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Adaptation is omnipresent but people systematically fail to correctly anticipate the degree to which they adapt. This leads individuals to make inefficient intertemporal decisions. This paper concerns optimal income taxation to correct for such anticipation-biases in a framework where consumers...
Persistent link: https://www.econbiz.de/10009570029
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/10009489041
Economic models of climate policy (or policies to combat other environmental problems) typically neglect psychological adaptation to changing life circumstances. People may adapt or become more sensitive, to different degrees, to a deteriorated environment. The present paper addresses these...
Persistent link: https://www.econbiz.de/10010354841
adjustment of the contract payment, involving adjustment costs for both players. Players’ payoffs from trade under the contract … whenever the contract payment relative to the outcome of an adjustment passes a certain threshold, depending among other things … of the adjustment costs. There is strategic substitutability in the choice of thresholds, so that if one player becomes …
Persistent link: https://www.econbiz.de/10002856667
This study investigates whether exchange rate flexibility aids real exchange rate adjustment based on intra-period data … produces faster or slower real exchange rate adjustment than the much less flexible official rate does. Half-life estimates of … adjustment speeds are obtained using fractional time series analysis. We find no systematic evidence that greater exchange rate …
Persistent link: https://www.econbiz.de/10003113305
Agents forming adaptive expectations generally make systematic mistakes. This characterization has fostered the rejection of adaptive expectations in macroeconomics. Experimental evidence, however, shows that in complex environments human subjects frequently rely on adaptive heuristics –...
Persistent link: https://www.econbiz.de/10012599034
We develop a programming algorithm that predicts a balanced-panel mix-adjusted house price index for arbitrary spatial …
Persistent link: https://www.econbiz.de/10012597680
The paper presents a general theory of the aggregation of prices and quantities that unifies the field and relates … topics that in the past have been treated separately and unsatisfactorily, or not at all. The theory does without the common … the theory lead to Törnqvist indexes defined on the appropriate data set. A numerical example confirms that in the non …
Persistent link: https://www.econbiz.de/10011514055
The production index is an important indicator for assessing the cyclical state of the economy. Unfortunately, the … part of those nuisance components are explicitly considered in the seasonal adjustment procedures used by statistical …
Persistent link: https://www.econbiz.de/10011514105
Socio-economic differences in longevity have fuelled a debate whether pension systems have a regressive bias favouring groups with a high life expectancy. We show that the distributional implications of such pooling depend critically on the benefit profile across age/time, which in turn is...
Persistent link: https://www.econbiz.de/10014470411