Essays On Political Economy Using Dynamic General Equilibrium Models

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Essays on Political Economy Using Dynamic General Equilibrium Models

Author : Lardo Stander
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (112 download)

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Book Synopsis Essays on Political Economy Using Dynamic General Equilibrium Models by : Lardo Stander

Download or read book Essays on Political Economy Using Dynamic General Equilibrium Models written by Lardo Stander and published by . This book was released on 2019 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This PhD thesis aims to look at four major issues in political economy and macroeconomics, namely, tax evasion, spirit of capitalism, globalisation and production structures involving delayed effects of inputs in dynamic general equilibrium models. These issues are of importance to any economy, but more so to an emerging economy like South Africa. The thesis will not only aim to obtain optimal policy responses in the presence of such distortions (deviations from the traditional Neoclassical world), but will also analyse the effects of these distortions on the growth and welfare of the economy. The thesis aims to have four separate papers based on dynamic general equilibrium (DGE) models: The first paper would aim to explain theoretically why tax evasion might depend on the level of financial development and the inflation rate in the economy. And then, it would try and test whether our proposed theoretical linkage holds in the data using panel data of 150 countries covering the period of 1980-2009. General equilibrium models that include the spirit of capitalism shows a positive relationship between growth and inflation aÌ22́Ơ0́− something unobserved in the data. The literature has tried to reconcile this theoretical and empirical mismatch by introducing human capital, cash-in-advance constraints applying to only specific kind of (non-productive) goods, etc. In the second paper, we, however, aim to show that a simpler way of achieving the negative inflationaÌ22́Ơ0́−growth relationship would be to introduce a banking system in the model subjected to cash reserve requirements. The third paper examines the effect of openness on economic growth, given a human capital accumulation function that captures the marginal benefit of knowledge spillovers in an economy. Two opposing effects are highlighted aÌ22́Ơ0́− one a positive effect from the increase in human capital on growth, the other a negative effect through an increase in seigniorage taxes aÌ22́Ơ0́− that would suggest there is a threshold value of openness, beyond which the impact of opening the economy even more becomes negative for economic growth. The fourth paper would aim to indicate that in the presence of lagged inputs, and especially lagged capital input, in the production structure of an economy, an inflation targeting country might experience aÌ22́Ơ¿3chaoticaÌ22́Ơ℗+ growth behaviour if the inflation target is set too high.

Essays in Dynamic General Equilibrium Theory

Author : Alessandro Citanna
Publisher : Springer Science & Business Media
ISBN 13 : 3540271929
Total Pages : 278 pages
Book Rating : 4.5/5 (42 download)

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Book Synopsis Essays in Dynamic General Equilibrium Theory by : Alessandro Citanna

Download or read book Essays in Dynamic General Equilibrium Theory written by Alessandro Citanna and published by Springer Science & Business Media. This book was released on 2006-01-11 with total page 278 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the area of dynamic economics, David Cass’s work has spawned a number of important lines of research, including the study of dynamic general equilibrium theory, the concept of sunspot equilibria, and general equilibrium theory when markets are incomplete. Based on these contributions, this volume contains new developments in the field, written by Cass's students and co-authors.

The Flawed Foundations of General Equilibrium Theory

Author : Frank Ackerman
Publisher : Routledge
ISBN 13 : 1135997381
Total Pages : 237 pages
Book Rating : 4.1/5 (359 download)

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Book Synopsis The Flawed Foundations of General Equilibrium Theory by : Frank Ackerman

Download or read book The Flawed Foundations of General Equilibrium Theory written by Frank Ackerman and published by Routledge. This book was released on 2004-06-24 with total page 237 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book, as the title suggests, explains how General equilibrium, the dominant conceptual framework in mainstream economics, describes a perfectly impossible world. Even with its counterfactual assumptions taken for granted, it fails on many levels. Under the impressive editorship of Ackerman and Nadal, this book will appeal to students and researchers in economics and related social science disciplines.

