An agent-based model to rural-urban migration analysis

In this paper we analyze the rural-urban migration phenomena as it is usually observed in economies which are in the early stages of industrialization. The analysis is conducted by means of a statistical mechanics approach which builds a computational agent-based model. Agents are placed on a lattice and the connections among them are described via an Ising like model. Simulations on this computational model show some emergent properties that are common in developing economies, such as a transitional dynamics characterized by continuous growth of urban population, followed by the equalization of expected wages between rural and urban sectors (Harris-Todaro equilibrium condition), urban concentration and increasing of per capita income.Comment: 16 pages, 9 figure

The Elusive Rentier Rich: Piketty's Data Battles and the Power of Absent Evidence

The popularity of Thomas Piketty?s research on wealth inequality has drawn attention to a curious question: why was widening wealth inequality largely neglected by mainstream economists in recent decades? To explore and explain that neglect, I draw on the writing of the early neoclassical economist John Bates Clark, who introduced the notion of the marginal productivity of income distribution at the end of the nineteenth century. I then turn to Piketty?s Capital in order to analyze the salience of marginal productivity theories of income today. I suggest that most of the criticism and praise for Piketty?s research is focused on data that are accessible and measurable, obscuring attention to questions over whether current methods for measuring economic capital are defensible or not. My overarching aim is to explore how ?absent? data in economics as a whole help to reinforce blind spots within mainstream economic theory

Why are Prices Sticky? Evidence from Business Survey Data

This paper offers new insights on the price setting behaviour of German retail firms using a novel dataset that consists of a large panel of monthly business surveys from 1991-2006. The firm-level data allows matching changes in firms' prices to several other firm-characteristics. Moreover, information on price expectations allow analyzing the determinants of price updating. Using univariate and bivariate ordered probit specifications, empirical menu cost models are estimated relating the probability of price adjustment and price updating, respectively, to both time- and state- dependent variables. First, results suggest an important role for state-dependence; changes in the macroeconomic and institutional environment as well as firm-specific factors are significantly related to the timing of price adjustment. These findings imply that price setting models should endogenize the timing of price adjustment in order to generate realistic predictions concerning the transmission of monetary policy. Second, an analysis of price expectations yields similar results providing evidence in favour of state-dependent sticky plan models. Third, intermediate input cost changes are among the most important determinants of price adjustment suggesting that pricing models should explicitly incorporate price setting at different production stages. However, the results show that adjustment to input cost changes takes time indicating "additional stickiness" at the last stage of processing

Why Don’t People Pay Attention? Endogenous Sticky Information in a DSGE Model

Building on the models of sticky information, we endogenize the probability of obtaining new information by introducing a switching mechanism allowing agents to choose between costly rational expectations and costless expectations under sticky information. Thereby, the share of agents with rational expectations becomes endogenous and timevarying. While central results of sticky information models are retained, we find that the share of rational expectations is positively correlated with the variance of the variable forecasted, providing a link to models of near-rationality. Output expectations in our model are generally more rational than inflation expectations, but the share of rational inflation expectations increases with a rising variance of the interest rate. With regard to optimal monetary policy, we find that the Taylor principle provides a necessary and sufficient condition for the determinacy of the model. However, output and inflation stability are optimized if the central bank does not react too strongly to inflation, but rather also targets the output gap with a relatively large coefficient in the Taylor rule

A Model of Vertical Oligopolistic Competition

This paper develops a model of successive oligopolies with endogenous market entry, allowing for varying degrees of product differentiation and entry costs in both markets. Our analysis shows that the downstream conditions dominate the overall profitability of the two-tier structure while the upstream conditions mainly affect the distribution of profits. We compare the welfare effects of upstream versus downstream deregulation policies and show that the impact of deregulation may be overvalued when ignoring feedback effects from the other market. Furthermore, we analyze how different forms of vertical restraints influence the endogenous market structure and show when they are welfare enhancing

Universal features in the growth dynamics of complex organizations

We analyze the fluctuations in the gross domestic product (GDP) of 152 countries for the period 1950--1992. We find that (i) the distribution of annual growth rates for countries of a given GDP decays with ``fatter'' tails than for a Gaussian, and (ii) the width of the distribution scales as a power law of GDP with a scaling exponent $\beta \approx 0.15$. Both findings are in surprising agreement with results on firm growth. These results are consistent with the hypothesis that the evolution of organizations with complex structure is governed by similar growth mechanisms.Comment: 4 pages, 7 ps figures, using Latex2e with epsf rotate and multicol style files. Submitted to PR

Updating Inflation Expectations

This paper investigates how inflation expectations evolve. In particular, we analyze the time-varying nature of the propensity to update expectations and its potential determinants. For this purpose we set up a flexible econometric model that tracks the formation of inflation expectations of consumers at each moment in time. We show that the propensity to update inflation expectations changes substantially over time and is related to the quantity and the quality of news