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Creator: Bental, Benjamin Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 103 Palabra clave: Schauder's theorem, Equilibrium, Fixed point theorem, and Overlapping generations Tema: D58 - Computable and Other Applied General Equilibrium Models and C68 - Computable General Equilibrium Models
Creator: Bryant, John B. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 175 Abstract:
Game theory is both at the heart of economics and without a definitive solution. This paper proposes a solution. It is argued that a dominance criterion generates a, and perhaps the, generalized equilibrium solution for game theory. First we provide a set theoretic perspective from which to view game theory, and then present and discuss the proposed solution.
Palabra clave: Nash equilbrium, Dominance, and Equilibria Tema: C72 - Noncooperative Games, C68 - Computable General Equilibrium Models, and C70 - Game Theory and Bargaining Theory: General
Creator: Bryant, John B. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 177 Descripción:
"Nominal labor contracts replicate net of tax real contracts contingent on aggregate risk in the model presented. Perhaps this is a model of money." (title page note)
Palabra clave: Wages, Income tax, Labor economics, and Inflation tax Tema: C68 - Computable General Equilibrium Models and J41 - Labor Contracts
Creator: Todd, Richard M. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 310 Palabra clave: Commodity, Futures market, Commodities, Buffer stock, and Commodity futures Tema: G13 - Contingent Pricing; Futures Pricing; option pricing and C68 - Computable General Equilibrium Models
Creator: Wallace, Neil Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 081 Abstract:
This paper argues that versions of Samuelson/Cass-Yaari overlapping-generations consumption-loans models ought to be taken seriously as models of fiat money. The case is made by summarizing and interpreting what these models have to say about fiat money and by arguing that these properties are robust in the sense that they can be expected to hold in any model of fiat money. Two of the properties establish the connection between, on the one hand, the existence of equilibria in which value is attached to a fixed stock of fiat money and, on the other hand, the optimality of such equilibria and the nonoptimality of nonfiat-money equilibria. Other properties describe aspects of the tenuousness of monetary equilibria in such models: The nonuniqueness of such equilibria in the sense that there always exists a nonfiat-money equilibrium and the dependence of the existence of the monetary equilibrium on the physical characteristics of other potential assets and on other institutional features like the tax-transfer scheme in effect. Rather than being defects of these models, it is argued that this tenuousness is helpful in interpreting various monetary systems and, in any case, is unavoidable; it will turn up in any good model of fiat money. Still other properties summarize what these models imply about the connection—or, better, lack of such— between fiat money and private borrowing and lending (financial intermediation) and what they imply about country-specific monies.
Palabra clave: Valued fiat money, Overlapping-generations models, and Pattern-of-exchange problem Tema: C68 - Computable General Equilibrium Models and E42 - Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
Creator: Conesa, Juan Carlos and Kehoe, Timothy Jerome, 1953- Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 550 Abstract:
In the early 1970s, hours worked per working-age person in Spain were higher than in the United States. Starting in 1975, however, hours worked in Spain fell by 40 percent. We find that 80 percent of the decline in hours worked can be accounted for by the evolution of taxes in an otherwise standard neoclassical growth model. Although taxes play a crucial role, we cannot argue that taxes drive all of the movements in hours worked. In particular, the model underpredicts the large decrease in hours in 1975–1986 and the large increase in hours in 1994–2007. The lack of productivity growth in Spain during 1994–2015 has little impact on the model’s prediction for hours worked.
Palabra clave: Hours worked, Distortionary taxes, Total factor productivity, and Dynamic general equilibrium Tema: E13 - General Aggregative Models: Neoclassical, C68 - Computable General Equilibrium Models, E24 - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity, and H31 - Fiscal Policies and Behavior of Economic Agents: Household
Creator: Aiyagari, S. Rao and Peled, Dan Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 197 Abstract:
It is often argued that with a positively skewed income distribution (median less than mean) majority voting would result in higher tax rates than maximizing average welfare and, hence, lower aggregate savings. We reexamine this view in a capital accumulation model, in which distorting redistributive taxes provide insurance against idiosyncratic shocks and income distributions evolve endogenously. We find small differences of either sign between the tax rates set by a majority voting and a utilitarian government, for reasonable parametric specifications, despite the fact that model simulations produce positively skewed distributions of total income across agents.
Palabra clave: Proportional taxes, Sequential majority voting, and Utilitarian government Tema: E62 - Fiscal Policy, H23 - Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies, and C68 - Computable General Equilibrium Models
Creator: McGrattan, Ellen R. Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 164 Abstract:
Since it is the dominant paradigm of the business cycle and growth literatures, the stochastic growth model has been used to test the performance of alternative numerical methods. This paper applies the finite element method to this example. I show that the method is easy to apply and, for examples such as the stochastic growth method, gives accurate solutions within a second or two on a desktop computer. I also show how inequality constraints can be handled by redefining the optimization problem with penalty functions.
Palabra clave: Finite element method and Growth model Tema: C63 - Computational Techniques; Simulation Modeling and C68 - Computable General Equilibrium Models
Creator: Christiano, Lawrence J. and Fisher, Jonas D. M. (Jonas Daniel Maurice), 1965- Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 171 Abstract:
We describe several methods for approximating the solution to a model in which inequality constraints occasionally bind, and we compare their performance. We apply the methods to a particular model economy which satisfies two criteria: It is similar to the type of model used in actual research applications, and it is sufficiently simple that we can compute what we presume is virtually the exact solution. We have two results. First, all the algorithms are reasonably accurate. Second, on the basis of speed, accuracy and convenience of implementation, one algorithm dominates the rest. We show how to implement this algorithm in a general multidimensional setting, and discuss the likelihood that the results based on our example economy generalize.
Palabra clave: Collocation, Parameterized expectations, Occasionally binding constraints, and Chebyshev interpolation Tema: C63 - Computational Techniques; Simulation Modeling, C60 - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling: General, and C68 - Computable General Equilibrium Models
Creator: Mercenier, Jean and Schmitt, Nicolas Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 188 Abstract:
We argue that the rationalization gains often predicted by static applied general equilibrium models with imperfect competition and scale economies are artificially boosted by an unrealistic treatment of fixed costs. We introduce sunk costs into one such model calibrated with real-world data. We show how this changes the oligopoly game in a way significant enough to affect, both qualitatively and quantitatively, the outcome of a trade liberalization exercise.
Palabra clave: Applied general equilibrium, Sunk costs, Market structure, and Trade liberalization Tema: D58 - Computable and Other Applied General Equilibrium Models, F17 - Trade: Forecasting and Simulation, F12 - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation, and C68 - Computable General Equilibrium Models