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We consider an infinite horizon neoclassical model with a government that (i) balances its budget at each point in time, (ii) faces unavoidable (incompressible) public expenditures, and (iii) further uses a fiscal rule for the share of variable government spending in output with the purpose of stabilizing the economy. We show that insulating this economy from belief driven fluctuations is not possible if the government finances these two components of public spending using a distortionary proportional income tax. In this case, we always have steady state multiplicity (two steady states) and global indeterminacy, while local indeterminacy is also possible. More precisely, even if a sufficiently procyclical share of the variable government spending component in output is still able to eliminate local indeterminacy, two saddle steady states prevail, so that, depending on expectations, the economy may either converge to the low steady state or to the high steady state. This implies that a regime switching rational expectation equilibrium, where the economy switches between paths converging to the two different steady states, easily arises. As expectations influence long run outcomes, our model is able to generate large and sudden expansions and contractions in response to expectation shocks. ; info:eu-repo/semantics/publishedVersion

We develop a model of endogenous party platform formation in a multidimensional policy space. Party platforms depend on the composition of the parties' primary electorate. The overall social outcome is taken to be a weighted average of party platforms and individuals vote strategically. Equilibrium is defined to obtain when no group of voters can shift the social outcome in its favor by deviating and the party platforms are consistent with their electorate. We provide sufficient conditions for existence of equilibria. ; Ortuño-Ortín gratefully acknowledge financial support from the Spanish Ministry of Science and Technology Project BEC2001-1653 and Project BEC2001-0980, respectively; A. Gomberg gratefully acknowledges the financial support from the Asociación Mexicana de Cultura ; Publicado

Dans cet article, nous traitons des effets de l'ouverture commerciale sur l'emploi et les salaires de deux pays symétriques. Deux firmes qui produisent des biens différenciés font chacune face à une main-d'œuvre syndiquée et se font concurrence en Cournot. L'équilibre emploi-salaire résulte d'un jeu de négociation dit efficient, entre les firmes et le syndicat des travailleurs. Nous trouvons que l'ouverture commerciale augmente le niveau d'emploi et n'a pas d'effet sur les salaires dès lors que les deux marchés tendent vers une intégration parfaite. Classification JEL : C62, D43, F15, F16, J51, L13.

The paper considers optimal monetary stabilization policy in a forward-looking model, when the central bank recognizes that private sector expectations need not be precisely model-consistent, and wishes to choose a policy that will be as good as possible in the case of any beliefs that are close enough to model-consistency. It is found that commitment continues to be important for optimal policy, that the optimal long-run inflation target is unaffected by the degree of potential distortion of beliefs, and that optimal policy is even more history-dependent than if rational expectations are assumed. (JEL C62, D84, E13, E31, E32, E52)

We develop an overlapping generations monetary endogenous growth (generated by productive public expenditures) model with inflation targeting, characterized by relocation shocks for young agents, which in turn generates a role for money (even in the presence of the return-dominating physical capital) and financial intermediaries. Based on this model, we show that growth dynamics emerge with a S-shaped growth path producing three equilibria. The low and high-growth equilibria are stable, but locally indeterminate, while the medium-growth equilibrium is unstable. Since, government expenditure is productive in our model, a higher inflation-target would translate into higher growth, but under multiple equilibria, this is not necessarily always the case.

This study uses secondary data to examine the extent of the current energy trade between Canada and China, as well as complementarities between the energy situation of the two countries. The purpose of this analysis is to define and evaluate the five specific elements stated in the research question as follows: 1. Draw attention to current Chinese economic trends and energy needs, 2. Compare resource availabilities and needs for both the Chinese and Canadian economies, 3. Investigate Canada's fossil fuel reserves and technologies, and consider how they could aid China in its future economic development, 4. Outline political and environmental implications engendered by a continuous increase in trading activities between the two countries, particularly in the energy sector, [and] 5. Recommend potential strategies that could lead to sustainable growth in the Chinese energy sector, given the country's current and future needs. The conclusion of this research points toward a significant opportunity which, at the current time, receives insufficient consideration to develop to its full potential. The final section of this project highlights areas of mutual interest to China and Canada, and strategies for closer cooperation between the two countries. --P.1. ; The original print copy of this thesis may be available here: http://wizard.unbc.ca/record=b1644026

This study uses secondary data to examine the extent of the current energy trade between Canada and China, as well as complementarities between the energy situation of the two countries. The purpose of this analysis is to define and evaluate the five specific elements stated in the research question as follows: 1. Draw attention to current Chinese economic trends and energy needs, 2. Compare resource availabilities and needs for both the Chinese and Canadian economies, 3. Investigate Canada's fossil fuel reserves and technologies, and consider how they could aid China in its future economic development, 4. Outline political and environmental implications engendered by a continuous increase in trading activities between the two countries, particularly in the energy sector, [and] 5. Recommend potential strategies that could lead to sustainable growth in the Chinese energy sector, given the country's current and future needs. The conclusion of this research points toward a significant opportunity which, at the current time, receives insufficient consideration to develop to its full potential. The final section of this project highlights areas of mutual interest to China and Canada, and strategies for closer cooperation between the two countries. --P.1. ; The original print copy of this thesis may be available here: http://wizard.unbc.ca/record=b1644026

In applied work in macroeconomics and finance, nonoptimal infinite horizon economies are often studied in which the state-space is unbounded. Important examples of such economies are single-sector growth models with production externalities, valued fiat money, monopolistic competition, and/or distortionary government taxation. Although sufficient conditions for existence and uniqueness of Markovian equilibrium are weIl known for the compact state space case, no similar sufficient conditions exist for unbounded growth. This paper provides such a set of sufficient conditions, and presents a computational algorithm that will prove asymptotically consistent when computing Markovian equilibrium.

