Evaluating Projects in a Dynamic Economy: Some New Envelope Results

This paper is concerned with the modern theory of social cost-bene.t analysis in a dynamic economy. The theory emphasizes the role of a comprehensive, forward- looking, dynamic welfare index within the period of the project rather than that of a project.s long-term consequences. However, what constitutes such a welfare index remains controversial in the recent literature. In this paper, we attempt to shed light on the issue by deriving three equivalent cost-bene.t rules for evaluating a small project. In particular, we show that the direct change in net national product (NNP) quali.es as a convenient welfare index without involving any other induced side e¤ects. The project evaluation criterion thus becomes the present discounted value of the direct changes in NNP over the project period. We also illustrate the application of this theory in a few stylized examples.dynamic cost-bene.t analysis; net national product; project evaluation; welfare index

On the Choice of Metrics in Dynamic Welfare Analysis: Utility versus Money Measures

This paper is concerned with the choice of metrics for social cost-benefit analysis and dynamic welfare comparisons. In a utility-theoretic framework, we show that there is always a money measure that can serve as a substitute for the maximized utility wealth. Thus, under the non-arbitrage course of discount rate, the choice between utility and money measures has no real effect on project evaluations. We also define a generalized comprehensive net national product measure with a consumer surplus term incorporated, which is completely consistent with the Weitzman foundation. It is shown that while a green (comprehensive) NNP growth simply reflects the income effect, the change in consumer surplus captures the welfare effect of relative price changes. We argue that the reason for green NNP to be a weak welfare indicator is not due to its choice of money metric per se but the ignorance of a consumer surplus term.Dynamic cost-benefit analysis; green national accounting; utility versus money metrics; Weitzman´s theorem

Genuine Saving under Stochastic Growth

The concept of genuine saving appeared for the first time in a proof of a now well known theorem in Weitzman (1976). It was reinvented and used as a local welfare indicator by Pearce and Atkinson (1993). The purpose of this paper is to generalize this welfare measure to a stochastic Brownian motion context. We will use a stochastic version of a growth model introduced by Ramsey (1928). The particular model was developed by Merton (1975). Although the model is simple, it is enough to understand what its welfare results will look like in a general case.Welfare measures under growth and uncertainty; diversified risk versus undiversified risk

The Role of the Hamiltonian in Dynamic Price Index Theory

This paper is an attempt to investigate the cost-of-living index problem in a general equilibrium multi-sector growth model. Instead of using the utility function as a compensation criterion as Konüs’ (1924) did in his original contribution, we take advantage of the current-value Hamiltonian in constructing our dynamic price index. Since the Hamiltonian is a constancy-equivalent of future utilities (Weitzman, 1976), the dynamic price index is defined in terms of the minimum expenditure that, under alternative prices, would support the constancy-equivalent-utility level in the future. We show that, when properly deflated by the dynamic price index, the real comprehensive net national product becomes an ideal measure for dynamic welfare comparisons. For some special cases, we show that the dynamic price index reduces to the simple static index.Dynamic index theory; Hamiltonian; ideal deflator

Flutter Prediction for Aircraft Conceptual Design

Flutter prediction is usually a knowledge-based analysis process that aims to reduce the cost of aeroelastic stability margin certification. However, early detection of flutter problems is beneficial in the development of unconventional aircraft. The recently developed automation tool ConceptFEA for structural sizing of aircraft concepts paves the way for rapid physics-based flutter prediction of aircraft concepts. A match-point iteration procedure using the p-k method is implemented for ConceptFEA with minimum user input requirements to generate flutter boundary points. A subsonic business jet concept and its high aspect-ratio wing variant are used to demonstrate how the newly developed flutter prediction capability can be used during aircraft conceptual design. Sized structures, flutter boundary curves, and flutter sensitivity analysis results are generated for these two concepts using ConceptFEA. The relevant equivalent plate theory is provided to show the quantitative relationships between a stiffened panel and its equivalent NASTRAN PSHELL panel. The rapid flutter prediction capability of ConceptFEA makes multidisciplinary collaborations between systems analysts and aeroelasticity experts feasible in practice

Money Metrics Welfare Measures in Imperfect Markets under Growth

This paper shows how utility based welfare measures in dynamic general equilibrium under imperfect markets can be transferred into a money metrics. In order to do this, we need to price forward looking components measured in units of utility. The typical comprehensive quasi-static welfare measure contains a core that looks like a comprehensive (green) NNP component, as well as additional consumer surplus terms for both consumption goods and the externality. In addition, it contains a forward looking component with the discounted value of the marginal externality as the function to be integrated over time is also required. To accomplish this, we need a price index that is independent of the market basket, or to assume that the marginal utility of income is constant over time. With respect to local welfare measures it turn out that growth in traditional NNP will surprisingly work, provided that we condition on a positive average marginal rate of return of investment, and use an augmented genuine saving concept.Welfare measurement under growth; imperfect markets; utility versus money metrics

Transient Resetting: A Novel Mechanism for Synchrony and Its Biological Examples

The study of synchronization in biological systems is essential for the understanding of the rhythmic phenomena of living organisms at both molecular and cellular levels. In this paper, by using simple dynamical systems theory, we present a novel mechanism, named transient resetting, for the synchronization of uncoupled biological oscillators with stimuli. This mechanism not only can unify and extend many existing results on (deterministic and stochastic) stimulus-induced synchrony, but also may actually play an important role in biological rhythms. We argue that transient resetting is a possible mechanism for the synchronization in many biological organisms, which might also be further used in medical therapy of rhythmic disorders. Examples on the synchronization of neural and circadian oscillators are presented to verify our hypothesis.Comment: 17 pages, 7 figure