Computation of equilibria in heterogeneous agent models

This paper essentially puts together procedures that are used in the computation of equilibria in models with a very large number of heterogeneous agents. It is not a complete description of all procedures used in the literature. It describes procedures that deal with infinitely lived agent versions of the growth model with and without aggregate uncertainty, overlapping generations models, and dynamic political economy models.Econometric models

The Balance of Payments and Borrowing Constraints: An Alternative View of the Mexican Crisis

In standard models of the balance of payments, crises occur when investors begin to doubt the credibility of the government's commitment to its exchange rate policy. In this paper, we develop an alternative model in which balance of payments crises occur even if the credibility of government fiscal, monetary, and exchange rate policies is never in doubt. In this alternative model, international lending is constrained by the risk of repudiation. Balance of payments crises occur when the government and citizens of a country hit their international borrowing constraints. Our model is broadly consistent with events in Mexico from 1987-1995. More generally, our model suggests that countries which undertake sweeping macroeconomic and structural reforms should expect to face a balance of payments crisis when they exhaust their access to international capital inflows.

The balance of payments and borrowing constraints: an alternative view of the Mexican crisis

In this paper we develop a model in which a country faces a balance of payments crisis if constraints on its international borrowing bind. We use the model to describe the dynamics of the trade balance, capital account, and balance of payments of a country that borrows to finance consumption following sweeping macroeconomic and structural reforms and then hits constraints on its international borrowing. We compare the predictions of this theoretical example with events in Mexico from 1987 through 1995.Financial crises - Mexico ; Balance of payments ; Mexico

Life insurance and household consumption.

In this paper, we use data of life insurance holdings by age, sex, and marital status to infer how individuals value consumption in different demographic stages. Essentially, we use revealed preference to estimate equivalence scales and altruism simultaneously in the context of a fully specified model with agents facing U.S. demographic features and with access to savings markets and life insurance markets. Our findings indicate that individuals are very caring for their dependents, that there are large economies of scale in consumption, that children are costly but wives with children produce a lot of goods in the home and that while females seem to have some form of habits created by marriage, men do not. These findings contrast sharply with the standard notions of equivalence scales.Insurance

On the equilibrium concept for overlapping generations organizations

A necessary feature for equilibrium is that beliefs about the behavior of other agents are rational. We argue that in stationary OLG environments this implies that any future generation in the same situation as the initial generation must do as well as the initial generation did in that situation. We conclude that the existing equilibrium concepts in the literature do not satisfy this condition. We then propose an alternative equilibrium concept, organizational equilibrium, that satisfies this condition. We show that equilibrium exists, it is unique, and it improves over autarky without achieving optimality. Moreover, the equilibrium can be readily found by solving a maximization program.Economics ; Equilibrium (Economics) - Mathematical models

Review of Polarimetric and ionospheric effects on Sar, Insar and Palsar systems: requirements and correction methods

Este estudio proporciona una actualización de las herramientas polarimétricas que se utilizan actualmente para la extracción óptima de la información a partir de imágenes de Radares de Apertura Sintética, SAR, de imágenes Interferométricas de SAR, InSAR e imágenes polarimétricas de SAR en la banda L, PALSAR. Los fundamentos de la teoría polarimétrica son discutidos en el contexto del radar de apertura sintética (SAR). Se revisa la calibración polarimétrica SAR, que es un tema importante para la extracción de información. Es considerada la extracción de información usando los parámetros de ondas dispersadas recibidas. Se proponen algunos esquemas de corrección ionosférica para las ondas transmitidas por el radar de apertura sintética (SAR) y para la interferometría SAR polarimétrica (PolInSAR) en el espacio. La variación temporal y espacial de la densidad de electrónica en la alta atmosfera afecta la propagación del pulso de radar dando lugar a distorsiones de la imagen. Se estima el Contenido Electrónico Total (CET) mediante la aplicación de la ecuación de Appleton-Hartree debido a distorsiones de enfoque, polarimetría e interferometría. Se propo-ne un estimador combinado que produce estimaciones diferenciales de CET. Se discute además el efecto de la estructura vertical de la ionosfera desde la fase interferométrica y se describen instrucciones importantes para la investigación futura.This study provides an update of the polarimetric tools currently used for optimal extraction of information from polarimetric SAR (Synthetic Aperture Radar), INSAR (Interferometric Synthetic Aperture Radar) and PALSAR (Phase Array L-band Synthetic Aperture Radar) imagery. The fundamentals of polarimetric theory are discussed in the context of synthetic aperture radar (SAR). Polarimetric SAR calibration, which is important for the extraction of subject information, is reviewed. Extraction of information using the received scattered wave is considered. Some schemes for ionospheric correction to synthetic aperture radar (SAR) and the wave interferometry (PolInSAR) are proposed. Temporal and spatial variations of the electronic density in the upper atmosphere affect radar pulse propagation and, thereby, result in distortion of the image. Due to distortions of focus, polarimetry and interferometry, the Total Electron Content (TEC) has been estimated by applying the Appleton-Hartree equation. We propose a combined estimator that reliably estimates of TEC differentials. We also discuss the effect of the vertical structure of the ionosphere from the interferometric phase and outline important avenues for future research.Fil: Rios, Victor Hugo. Consejo Nacional de Investigaciones Científicas y Técnicas; Argentina. Universidad Nacional de Tucuman. Facultad de Ciencias Exactas y Tecnologia. Departamento de Fisica; Argentin

Finite-Life, Private-Information Theory of Unsecured Debt

We propose a theory of unsecured debt that is based on the existence of private information about a person's type and on the fact that some debtors have the incentive to forego bankruptcy in order to signal their type. The theory formalizes the idea that the type of a person is relevant to trading partners in many exchange situations and by resisting opportunistic behavior in one exchange context, a person may signal valuable information about his type to trading partners in other exchange contexts. In the model, by resisting opportunistic behavior in the credit market borrowers can signal their type to the insurance market. The model is consistent with the observation that insurers use credit scores to predict the likelihood of a person filing insurance claims.Adverse Selection, Insurance, Credit Scores, Default Risk

Aggregate and Welfare Effects of Redistribution of Wealth Under Inflation and Price-Level Targeting

Since the work of Doepke and Schneider (2006a) and Meh and Terajima (2008), we know that inflation causes major redistribution of wealth - between households and the government, between nationals and foreigners, and between households within the same country. Two types of monetary policy, inflation targeting (IT) and price level targeting (PT), have very different implications for the price level path subsequent to a price-level shock, and consequently, have different redistributional properties which is what we explore in this paper. For Canada, we show that the magnitude of redistributions of an unexpected 1% price-level increase under IT is about three times larger than under PT. Households' and foreigners' wealth losses from a price level increase is matched by the gains of the government. Even though this redistribution is zero-sum, we observe positive effects on GDP due to the wealth loss, the lower value of the debt and its associated fiscal adjustment, and the non-linear effects on work effort of the redistribution of wealth across households. Finally, the direction of the change in the weighted welfare of households depends on the fiscal policy.Economic models; Monetary policy framework; Sectoral balance sheet; Inflation: costs and benefits; Inflation targets; Inflation and prices