Maurice Potron (1872-1942) est un mathématicien français qui, dès 1911, conçoit un modèle économique où l'analyse de la production est fondée sur la construction d'un tableau analogue à celui des échanges interindustriels imaginé plus tard par Leontief. Potron définit la notion de régime satisfaisant et établit un résultat d'existence en utilisant le théorème de Perron-Frobenius, bien avant que celui-ci ne soit connu des économistes. Il énonce aussi le premier théorème explicite de dualité. Nous examinons ici la vie de Potron, qui était jésuite, et soulignons l'inspiration religieuse de son modèle. Un rôle particulier dans cette analyse revient à la doctrine sociale de l'Église, qui est renouvelée par l'encyclique Rerum novarum et au service de laquelle lui-même et sa famille se sont fortement engagés. Nous expliquons aussi pourquoi ce travail de pionnier est longtemps passé inaperçu. Codes JEL :  B31, C62, C67

Did the Federal Reserve's Quantitative Easing (QE) in the aftermath of the financial crisis have macroeconomic effects? To answer this question, we estimate a large-scale DSGE model over the sample from 1998 until 2020, including data of the Fed's balance sheet. We allow for QE to affect the economy via multiple channels that arise from several financial frictions. Our nonlinear Bayesian likelihood approach fully accounts for the zero lower bound on nominal interest rates. We find that QE increased output by about 1.2 percent, reflecting a net increase in investment of nearly 9 percent accompanied by a 0.7 percent drop in aggregate consumption. Both government bond and capital asset purchases effectively improved financing conditions. Especially capital asset purchases significantly facilitated new investment and increased the production capacity. Against the backdrop of a fall in consumption, supply side effects dominated, leading to a disinflationary effect of about 0.25 percent annually.

Did the Federal Reserves' Quantitative Easing (QE) in the aftermath of the financial crisis have macroeconomic effects? To answer this question, the authors estimate a large-scale DSGE model over the sample from 1998 to 2020, including data of the Fed's balance sheet. The authors allow for QE to affect the economy via multiple channels that arise from several financial frictions. Their nonlinear Bayesian likelihood approach fully accounts for the zero lower bound on nominal interest rates. They find that between 2009 to 2015, QE increased output by about 1.2 percent. This reflects a net increase in investment of nearly 9 percent, that was accompanied by a 0.7 percent drop in aggregate consumption. Both, government bond and capital asset purchases were effective in improving financing conditions. Especially capital asset purchases significantly facilitated new investment and increased the production capacity. Against the backdrop of a fall in consumption, supply side effects dominated which led to a mild disinflationary effect of about 0.25 percent annually.

Cet article s'intéresse à la distribution d'équilibre de long terme d'une économie peuplée d'agents hétérogènes et caractérisés par un biais pour le présent au sens de l'escompte quasi-hyperbolique. Dans le contexte d'une première configuration avec une fonction d'utilité logarithmique et une technologie de production Cobb-Douglas, cet article établit l'existence et l'unicité de l'équilibre : seul l'agent associé à la plus haute valeur d'un coefficient procédant tout à la fois du coefficient de biais pour le présent et du taux d'escompte pourra bénéficier de valeurs positives pour sa consommation et sa richesse de long terme. Une seconde configuration avec une utilité à élasticité de substitution constante et une technologie de production linéaire est alors envisagée. L'article établit ensuite l'existence et l'unicité de l'équilibre. Il existera de la même façon et génériquement un unique agent bénéficiant du taux de croissance le plus élevé pour sa consommation et sa richesse. La sélection de cet agent résultant aussi bien de caractéristiques afférant aux préférences qu'à la technologie, il vaut de souligner qu'il pourra changer comme suite d'un choc technologique. JEL Classification : E32, C62

Forward guidance as a tool of unconventional monetary policy can be highly efficient to support aggregate demand and to steer the economy out of the zero lower bound (ZLB). However, the effect that stimulates the economy can give rise to a time-inconsistency problem: if the central bank promises to keep interest rates at the ZLB for long, the sub-sequent increase in inflation and economic activity may create a motive for the central bank to forego its promise and to exit the ZLB earlier than announced. We illustrate the time-inconsistency problem in a New Keynesian model with hand-to-mouth consumers. Using a novel and analytically tractable method for handling occasionally binding constraints, we contrast the case of commitment to forward guidance with the case in which monetary policy allows for an early exit of the ZLB. Our method is able to provide results on uniqueness and existence of (ZLB) equilibria. We study the equilibrium selection given different scenarios and conclude that central bankers should be careful when choosing the number of periods with low interest rates in order to avoid the inconsistency problem. Furthermore, we calculate government spending multipliers and argue that the multiplier is even larger if combined with forward guidance.

We derive the optimal monetary policy in a sticky price model when private agents follow adaptive learning. We show that this slight departure from rationality has important implications for policy design. The central bank faces a new intertemporal trade-off, not present under rational expectations: it is optimal to forego stabilizing the economy in the present in order to facilitate private sector learning and thus ease the future intratemporal inflation-output gap trade-offs. The policy recommendation is robust: the welfare loss entailed by the optimal policy under learning if the private sector actually has rational expectations is much smaller than if the central bank mistakenly assumes rational expectations when in fact agents are learning.