Liquidity constraints and time non-separable preferences: simulating models with large state spaces

This paper presents an alternative method for the stochastic simulation of nonlinear and possibly non-differentiable models with large state spaces. We compare our method to other existing methods, and show that the accuracy is satisfactory. We then use the method to analyze the features of an intertemporal optimizing consumption-saving model, when the utility function is time non-separable and when liquidity constraints are imposed. Two non-separabilities are studied, habit persistence and durability of the commodity. As the model has no closed-form solution, we compute deterministic and stochastic solution paths. It enables us to compare income and consumption volatility, and to describe the density of consumption under the different hypotheses on the utility function

The nature of light in an expanding universe

In this paper, we prove the existence of two degrees of freedom that govern the movement of light in an expanding universe. The use of the fractal manifold model leads to reciprocal causality between variation of geometry and gravity, which both play a complementary role in the universe architecture. This study unravels new facts about the distribution of matter in the universe, and provides a new interpretation of Dark Matter and Dark Energy.Comment: 25 page

The Dynamics of Car Sales: A Discrete Choice Approach

Mankiw [1982] explores the Permanent Income Hypothesis implication that durable expenditures follow an ARMA(1,1) representation. He finds that durable expenditures are represented by an AR(1) process which implies that the rate of depreciation of durables, under the PIH model, is 100%. This finding presents a puzzle. Our paper builds on earlier work which attempts to explain this puzzle by considering the aggregation of the discrete dynamic choices of heterogeneous households. We implement this approach by estimating a dynamic discrete choice model of car replacement. We find that through aggregation we can explain both the AR and MA components of Mankiw's results. Further we find that our model is able to match a VAR representation of car sales, prices and income. We find that most of the variation in car sales is due to shocks which influence the replacement probability.

Passive smoking: the effect of bans and taxes

Smoking bans have been widely introduced in recent years in an effort to reduce non-smokers' exposure to tobacco smoke. Jérôme Adda and Francesca Cornaglia evaluate the effect of these restrictions - and of taxes on cigarettes - on the incidence of passive smoking and, in particular, their unintended consequences for children.smoking, taxes, bans