Interaction between fiscal and monetary policy in a dynamic nonlinear model

Fundação de Amparo à Pesquisa do Estado de São Paulo (FAPESP)

Substructuring approache in state space models for dynamic system parameters identification

In the recent decade, the request for structural health monitoring expertise increased exponentially in the United States. The aging issues that most of the transportation structures are experiencing can put in serious jeopardy the economic system of a region as well as of a country. At the same time, the monitoring of structures is a central topic of discussion in Europe, where the preservation of historical buildings has been addressed over the last four centuries. More recently, various concerns arose about security performance of civil structures after tragic events such the 9/11 or the 2011 Japan earthquake: engineers looks for a design able to resist exceptional loadings due to earthquakes, hurricanes and terrorist attacks. After events of such a kind, the assessment of the remaining life of the structure is at least as important as the initial performance design. Consequently, it appears very clear that the introduction of reliable and accessible damage assessment techniques is crucial for the localization of issues and for a correct and immediate rehabilitation. The System Identification is a branch of the more general Control Theory. In Civil Engineering, this field addresses the techniques needed to find mechanical characteristics as the stiffness or the mass starting from the signals captured by sensors. The objective of the Dynamic Structural Identification (DSI) is to define, starting from experimental measurements, the modal fundamental parameters of a generic structure in order to characterize, via a mathematical model, the dynamic behavior. The knowledge of these parameters is helpful in the Model Updating procedure, that permits to define corrected theoretical models through experimental validation. The main aim of this technique is to minimize the differences between the theoretical model results and in situ measurements of dynamic data. Therefore, the new model becomes a very effective control practice when it comes to rehabilitation of structures or damage assessment. The instrumentation of a whole structure is an unfeasible procedure sometimes because of the high cost involved or, sometimes, because it’s not possible to physically reach each point of the structure. Therefore, numerous scholars have been trying to address this problem. In general two are the main involved methods. Since the limited number of sensors, in a first case, it’s possible to gather time histories only for some locations, then to move the instruments to another location and replay the procedure. Otherwise, if the number of sensors is enough and the structure does not present a complicate geometry, it’s usually sufficient to detect only the principal first modes. This two problems are well presented in the works of Balsamo [1] for the application to a simple system and Jun [2] for the analysis of system with a limited number of sensors. Once the system identification has been carried, it is possible to access the actual system characteristics. A frequent practice is to create an updated FEM model and assess whether the structure fulfills or not the requested functions. Once again the objective of this work is to present a general methodology to analyze big structure using a limited number of instrumentation and at the same time, obtaining the most information about an identified structure without recalling methodologies of difficult interpretation. A general framework of the state space identification procedure via OKID/ERA algorithm is developed and implemented in Matlab. Then, some simple examples are proposed to highlight the principal characteristics and advantage of this methodology. A new algebraic manipulation for a prolific use of substructuring results is developed and implemented.

The abuse of intellectual property rights and regulations in China: a law and economic analysis

From the institutional point of view, the legal system of IPR (intellectual property right, hereafter, IPR) is one of incentive institutions of innovation and it plays very important role in the development of economy. According to the law, the owner of the IPR enjoy a kind of exclusive right to use his IP(intellectual property, hereafter, IP), in other words, he enjoys a kind of legal monopoly position in the market. How to well protect the IPR and at the same time to regulate the abuse of IPR is very interested topic in this knowledge-orientated market and it is the basic research question in this dissertation. In this paper, by way of comparing study and by way of law and economic analyses, and based on the Austrian Economics School’s theories, the writer claims that there is no any contradiction between the IPR and competition law. However, in this new economy (high-technology industries), there is really probability of the owner of IPR to abuse his dominant position. And with the characteristics of the new economy, such as, the high rates of innovation, “instant scalability”, network externality and lock-in effects, the IPR “will vest the dominant undertakings with the power not just to monopolize the market but to shift such power from one market to another, to create strong barriers to enter and, in so doing, granting the perpetuation of such dominance for quite a long time.”1 Therefore, in order to keep the order of market, to vitalize the competition and innovation, and to benefit the customer, in EU and US, it is common ways to apply the competition law to regulate the IPR abuse. In Austrian Economic School perspective, especially the Schumpeterian theories, the innovation/competition/monopoly and entrepreneurship are inter-correlated, therefore, we should apply the dynamic antitrust model based on the AES theories to analysis the relationship between the IPR and competition law. China is still a developing country with relative not so high ability of innovation. Therefore, at present, to protect the IPR and to make good use of the incentive mechanism of IPR legal system is the first important task for Chinese government to do. However, according to the investigation reports,2 based on their IPR advantage and capital advantage, some multinational companies really obtained the dominant or monopoly market position in some aspects of some industries, and there are some IPR abuses conducted by such multinational companies. And then, the Chinese government should be paying close attention to regulate any IPR abuse. However, how to effectively regulate the IPR abuse by way of competition law in Chinese situation, from the law and economic theories’ perspective, from the legislation perspective, and from the judicial practice perspective, there is a long way for China to go!