Methods of Dynamic Economics

Author : J. R. Hicks
Publisher : Clarendon Press
ISBN 13 : 0191521434
Total Pages : 182 pages
Book Rating : 4.1/5 (915 download)

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Book Synopsis Methods of Dynamic Economics by : J. R. Hicks

Download or read book Methods of Dynamic Economics written by J. R. Hicks and published by Clarendon Press. This book was released on 1987-10-08 with total page 182 pages. Available in PDF, EPUB and Kindle. Book excerpt: Capital and Growth was published in 1965, and rapidly established itself as a landmark in economic theory. In this volume, Sir John takes his earlier work and examines it critically for its present-day value. The result is a substantially reworked book based on the first and best part of his 1965 publication. The theme, now more clearly identified, is a comparative study of the economics of change, and brings in many of Hicks's subsequent developments and refinements - in particular a 'neo-Austrian' theory of capital which he developed in Capital and Time(1973). A new chapter on Keynes's methods has been added. The sum is a more complete classification of the family of models appropriate for analysing dynamic economics.

Equilibrium, Markets and Dynamics

Author : Cars H. Hommes
Publisher : Springer Science & Business Media
ISBN 13 : 3642561314
Total Pages : 344 pages
Book Rating : 4.6/5 (425 download)

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Book Synopsis Equilibrium, Markets and Dynamics by : Cars H. Hommes

Download or read book Equilibrium, Markets and Dynamics written by Cars H. Hommes and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 344 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book contains essays in honour of Claus Weddepohl who, after 22 years, is retiring as professor of mathematical economics at the Department of Quantitative Economics of the University of Amsterdam. Claus Weddepohl may be viewed as th~ first Dutch mathematical economist in the general equi librium tradition of Arrow, Debreu and Hahn. The essays in this book are centered around the themes Equilibrium, Markets and Dynamics, that have been at the heart of Weddepohl's work on mathematical economics for more than three decades. The essays have been classified according to these three themes. Admittedly such a classification always is somewhat arbitrary, and most essays would in fact fit into two or even all three themes. The essays have been written by international as well as Dutch friends and colleagues including Weddepohl's former Ph. D. students. The book starts with a review of Claus Weddepohl's work by Roald Ramer, who has been working with him in Amsterdam for all those years. The review describes how Weddepohl became fascinated by general equilibrium theory in the early stages of his career, how he has been working on the theory of markets throughout his career, and how he turned to applications of nonlinear dynamics to price adjustment processes in a later stage of his career. The first part of the book, Equilibrium, collects essays with general equilib rium theory as the main theme.

Environmental Economics and Computable General Equilibrium Analysis

Author : John R. Madden
Publisher : Springer Nature
ISBN 13 : 9811539707
Total Pages : 417 pages
Book Rating : 4.8/5 (115 download)

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Book Synopsis Environmental Economics and Computable General Equilibrium Analysis by : John R. Madden

Download or read book Environmental Economics and Computable General Equilibrium Analysis written by John R. Madden and published by Springer Nature. This book was released on 2020-07-11 with total page 417 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book addresses major issues such as a growing world energy demand, environmental degradation due to anthropogenic greenhouse gas (GHG) emission, and risk management of disastrous events such as pandemics, abnormal climate, and earthquakes. Using cutting-edge analytical tools, particularly computable general equilibrium (CGE) modelling, the analyses are focused on a very wide range of policy-relevant economic questions for the Asia-Pacific region, especially for Japan, China, India, Vietnam, and smaller nations, including Brunei, Timor Leste, and Fiji. The first part considers (a) the effects of climate change on agriculture sectors, energy policies, and future GHG emission trends, (b) adaptation to climate changes in energy policy and its impacts on the economies, and (c) risk management of catastrophic events such as global pandemics. The second part examines (a) energy environmental issues, (b) economic impacts of natural disaster and depopulation, and (c) effects of informatics development on risk management, using CGE modelling and other methods in regional science fields. Contributors are internationally active leading CGE modellers and environmental economists. The book should be greatly beneficial for scholars and graduate students as well as policy makers who are interested in the economic effects and management of risks relating to climate change and disastrous events.

