments

In models of optimal savings with income uncertainty and habit formation, people should save early to create a buffer stock, to cushion bad income draws and limit the negative internality from habit formation. In experiments in this setting, people save too little initially, but learn to save optimally within four repeated lifecycles, or 1-2 lifecycles with “social learning.” Using beverage rewards (cola) to create visceral temptation, thirsty subjects who consume immediately overspend compared to subjects who only drink after time delay. The relative overspending of immediate-consumption subjects is consistent with hyperbolic discounting and dual-self models. Estimates of the present-bias choices are β=0.6-0.7, which are consistent with other studies (albeit over different time horizons)

RESOURCE OR NUISANCE? MANAGING AFRICAN ELEPHANTS AS A MULTI-USE SPECIES

Increasing human interference with natural systems causes us to re-think our perception of wildlife species and the economic choices society makes with regards to their management. Accordingly, we generalize existing 'bioeconomic' models by proposing an economically-based classification of species. The theoretical model is applied to the case of African elephant management. We demonstrate that the classification of the steady state population of a species depends on both species' density and economic factors. Our main results are threefold. First, we demonstrate the classification-dependent possibility of multiple equilibria and perverse comparative statics for multi-use species. Second, upon comparing the optimal stock of a multi-use species to the stock under an open access regime, we find that the ranking in terms of abundance is ambiguous. Finally, and consistent with existing literature on resource management in a second-best world, our case study supports the idea that trade measures have ambiguous effects on wildlife abundance under open access.Resource /Energy Economics and Policy,

Health Care Opinion Leaders' Views on Health Care Delivery System Reform

Presents findings of a survey of experts on reforming delivery systems -- organized delivery systems, patient-centered medical homes, and retail clinics -- and recommended policy strategies, such as improving the primary care system

Smart Procurement of Naturally Generated Energy (SPONGE) for Plug-in Hybrid Electric Buses

We discuss a recently introduced ECO-driving concept known as SPONGE in the context of Plug-in Hybrid Electric Buses (PHEB)'s.Examples are given to illustrate the benefits of this approach to ECO-driving. Finally, distributed algorithms to realise SPONGE are discussed, paying attention to the privacy implications of the underlying optimisation problems.Comment: This paper is recently submitted to the IEEE Transactions on Automation Science and Engineerin

Learning and Visceral Temptation in Dynamic Saving Experiments

This paper tests two explanations for apparent undersaving in life cycle models: bounded rationality and a preference for immediacy. Each was addressed in a separate experimental study. In the first study, subjects saved too little initially—providing evidence for bounded rationality—but learned to save optimally within four repeated life cycles. In the second study, thirsty subjects who consume beverage sips immediately, rather than with a delay, show greater relative overspending, consistent with quasi-hyperbolic discounting models. The parameter estimates of overspending obtained from the second study, but not the first, are in range of several empirical studies of saving (with an estimated β = 0.6–0.7)

Credit Ratings as Coordination Mechanisms

In this paper, we provide a novel rationale for credit ratings. The rationale that we propose is that credit ratings can serve as a coordinating mechanism in situations where multiple equilibria can obtain. We show that credit ratings provide a "focal point" for firms and their investors. We explore the vital, but previously overlooked implicit contractual relationship between a credit rating agency and a firm. Credit ratings can help fix the desired equilibrium and as such play an economically meaningful role. Our model provides several empirical predictions and insights regarding the expected price impact of ratings changes, the discreteness in funding cost changes, and the effect of the focus of organizations on the efficacy of credit ratings.http://deepblue.lib.umich.edu/bitstream/2027.42/39841/3/wp457.pd

Exit Options and the Allocation of Authority

We analyze the optimal allocation of authority in an organization whose members have conflicting preferences. One party has decision-relevant private information, and the party who obtains authority decides in a self-interested way. As a novel element in the literature on decision rights, we consider exit option contracts: the party without decision rights is entitled to prematurely terminate the relation after the other party's choice. We show that under such a contract it is always optimal to assign authority to the informed and not to the uninformed party, irrespective of the parties' conflict of interest. Indeed, the first-best efficient solution can be obtained by such a contract