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On the Applicability of Global Approximation Methods for Models with Jump Discontinuities in Policy Functions

Görtz, Christoph G. - 2014

We show that the standard Value Function Iteration (VFI) algorithm has difficulties approximating models with jump discontinuities in policy functions. We find that VFI fails to accurately identify the location and size of jump discontinuities while other methods - such as the Endogenous Grid...

Persistent link: https://www.econbiz.de/10013051605

Characterizing the Sustainability Problem in an Exhaustible Resource Model

Mitra, Tapan; Asheim, Geir B.; Buchholz, Wolfgang; … - 2021

The Dasgupta-Heal-Solow-Stiglitz model of capital accumulation and resource depletion poses the following sustainability problem: is it feasible to sustain indefinitely a level of consumption that is bounded away from zero? We provide a complete technological characterization of the...

Persistent link: https://www.econbiz.de/10013315930

Regime Shifts and Uncertainty in Pollution Control

Zeeuw, Aart de; Zemel, Amos - 2021

We develop a simple model of managing a system subject to pollution damage under risk of an abrupt and random jump in the damage coefficient. The model allows the full dynamic characterization of the optimal emission policies under uncertainty. The results, that imply prudent behavior due to...

Persistent link: https://www.econbiz.de/10013315940

Value Function Iteration as a Solution Method for the Ramsey Model

Heer, Burkhard; Maußner, Alfred - 2021

Value function iteration is one of the standard tools for the solution of the Ramsey model. We compare six different ways of value function iteration with regard to speed and precision. We find that value function iteration with cubic spline interpolation between grid points dominates the other...

Persistent link: https://www.econbiz.de/10013316545

Inequality, Structure of Production and International Trade – The Role of Credit Market Imperfection

Beladi, Hamid - 2017

Credit rationing in the presence of asset inequality affects production and trade pattern in this paper, but not in the conventional way. A Ricardian general equilibrium framework with heterogeneous levels of asset ownership is developed to show that more equal asset distribution may contract...

Persistent link: https://www.econbiz.de/10012962668

A Lipsetian Theory of Democratization : Development, Education, Inequality, and Resources

Boucekkine, Raouf - 2017

The paper reexamines Lipset's theory of democratization, by distinguishing the role of (economic) development from that …-market aspirations - and forces the elite to expand redistribution. Along the lines of this trade-off, our theory provides a Lipsetian …

Persistent link: https://www.econbiz.de/10012963389

Factor Income Distribution and Endogenous Economic Growth - When Piketty Meets Romer

Irmen, Andreas - 2017

We scrutinize Thomas Piketty's (2014) theory concerning the relationship between an economy's long-run growth rate, its … of Piketty's Second Fundamental Law of Capitalism does not hold. In line with Piketty's theory a smaller long-run growth …, both the economy's savings rate and its growth rate are endogenous variables whereas in Piketty's theory they are both …

Persistent link: https://www.econbiz.de/10012965706

Should Income Inequality Be Praised? Multiple Public Goods Provision, Income Distribution and Social Welfare

Itaya, Jun-ichi - 2017

We investigate how income inequality affects social welfare in a model of voluntary contributions to multiple pure public goods. Itaya, de Meza, and Myles (1997) show that the maximization of social welfare precludes income equality in a single pure public good model. In contrast, we show that...

Persistent link: https://www.econbiz.de/10012965708

The Gini Coefficient and Personal Inequality Measurement

Davies, James B. - 2017

The Gini coefficient is based on the sum of pairwise income differences. For an individual, differences vis-à-vis poorer people represent advantage, and those versus richer people deprivation. Any weighted average of deprivation and advantage generates a “Gini admissible” personal...

Persistent link: https://www.econbiz.de/10012968651

Should Pollution Taxes Be Targeted at Income Redistribution?

Jacobs, Bas - 2017

This paper analyses optimal corrective taxation and optimal income redistribution. Under general utility functions, the Pigouvian pollution tax is higher if pollution damages disproportionally hurt the poor due to equity weighting of pollution damages. Moreover, optimal pollution taxes should be...

Persistent link: https://www.econbiz.de/10012948330