Emergence and Entanglement in a Theory of Political Economy

Author : Richard E. Wagner
Publisher :
ISBN 13 :
Total Pages : 37 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Emergence and Entanglement in a Theory of Political Economy by : Richard E. Wagner

Download or read book Emergence and Entanglement in a Theory of Political Economy written by Richard E. Wagner and published by . This book was released on 2019 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: Political economy is a field of study where theorists typically treat polities and markets as separate orders of activity within society. Moreover, the standard mode of analysis treats those entities as existing in states of equilibrium. To the contrary, this essay treats polities and markets as entangled and, moreover, as entities that have ecological and emergent character. Among other things, this shift in analytical focus means that turbulence and not stability is a key analytical feature to be incorporated into a theory of political economy. It also means that any human population system is open and not closed, which means in turn that the future is imaginable but not genuinely knowable, for it will be generated through complex interaction within an arena that entails both trade and conflict. In other words, the analytical framework set forth here is antithetical to the DSGE (Dynamic Stochastic General Equilibrium) that is highly popular among economists today.

Value, Capital and Growth

Author : Gabriel R. Ricci
Publisher : Routledge
ISBN 13 : 1351300180
Total Pages : 705 pages
Book Rating : 4.3/5 (513 download)

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Book Synopsis Value, Capital and Growth by : Gabriel R. Ricci

Download or read book Value, Capital and Growth written by Gabriel R. Ricci and published by Routledge. This book was released on 2017-09-08 with total page 705 pages. Available in PDF, EPUB and Kindle. Book excerpt: Value, Capital and Growth was written as a mark of honor to Sir John Hicks on the occasion of his retirement as Drummond Professor of Political Economy at the University of Oxford. As the title implies, most of the essays are directed to the development of the three great topics of modern economic theory to which he contributed--Value, Capital, and Growth. More specifically, there are important papers on general equilibrium, aggregation, and index numbers-- all topics of deep interest in international economics.The volume is particularly noteworthy for a number of papers exploring hitherto unrealized implications of general equilibrium models. There are also several papers dealing with mathematical economics as they relate to trade and development, which will be of great interest to students of those fields. Few theorists possessed Hicks catholicity in economics and his interest in and appetite for all branches of applied economics, and especially comparative economic history. His interests ranged from Italian Renaissance banking to academic publishing and the export and import of scholarly works,The international eminence of the contributors and the quality of their work ensure that this volume is a fitting tribute to a great economist and that it will be studied carefully for many years. No effort was spared to present the work in a style and format worthy of the subject and of the occasion. The volume includes masterful contributions by Kenneth Arrow, Jagdish Bhagwati, Roy Harrod, Paul A. Samuelson, Robert M. Solow, and Alan A. Walters among others, and contains a full biographical and bibliographical data base on Hicks.J.N. Wolfe was professor of economics at the University of Edinburgh until his retirement.

Organization with Incomplete Information

Author : Mukul Majumdar
Publisher : Cambridge University Press
ISBN 13 : 9780521553001
Total Pages : 372 pages
Book Rating : 4.5/5 (53 download)

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Book Synopsis Organization with Incomplete Information by : Mukul Majumdar

Download or read book Organization with Incomplete Information written by Mukul Majumdar and published by Cambridge University Press. This book was released on 1998-09-13 with total page 372 pages. Available in PDF, EPUB and Kindle. Book excerpt: There have been systematic attempts over the last twenty-five years to explore the implications of decision making with incomplete information and to model an 'economic man' as an information-processing organism. These efforts are associated with the work of Roy Radner, who joins other analysts in this collection to offer accessible overviews of the existing literature on topics such as Walrasian equilibrium with incomplete markets, rational expectations equilibrium, learning, Markovian games, dynamic game-theoretic models of organization, and experimental work on mechanism selection. Some essays also take up relatively new themes related to bounded rationality, complexity of decisions, and economic survival. The collection overall introduces models that add to the toolbox of economists, expand the boundaries of economic analysis, and enrich our understanding of the inefficiencies and complexities of organizational design in the presence of uncertainty.

