Testing Core Membership in Public Goods Economies

This paper develops a recent line of economic theory seeking to understand public goods economies using methods of topological analysis. Our first main result is a very clean characterization of the economy's core (the standard solution concept in public goods). Specifically, we prove that a point is in the core iff it is Pareto efficient, individually rational, and the set of points it dominates is path connected. While this structural theorem has a few interesting implications in economic theory, the main focus of the second part of this paper is on a particular algorithmic application that demonstrates its utility. Since the 1960s, economists have looked for an efficient computational process that decides whether or not a given point is in the core. All known algorithms so far run in exponential time (except in some artificially restricted settings). By heavily exploiting our new structure, we propose a new algorithm for testing core membership whose computational bottleneck is the solution of $O(n)$ convex optimization problems on the utility function governing the economy. It is fairly natural to assume that convex optimization should be feasible, as it is needed even for very basic economic computational tasks such as testing Pareto efficiency. Nevertheless, even without this assumption, our work implies for the first time that core membership can be efficiently tested on (e.g.) utility functions that admit "nice" analytic expressions, or that appropriately defined $\varepsilon$-approximate versions of the problem are tractable (by using modern black-box $\varepsilon$-approximate convex optimization algorithms).Comment: To appear in ICALP 201

Testing Core Membership in Public Goods Economies

This paper develops a recent line of economic theory seeking to understand public goods economies using methods of topological analysis. Our first main result is a very clean characterization of the economy\u27s core (the standard solution concept in public goods). Specifically, we prove that a point is in the core iff it is Pareto efficient, individually rational, and the set of points it dominates is path connected. While this structural theorem has a few interesting implications in economic theory, the main focus of the second part of this paper is on a particular algorithmic application that demonstrates its utility. Since the 1960s, economists have looked for an efficient computational process that decides whether or not a given point is in the core. All known algorithms so far run in exponential time (except in some artificially restricted settings). By heavily exploiting our new structure, we propose a new algorithm for testing core membership whose computational bottleneck is the solution of O(n) convex optimization problems on the utility function governing the economy. It is fairly natural to assume that convex optimization should be feasible, as it is needed even for very basic economic computational tasks such as testing Pareto efficiency. Nevertheless, even without this assumption, our work implies for the first time that core membership can be efficiently tested on (e.g.) utility functions that admit ``nice\u27\u27 analytic expressions, or that appropriately defined epsilon-approximate versions of the problem are tractable (by using modern black-box epsilon-approximate convex optimization algorithms)

The Structure and Dynamics of Schools and Business: Do They Face Similar Issues?

The main aims of the report are to: (1) gain a better understanding of key economic forces shaping choices available to schools; (2) build up our practical knowledge of how other organisations deal with the kinds of issues facing schools; and (3) bridge the gap between the view that economics has nothing useful to say about how to organise education and the view that education is just another business and should be treated as such. The report draws on analogies from the business world to highlight parallels between the operating environment facing schools and businesses. It also identifies some important features of schooling which do not have a strong parallel in the business world, which suggests care needs to be taken not to draw too much from any individual example.

The Devil's long tail: religious moderation and extremism on the Web

In this article, we examine Chris Anderson's theory of the long tail with regard not to an economic market, but rather to the competitive marketplace of ideas. In a religious context, we interpret the long-tail theory as predicting that the Web will allow extreme or strict sects to flourish in an unprecedented way by helping proponents cater to the long tail online. If this is true, it threatens the orthodox understanding of the dynamics of religious extremism. It would also undermine the associated idea that groups’ convergence on the middle ground of religious beliefs cultivates and is cultivated by liberal civic virtues. If radical groups can flourish while preaching virtues diametrically opposed to liberalism, freedom of religion might not be so good for liberalism after all

Real and monetary convergence within the European Union and between the European Union and candidate countries: A rolling cointegration approach

We use rolling cointegration to measure the convergence of base money, M2, the consumer price index and industrial output between two reference countries, Germany and France, and recent EU members and some transition economy candidates. Counties that recently joined the EU exhibit time-varying cointegration with the reference countries over much of the 1980-2000 sample period. Cointegration for the transition economies was comparable for M2 and prices, but less so for monetary policy and industrial output. This suggests that a peg to the Euro upon accession is feasible for the East European candidates, but the benefits of joining the Euro zone are as yet limited. --European Union,convergence,currency areas,enlargement,cointegration,policy coordination

Revitalizing Multilateral Governance at the World Trade Organization Report of the High-Level Board of Experts on the Future of Global Trade Governance. Bertelsmann Policy Brief 2018

