Optimal Endogenous Growth with Exhaustible Resources

We study optimal research and extraction policies in an endogenous growth model in which both production and research require an exhaustible resource. It is shown that optimal growth is not sustainable if the accumulation of knowledge depends on the resource as an input, or if the returns to scale in research are decreasing. The model is stated as an infinite-horizon optimal control problem with an integral constraint on the control variables. We consider the main mathematical aspects of the problem, establish an existence theorem and derive an appropriate version of the Pontryagin maximum principle. A complete characterization of the optimal transitional dynamics is given

Vote Probabilities, Thresholds and Actor Preferences: Decision Capacity and the Council of the European Union

This paper studies how voting rules affect the ease with which decisions are made, basing the analysis on the key premise that ideology makes some coalitions more likely to form than others. Our study focuses on the Council of the European Union (EU), where member states hold different voting weights and ideological positions are strongly linked to the affiliation of actors to political parties. Accordingly, to explore the influence of ideology on the probability of coalition formation, and to thus formulate a ‘decision probability’, we incorporate ideological positions in the analysis of efficiency of the voting system. For the case of the EU, we particularly consider the transition from the triple-majority voting system of the Nice Treaty to the double-majority system incorporated into the Lisbon Treaty. The standard assumption that member states vote independently and affirmatively with a probability of 0.5 leads to a more pessimistic view of the Council’s decision-making capacity than does the premise that member state votes are biased towards voting with the Council majority. The latter assumption is supported by voting data and anecdotal evidence on the ‘consensus-seeking’ culture in the Council. Hence, this paper offers some insights into the ‘efficiency’ of the decision-making process, given institutional voting rules, in combination with actual actor ideological positions.Security and Global Affair

Evolutionary estimation of a Coupled Markov Chain credit risk model

There exists a range of different models for estimating and simulating credit risk transitions to optimally manage credit risk portfolios and products. In this chapter we present a Coupled Markov Chain approach to model rating transitions and thereby default probabilities of companies. As the likelihood of the model turns out to be a non-convex function of the parameters to be estimated, we apply heuristics to find the ML estimators. To this extent, we outline the model and its likelihood function, and present both a Particle Swarm Optimization algorithm, as well as an Evolutionary Optimization algorithm to maximize the likelihood function. Numerical results are shown which suggest a further application of evolutionary optimization techniques for credit risk management

Recovery of the Austrian economy following the COVID-19 crisis can take up to three years

Collaboration between researchers from IIASA, WU, WIFO, and the IHS provides scenarios of the medium-run economic effects of the lockdown in Austria using the IIASA macroeconomic simulation model. The analysis suggests that the return to the business-as-usual trend may take up to three years after a steep initial economic downturn due to the lockdown, and a gradual recovery thereafter

Patent Pools: Intellectual Property Rights and Competition

Patent pools do not correct all problems associated with patent thickets. In this respect, patent pools might not stop the outsider problem from striking pools. Moreover, patent pools can be expensive to negotiate, can exclude patent holders with smaller numbers of patents or enable a group of major players to form a cartel that excludes new competitors. For all the above reasons, patent pools are subject to regulatory clearance because they could result in a monopoly. The aim of this article is to present the relationship between patents and competition in a broad context

‘Better late than never’: the interplay between green technology and age for firm growth

This paper investigates the relationship between green/non-green technologies and firm growth. By combining the literature on eco-innovations, industrial organisation and entrepreneurial studies, we examine the dependence of this relationship on the pace at which firms grow and the age of the firm. From a dataset of 5498 manufacturing firms in Italy for the period of 2000–2008, longitudinal fixed effects quantile models are estimated, in which the firm’s age is set to moderate the effects of green and non-green patents on employment growth. We find that the positive effect of green technologies on growth is greater than that of non-green technologies. However, this result does not apply to struggling and rapidly growing firms. With fast-growing (above the median) firms, age moderates the growth effect of green technologies. Inconsistent with the extant literature, this moderation effect is positive: firm experience appears important for the growth benefits of green technologies, possibly relative to the complexity of their management