Dynamic Macroeconomic Analysis

Author : Sumru Altug
Publisher : Cambridge University Press
ISBN 13 : 9780521826686
Total Pages : 604 pages
Book Rating : 4.8/5 (266 download)

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Book Synopsis Dynamic Macroeconomic Analysis by : Sumru Altug

Download or read book Dynamic Macroeconomic Analysis written by Sumru Altug and published by Cambridge University Press. This book was released on 2003-11-20 with total page 604 pages. Available in PDF, EPUB and Kindle. Book excerpt: This collection of essays applies modern micro-founded macroeconomic models to some of the most important economic policy questions facing monetary and macroeconomic policymakers. Key issues surveyed include: consumption investment; growth and business cycles; the role of government; asset pricing; the interaction of monetary and fiscal policy; open-economy issues; stabilization policy and general equilibrium analysis of emerging market crises. The book includes specially commissioned chapters from recognized authorities.

Provisional Agenda for the 4854th (closed) Meeting of the Security Council, to be Held in Private on Friday, 7 November 2003

Author :
Publisher :
ISBN 13 :
Total Pages : 1 pages
Book Rating : 4.:/5 (819 download)

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Book Synopsis Provisional Agenda for the 4854th (closed) Meeting of the Security Council, to be Held in Private on Friday, 7 November 2003 by :

Download or read book Provisional Agenda for the 4854th (closed) Meeting of the Security Council, to be Held in Private on Friday, 7 November 2003 written by and published by . This book was released on 2003 with total page 1 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Essays on Political Economy Volume III

Author : George H Blackford Ph D
Publisher :
ISBN 13 : 9781655564222
Total Pages : 250 pages
Book Rating : 4.5/5 (642 download)

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Book Synopsis Essays on Political Economy Volume III by : George H Blackford Ph D

Download or read book Essays on Political Economy Volume III written by George H Blackford Ph D and published by . This book was released on 2020-01-12 with total page 250 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume contains six essays on Keynes' general theory: Chapter 1, Keynes on Economic Stagnation and Debt, explains how the failure of neoclassical economics to embrace Keynes' arguments with regard to the long-run tendency of the system to trend toward stagnation and to ignore the problems endemic in the economics of debt facilitated the adoption of economic policies in the United States that contributed to the economic, political, and social problems we face today. Chapter 2, Causality in Keynes' General Theory, explains the way in which Keynes' adoption of Marshall's ceteris-paribus, partial-equilibrium methodology combined with his realization that a) the rate of interest is determined by the supply and demand for money and b) employment, output, and income are determined by saving and investment as expectations adjust to the realized results that are achieved within the system as the system evolves through time makes it possible to establish the temporal order in which events must occur and that this makes a logically consistent, causal analysis of dynamic behavior pos-sible within the analytical framework developed by Keynes' throughout The General Theory. Chapter 3, Robertson versus Keynes and the Short-Period Problem of Saving, demonstrates that the only way to make sense out of Robertson's dynamic explanation of an increase in saving within the context of Keynes' general theory is to assume unit-elastic expectations with an instantaneous adjustment in the value of output produced. It is argued that Robertson IGNORED the effects of an increase in saving on expectations, prospective yields, and the demand for investment goods in his 1957 Lectures just as they have been ignored by economic policy makers over the past seventy or eighty years. Chapter 4, A Note on Robertson and Tsiang versus Keynes, demonstrates that Tsiang does not reconcile the Robertson/Keynes controversy in Robertson's favor in that Tsiang misspecified Keynes' demand for money function. It also demonstrates that both the liquidity preference and loanable funds theories as embodied in Tsiang's model assume that the rate of interest is a purely monetary phenomenon, determined solely by the supply and demand for the stock of money, not the flow of loanable funds. Finally, the fundamental difference between Robertson and Keynes as exemplified by Tsiang's analysis is seen to be that Robertson's method of analysis was descriptive and static while Keynes' method of analysis was causal and dynamic.Chapter 5, A Stock-Flow Model of Keynes' Theory of Interest, provides a formal model of Keynes' Liquidity-Preference theory of interest that draws a clear distinction between stocks and flows. This model is used to clarify the confusion that exists within the discipline of economics with regard to the issues that separated Robertson and Keynes Loanable-funds/Liquidity-Preference controversy. Robertson's misconceptions with regard to the nature of Keynes' theory of interest, and by extension those of Harry Johnson, Axel Leijonhufvud, George Horwich, Meir Kohn, Sho-Chieh Tsiang and others who have defended Robertson's arguments, are explained within the context of this model.Chapter 6, Mr. Keynes and the NeoClassics: A Reinterpretation, provides a model of Keynes' integration of monetary and value theory that incorporates the price of non-debt assets as well as the prices of consumption and investment goods is specified below. It is demonstrated that the Keynesian IS/LM model is a special (static) case of this model, and that the Marshallian roots of Keynes' model makes a causal analysis of dynamic behavior possible while the Walrasian roots of the neoclassical Keynesian model only allow for a description of dynamic behavior without explanation other than through the invocation of a mythical auctioneer.

