Dynamic Factor Demands in a Changing Economy - An Irish Application

In this paper a model of dynamic factor demands is presented for the Irish economy. Total costs, labour and capital are modelled on a two-stage basis. First, a static, long-run cost function is specified which allows for the derivation of expressions for optimal labour and capital demand. This function is assumed to be of the flexible, translog form and thus more general than the generic Cobb-Douglas application. In the second stage, a dynamic cost function is specified which nests the long-run static approach. Growth rates in factor shares are derived from the dynamic approach and the rate of adjustment of input use to factor price changes is examined through the use of short and long-run elasticities.

Cosmological perturbation theory in 1+1 dimensions

Many recent studies have highlighted certain failures of the standard Eulerian-space cosmological perturbation theory (SPT). Its problems include (1) not capturing large-scale bulk flows [leading to an O(1) error in the 1-loop SPT prediction for the baryon acoustic peak in the correlation function], (2) assuming that the Universe behaves as a pressureless, inviscid fluid, and (3) treating fluctuations on scales that are non-perturbative as if they were. Recent studies have highlighted the successes of perturbation theory in Lagrangian space or theories that solve equations for the effective dynamics of smoothed fields. Both approaches mitigate some or all of the aforementioned issues with SPT. We discuss these physical developments by specializing to the simplified 1D case of gravitationally interacting sheets, which allows us to substantially reduces the analytic overhead and still (as we show) maintain many of the same behaviors as in 3D. In 1D, linear-order Lagrangian perturbation theory ("the Zeldovich approximation") is exact up to shell crossing, and we prove that n^{th}-order Eulerian perturbation theory converges to the Zeldovich approximation as n goes to infinity. In no 1D cosmology that we consider (including a CDM-like case and power-law models) do these theories describe accurately the matter power spectrum on any mildly nonlinear scale. We find that theories based on effective equations are much more successful at describing the dynamics. Finally, we discuss many topics that have recently appeared in the perturbation theory literature such as beat coupling, the shift and smearing of the baryon acoustic oscillation feature, and the advantages of Fourier versus configuration space. Our simplified 1D case serves as an intuitive review of these perturbation theory results.Comment: 28 pages + appendices; 10 figures; matches version accepted to JCA

Credit conditions and tenure choice: A cross-country examination [on housing market]. ESRI WP582, December 2017

An understanding of the house price to rent ratio and its determinants is important in assessing housing market developments and tenure choice therein. While the ratio is most usually explained by the user cost of capital, the influence of credit conditions on it has been added to econometric assessments in recent years. Using a new cross-country panel, we estimate the impact of variations in credit conditions on the house price to rent ratio between 1994 and 2015 on both a panel and country-by-country basis. This period was one of substantial cross-country house price movements as developments in standard explanatory variables, such as income levels, interest rates and demographics, were accompanied by major changes in credit markets. In line with other recent studies, our results establish the relevance of credit conditions to the house price to rent ratio at both panel and country levels. Moreover, the evidence points to credit conditions dominating the user cost of capital over the sample period, emphasising the need to include credit analysis when evaluating housing market developments