Modeling the spatial dynamics of economic models

The advances that have been characterizing spatial econometrics in recent years are mostly theoretical and have not found an extensive empirical application yet. In this work we aim at supplying a review of the main tools of spatial econometrics and to show an empirical application for one of the most recently introduced estimators. Despite the numerous alternatives that the econometric theory provides for the treatment of spatial (and spatiotemporal) data, empirical analyses are still limited by the lack of availability of the correspondent routines in statistical and econometric software. Spatiotemporal modeling represents one of the most recent developments in spatial econometric theory and the finite sample properties of the estimators that have been proposed are currently being tested in the literature. We provide a comparison between some estimators (a quasi-maximum likelihood, QML, estimator and some GMM-type estimators) for a fixed effects dynamic panel data model under certain conditions, by means of a Monte Carlo simulation analysis. We focus on different settings, which are characterized either by fully stable or quasi-unit root series. We also investigate the extent of the bias that is caused by a non-spatial estimation of a model when the data are characterized by different degrees of spatial dependence. Finally, we provide an empirical application of a QML estimator for a time-space dynamic model which includes a temporal, a spatial and a spatiotemporal lag of the dependent variable. This is done by choosing a relevant and prolific field of analysis, in which spatial econometrics has only found limited space so far, in order to explore the value-added of considering the spatial dimension of the data. In particular, we study the determinants of cropland value in Midwestern U.S.A. in the years 1971-2009, by taking the present value model (PVM) as the theoretical framework of analysis.