Three Essays on Asset Pricing Model with Heterogenous Agents

Author : Tae-Jin Kang
Publisher :
ISBN 13 :
Total Pages : 174 pages
Book Rating : 4.:/5 (89 download)

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Book Synopsis Three Essays on Asset Pricing Model with Heterogenous Agents by : Tae-Jin Kang

Download or read book Three Essays on Asset Pricing Model with Heterogenous Agents written by Tae-Jin Kang and published by . This book was released on 1991 with total page 174 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Essays on Policy Dynamics Under Political Frictions

Author : Yanlei Ma
Publisher :
ISBN 13 :
Total Pages : 186 pages
Book Rating : 4.:/5 (932 download)

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Book Synopsis Essays on Policy Dynamics Under Political Frictions by : Yanlei Ma

Download or read book Essays on Policy Dynamics Under Political Frictions written by Yanlei Ma and published by . This book was released on 2015 with total page 186 pages. Available in PDF, EPUB and Kindle. Book excerpt: The successful design and implementation of macroeconomic and public policies has an important political dimension. This dissertation, which lies at the intersection of macroeconomics and political economy, focuses on understanding the dynamic fiscal and regulatory policies in the context of political conflicts and special interests. The first essay, Curse or Blessing? On the Welfare Consequences of Divided Government and Policy Gridlock, studies the welfare consequences of divided government by analyzing a dynamic legislative bargaining model with endogenous status quo. By comparing a unified government where the opponent's approval is not needed with a divided government where unanimity rule applies, I show that with divided government tax policy is less responsive due to gridlock and is distorted due to dynamic strategic considerations. However, the welfare consequences of such a policy are mixed because gridlock also reduces policy fluctuations created by political turnover. In the simulated economy, I find that divided government can Pareto dominate unified government. While this phenomenon prevails at various levels of inequality and political polarization, the set of initial status quo tax rates allowing for it shrinks as inequality and political polarization rises. Moreover, as income inequality rises, on average divided government benefits the poor while hurting the rich. This is because households at different income levels trade off potential gains and losses from policy gridlock differently. The second essay, Political-Driven Financial Regulatory Cycle, develops a positive theory of political-driven financial regulatory cycle. The key feature of the model is that the regulatory policy is determined through the interaction of financial sector special interest group, politicians competing for office, and households with time-varying attention on financial regulation. I find that in absence of the special interest group, politicians maximize the utility of households and implement stringent regulation. Once the special interest group is introduced, the politicians are induced to behave as if they were maximizing the weighted sum of utilities of the financial industry and strategic households. In symmetric equilibrium, politicians' policies converge and they choose the regulation such that the electoral loss due to weakened support from households equals the electoral gain created by campaign contribution. Moreover, the equilibrium financial regulation turns out to be pro-cyclical. During financial market expansions, the financial regulation remains largely ignored by the general public. Hence the policymaker cater to the financial interest group and promote loose regulation. Once financial crisis takes place, the public attention on regulation is brought up. For fear of upsetting the voters, the politician is forced to tighten the regulation. The third essay, Evaluating Durable Public Good Provision using Housing Prices, is collaborated work with professor Stephen Coate. Recent empirical work in public finance uses the housing price response to public investments to assess the efficiency of local durable public good provision. This paper investigates the theoretical foundations for this technique. In the context of a novel theoretical model developed to study the issue, it shows that there is limited justification for the technique when a budget-maximizing bureaucrat interacts with rational, forward-looking citizens. A special case in which the bureaucrat faces no vot- ing uncertainty is solved in closed form to show why the technique can falsely predict under-provision. In the generalized model which involves randomness of voting outcomes, we show numerically that the technique may falsely predict both under-provision and over-provision of local durable public good. The technique is valid, however, when citizens have adaptive expectations, believing that whatever provision level that currently prevails will be maintained indefinitely.