If international trade is not governed by rules, mere might dictates what is right. The World Trade Organization (WTO) serves as a place where trade policy issues are addressed, disputes arbitrated, legal frameworks derived and enforced. Through these functions, the WTO ensures that the rules of trade policy are inspired by fairness and reciprocity rather than national interest. It is more important than ever to vitalize the global public good that it rep-resents against various threats that have been undermining it. Therefore, the Global Economic Dynamics project of the Bertelsmann Stiftung has called into life a High-Level Board of Experts on the Future of Global Trade Governance. Composed of eminent experts and seasoned trade diplomats, it elaborated a series of feasible policy recommendations that will increase the effectiveness and sali-ence of the WTO. We hope that this Report provides helpful suggestions in a time marked by increasing trade disputes and protectionism and instead contributes to stronger multilateral institutions and fora.1 The Bertelsmann Stiftung owes a debt of gratitude to Prof Bernard Hoekman, the Chairman of the Expert Board and author of this report. His invaluable expertise and experience, guidance and ability to bridge controversial opinions have been crucial in defining the work of the Board. We would also like to express our sincere thanks to all our Board Members, who generously contributed their expertise, time and networks. Without their dedication, this Report would not have been possible. Finally, we would like to thank Robert Koopman and Aik Hoe Lim of the WTO for their support throughout the whole process and Christian Bluth of Bertelsmann Stiftung for managing this common endeavour

Central Banking and the Choice of Currency Regime in Accession Countries

The subject matter of this paper is the design of appropriate Central Banking arrangements and exchange rate regimes for those former centrally planned Central and East European countries that are candidates for full membership in the European Union. We give an overview of the existing arrangements and point out to which extent monetary arrangements are restricted by conditions for entry both into the European Union and eventually into the European Monetary Union. Furthermore we investigate to which degree countries are fulfilling the accession criteria and compare their performance with the performance of earlier EU joiners like the countries of the Iberian Peninsula, Ireland and Greece.

Deep Integration with the EU and its Likely Impact on Selected ENP Countries and Russia

Deep Integration with the EU and its Likely Impact on Selected ENP Countries and Russia Abstract: The aim of this study is to estimate the impact of the removal of NTBs in trade between the EU and its selected CIS partners: Russia, Ukraine, Georgia, Armenia and Azerbaijan (CIS5). The report includes a discussion of methodologies of measurement of non-tariff barriers and the impact of their removal, including a review of previous studies focusing on CEE and CIS regions. Further, we employ a computable general equilibrium model encompassing the following three pillars of trade facilitation: legislative and regulatory approximation, reform of customs rules and procedures and liberalization of the access of foreign providers of services. We conclude that a reduction of NTBs and improved access to the EU market would bring significant benefits to the CIS5 countries in terms of welfare gains, GDP growth, increases in real wages and expansion of international trade. The possible welfare implications of deep integration with the EU range from 5.8% of GDP in Ukraine to sizeable expected gains in Armenia (3.1%), Russia (2.8%), Azerbaijan (1.8%) and Georgia (1.7%).Institutional harmonization, European integration, European Neighborhood Policy, ENP, non-tariff barriers, NTBs, Computable General Equilibrium, CGE model

Sources of inflation and output fluctuations in Poland and Hungary: Implications for full membership in the European Union

This paper examines the sources of fluctuations in inflation and output in two leading transitioneconomy candidates for admission to the European Union (EU), Poland and Hungary. Using a rational expectations, dynamic open economy aggregate supply- aggregate demand model, we consider real oil price, supply, balance of payments, demand, and monetary disturbances incorporating important features of transition economies such as balance of payments disturbances and finite capital mobility. Evidence indicates that supply shocks explain a sizable portion of price level movements in Hungary while demand shocks are dominant in price level movements in Poland. Monetary shocks are an important source of output fluctuations in the short run in Hungary suggesting nominal inertia. In Poland, real demand shocks affect output in the short run (up to one year), while monetary shocks are negligible. Estimates of “core inflation” based on historical realizations of the shocks suggest that a major component of inflation has been demand driven, “core” inflation. Finally, policy implications of these findings regarding EU membership are evaluated. --Business Cycles,Inflation,Transition Economies,Time Series Models

Catching Up: The Role of Demand, Supply and Regulated Price Effects on the Real Exchange Rates of Four Accession Countries

The main aim of this paper is to examine the exchange rate behavior of a group of four transitional, EU accession countries, with a view to making policy recommendations regarding their accession to full European Monetary Union. We employ a dynamic OLS panel estimator to investigate the relative importance of demand and supply influences on the exchange rates of these countries. Our analysis shows that both supply- and demand-side effects are important for the accession countries, although their overall effect on inflation differentials and competitiveness seems to be small. An additional focus of the paper is the examination of the role that administrated, or regulated, prices and the productivity of the distribution sector play in the real exchange rate dynamics. Based on a unique database we show that administrated prices have been a powerful force behind price and real exchange developments for our group of accession countries. The distribution sector is shown to have an independent effect on the internal price ratio over-and-above that generated by the BS effect.exchange rates, monetary integration, EMU