Financial Expectations, Consumption and Saving: A Microeconomic Analysis

We explore the determinants of individuals´ financial expectations using data from the British Household Panel Survey (BHPS) 1991-2001. Our findings suggest that individuals´ financial predictions are influenced by both the life cycle and the business cycle. We also investigate the extent to which the accuracy of past financial expectations affects current financial expectations. Interestingly, only past financial optimism matters, regardless of the accuracy of the prediction. We also explore the relationship between financial realisations and expectations and we find that expectations tend to fall short of financial realisations. Finally, we investigate the relationship between financial expectations, savings and consumption. Our findings suggest that financial optimism is inversely associated with savings and that current financial expectations serve to predict future consumption

Solar Rights and Restrictive Covenants: A Microeconomic Analysis

This comment addresses the enforceability of restrictive covenants in relation to solar energy rights. Articulating the framework for development of solar energy, this comment works through an economic model formulated by Professors Ellickson, Coase, Calabresi, and Malemed. Looking for an efficient allocation of resources, this comment proposes a modernization of common law property principles to ensure the proper growth of solar energy

Aggregate Implications of Lumpy Investment: New Evidence and a DSGE Model

The sensitivity of U.S. aggregate investment to shocks is procyclical: the initial response increases by approximately 50% from the trough to the peak of the business cycle. This feature of the data follows naturally from a DSGE model with lumpy microeconomic capital adjustment. Beyond explaining this specific time variation, our model and evidence provide a counterexample to the claim that microeconomic investment lumpiness is inconsequential for macroeconomic analysis.

Being religious - A Question of Incentives?

Studies of the relationship between religion and economics can be divided into three major lines of research: behavioural economics of religion (microeconomic approach), macroeconomic consequences of religion and religious explanations of economic phenomena. Except for the third line strong evidence has been found on the microeconomic level of individuals and households that economic behaviour and outcome correlate with religion. Furthermore the role of religion on the macroeconomic level, e.g. the impact on economic growth, has been analyzed, too. However, only a few models integrating these two levels exist. In order to exemplify such an integrated model, the first step of the analysis has to be the examination of the decisions taken on the microeconomic level. For this purpose this paper focuses on rational incentives to be religious and to take part in religious activities without taking into account the benefits derived from religious believes itself.religion, incentives, individual religiosity

Some Novel Implications of Replacemnt and Scrapping

The emphasis of capital theory in recent decades has moved away from the implications of useful life as an important economic variable and has turned on the microeconomic and macroeconomic consequences of investment irreversibilities. Thus the voluminous literature that has developed ignores the marked difference be-tween replacement and scrapping and glosses over their significant implications for microeconomic and aggregate dynamics. This paper highlights the gains in explana-tory power that result when useful life, replacement and scrapping are placed in the center of the analysis. It does so by considering an economy with two representative firms that differ only in that the one applies replacement and the other scrapping. Among other interesting findings, at the microeconomic level it turns out that the de-mand for replacement investment is not invariant with respect to the type of capital policy being applied, whereas at the macroeconomic level it is shown that we cannot obtain consistent aggregates of capital stock and replacement investment.Capital, investment, service life, replacement, scrapping