The Theory of Money and Financial Institutions

Author : Martin Shubik
Publisher : MIT Press
ISBN 13 : 9780262693110
Total Pages : 472 pages
Book Rating : 4.6/5 (931 download)

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Book Synopsis The Theory of Money and Financial Institutions by : Martin Shubik

Download or read book The Theory of Money and Financial Institutions written by Martin Shubik and published by MIT Press. This book was released on 1999 with total page 472 pages. Available in PDF, EPUB and Kindle. Book excerpt: This first volume in a three-volume exposition of Shubik's vision of "mathematical institutional economics" explores a one-period approach to economic exchange with money, debt, and bankruptcy. This is the first volume in a three-volume exposition of Martin Shubik's vision of "mathematical institutional economics"--a term he coined in 1959 to describe the theoretical underpinnings needed for the construction of an economic dynamics. The goal is to develop a process-oriented theory of money and financial institutions that reconciles micro- and macroeconomics, using as a prime tool the theory of games in strategic and extensive form. The approach involves a search for minimal financial institutions that appear as a logical, technological, and institutional necessity, as part of the "rules of the game." Money and financial institutions are assumed to be the basic elements of the network that transmits the sociopolitical imperatives to the economy. Volume 1 deals with a one-period approach to economic exchange with money, debt, and bankruptcy. Volume 2 explores the new economic features that arise when we consider multi-period finite and infinite horizon economies. Volume 3 will consider the specific role of financial institutions and government, and formulate the economic financial control problem linking micro- and macroeconomics.

Three Essays In Dynamic Political Economy

Author : Benjarong Suwankiri
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (42 download)

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Book Synopsis Three Essays In Dynamic Political Economy by : Benjarong Suwankiri

Download or read book Three Essays In Dynamic Political Economy written by Benjarong Suwankiri and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: All observed government policies must pass through a political process. In many macroeconomic settings, the implemented policies affect the economy not only during the current period, but also the future path of the economy. In this dissertation, I investigate policies pertaining to immigration, redistribution, and poverty reduction. In the first chapter, I study how politics jointly determine the economy's redistribution and immigration policies. I develop a dynamic political economy model featuring three groups of voters: skilled workers, unskilled workers, and retirees. The model also features both inter- and intra-generational redistribution, resembling a welfare state. To analyze multi-group political economy equilibria, I extend the class of dynamic political games featuring Subgame-perfect Markov as its equilibrium concept. The analysis allows for strategic voting behavior, where voters may vote for a candidate not directly representing their group. Because the policy preference of the unskilled workers is the most intermediate, other groups may choose to side with this policy choice in order to avoid their least preferred candidate. For the unskilled workers, inequality plays a key role in determining the degree of redistribution. Therefore, immigration ultimately affects the generosity of the welfare state by altering the level of inequality in the economy. The objectives of the second chapter are twofold. First, the chapter tries to understand the relationship between immigration and asset prices. The analysis reveals that the asset price responds positively to immigration. The immigration's influence goes through four channels: increasing saving, increasing marginal product of capital, decreasing marginal cost of investment, and raising population growth rate. After the preceding analysis, I study how different cohorts will harness these benefits through political interactions. This exercise reveals that the young cohort may have a strategic motive to influence the identity of the decisive voter in the next period to ensure the highest return on their savings in retirement. In addition, the model also predicts that the uncertainty in the population growth rate of the immigrants will lower these immigration quotas. The last chapter moves away from international policy arena and focuses domestically on escaping a poverty trap. Prior studies conclude that redistribution is a futile policy against this vicious cycle of poverty. I revisit this line of literature and show contrary to this conclusion that redistribution can help the economy escape the poverty trap. I characterize a necessary sequence of lump-sum taxes and transfers and show that this scheme will move the economy out of the poverty trap in finite time regardless of the economy's initial distribution of wealth. Unfortunately, I also show that neither basic democracy nor dictatorship can take the economy there with this policy scheme. The rationale for this is the following. The proposed escape route from poverty requires an economic input from the richer group. However, the shift in the decisive political influence during the path of development, from the hands of the poor to the hands of the rich, will put an end to this pro-poor policy scheme.

Essays on Dynamics and Information in Political Economy

Author : Zizhen Ma
Publisher :
ISBN 13 :
Total Pages : 216 pages
Book Rating : 4.:/5 (127 download)

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Download or read book Essays on Dynamics and Information in Political Economy written by Zizhen Ma and published by . This book was released on 2019 with total page 216 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This thesis consists of three essays on political economy. It focuses on understanding how dynamics and information affect collective behavior. Chapter 1, studies the impact of dynamic interaction on agenda setting power. For a canonical model of bargaining with a fixed agenda setter, we show that when players are impatient or the set of alternatives is one-dimensional, the equilibrium outcome from the static model obtains; but when players are patient and the alternatives are multidimensional, the equilibrium outcome typically converges to the ideal point of the agenda setter due to the agenda setter's ability to play winning coalitions off against one another. Threat of exclusion in a dynamic bargaining environment can lead to extreme agenda setting power. Chapter 2, takes a step on understanding dynamic multilateral bargaining with asymmetric informaton. It studies the impact of reputational concerns on efficiency and surplus distribution in a simple non-unanimous bargaining environment. Three agents bargain over the division of one dollar with a protocol in which proposers are drawn i.i.d according to the uniform distribution over an infinite horizon and bargaining settles with the agreement of a majority. Each agent could be an obstinate type committed to claiming a certain share of the dollar. Assuming common conflicting claims and common discount factors, I show that this bargaining process can exhibit features in sharp contrast to their counterparts of bilateral reputational bargaining. In a reasonably refined class of equilibria, efficiency loss vanishes as rational types become patient and bargaining ends immediately if all agents are of rational types; moreover, when the prior probabilities of obstinacy are sufficiently low, the agent with the lowest positive prior of obstinacy obtains ex ante the largest share of the dollar. Chapter 3, changes attention from bargaining to auction. It studies competing auctions where each seller has private information about the quality of its object and chooses the reserve price of a second-price auction. Buyers observe the reserve prices and decide which auction to participate in. For a class of primitives, we show that a perfect Bayesian equilibrium exists for any finite market. In any such PBE, higher quality is signaled through higher reserve price at the expense of trade opportunities. But there might be bunching regions causing inefficiencies. In fact, in the large-market limit characterized by a directed search model, the interaction of adverse selection and search frictions entail distortion at the bottom: when either the buyer-seller ratio is sufficiently large or a regularity condition is met, there is no separating PBE in which the lowest-quality seller sets reserve price equal to its opportunity cost"--Pages vii-viii.