Compensation, Incentives and Risk: Economic Theory and Russian Practise

Mr. Pechersky set out to examine a specific feature of the employer-employee relationship in Russian business organisations. He wanted to study to what extent the so-called "moral hazard" is being solved (if it is being solved at all), whether there is a relationship between pay and performance, and whether there is a correlation between economic theory and Russian reality. Finally, he set out to construct a model of the Russian economy that better reflects the way it actually functions than do certain other well-known models (for example models of incentive compensation, the Shapiro-Stiglitz model etc.). His report was presented to the RSS in the form of a series of manuscripts in English and Russian, and on disc, with many tables and graphs. He begins by pointing out the different examples of randomness that exist in the relationship between employee and employer. Firstly, results are frequently affected by circumstances outside the employee's control that have nothing to do with how intelligently, honestly, and diligently the employee has worked. When rewards are based on results, uncontrollable randomness in the employee's output induces randomness in their incomes. A second source of randomness involves the outside events that are beyond the control of the employee that may affect his or her ability to perform as contracted. A third source of randomness arises when the performance itself (rather than the result) is measured, and the performance evaluation procedures include random or subjective elements. Mr. Pechersky's study shows that in Russia the third source of randomness plays an important role. Moreover, he points out that employer-employee relationships in Russia are sometimes opposite to those in the West. Drawing on game theory, he characterises the Western system as follows. The two players are the principal and the agent, who are usually representative individuals. The principal hires an agent to perform a task, and the agent acquires an information advantage concerning his actions or the outside world at some point in the game, i.e. it is assumed that the employee is better informed. In Russia, on the other hand, incentive contracts are typically negotiated in situations in which the employer has the information advantage concerning outcome. Mr. Pechersky schematises it thus. Compensation (the wage) is W and consists of a base amount, plus a portion that varies with the outcome, x. So W = a + bx, where b is used to measure the intensity of the incentives provided to the employee. This means that one contract will be said to provide stronger incentives than another if it specifies a higher value for b. This is the incentive contract as it operates in the West. The key feature distinguishing the Russian example is that x is observed by the employer but is not observed by the employee. So the employer promises to pay in accordance with an incentive scheme, but since the outcome is not observable by the employee the contract cannot be enforced, and the question arises: is there any incentive for the employer to fulfil his or her promises? Mr. Pechersky considers two simple models of employer-employee relationships displaying the above type of information symmetry. In a static framework the obtained result is somewhat surprising: at the Nash equilibrium the employer pays nothing, even though his objective function contains a quadratic term reflecting negative consequences for the employer if the actual level of compensation deviates from the expectations of the employee. This can lead, for example, to labour turnover, or the expenses resulting from a bad reputation. In a dynamic framework, the conclusion can be formulated as follows: the higher the discount factor, the higher the incentive for the employer to be honest in his/her relationships with the employee. If the discount factor is taken to be a parameter reflecting the degree of (un)certainty (the higher the degree of uncertainty is, the lower is the discount factor), we can conclude that the answer to the formulated question depends on the stability of the political, social and economic situation in a country. Mr. Pechersky believes that the strength of a market system with private property lies not just in its providing the information needed to compute an efficient allocation of resources in an efficient manner. At least equally important is the manner in which it accepts individually self-interested behaviour, but then channels this behaviour in desired directions. People do not have to be cajoled, artificially induced, or forced to do their parts in a well-functioning market system. Instead, they are simply left to pursue their own objectives as they see fit. Under the right circumstances, people are led by Adam Smith's "invisible hand" of impersonal market forces to take the actions needed to achieve an efficient, co-ordinated pattern of choices. The problem is that, as Mr. Pechersky sees it, there is no reason to believe that the circumstances in Russia are right, and the invisible hand is doing its work properly. Political instability, social tension and other circumstances prevent it from doing so. Mr. Pechersky believes that the discount factor plays a crucial role in employer-employee relationships. Such relationships can be considered satisfactory from a normative point of view, only in those cases where the discount factor is sufficiently large. Unfortunately, in modern Russia the evidence points to the typical discount factor being relatively small. This fact can be explained as a manifestation of aversion to risk of economic agents. Mr. Pechersky hopes that when political stabilisation occurs, the discount factors of economic agents will increase, and the agent's behaviour will be explicable in terms of more traditional models.

Screening for Chlamydia trachomatis: a systematic review of the economic evaluations and modelling

OBJECTIVE: To review systematically and critically, evidence used to derive estimates of costs and cost effectiveness of chlamydia screening. METHODS: Systematic review. A search of 11 electronic bibliographic databases from the earliest date available to August 2004 using keywords including chlamydia, pelvic inflammatory disease, economic evaluation, and cost. We included studies of chlamydia screening in males and/or females over 14 years, including studies of diagnostic tests, contact tracing, and treatment as part of a screening programme. Outcomes included cases of chlamydia identified and major outcomes averted. We assessed methodological quality and the modelling approach used. RESULTS: Of 713 identified papers we included 57 formal economic evaluations and two cost studies. Most studies found chlamydia screening to be cost effective, partner notification to be an effective adjunct, and testing with nucleic acid amplification tests, and treatment with azithromycin to be cost effective. Methodological problems limited the validity of these findings: most studies used static models that are inappropriate for infectious diseases; restricted outcomes were used as a basis for policy recommendations; and high estimates of the probability of chlamydia associated complications might have overestimated cost effectiveness. Two high quality dynamic modelling studies found opportunistic screening to be cost effective but poor reporting or uncertainty about complication rates make interpretation difficult. CONCLUSION: The inappropriate use of static models to study interventions to prevent a communicable disease means that uncertainty remains about whether chlamydia screening programmes are cost effective or not. The results of this review can be used by health service managers in the allocation of resources, and health economists and other researchers who are considering further research in this area.

Cost effectiveness of home based population screening for Chlamydia trachomatis in the UK: economic evaluation of chlamydia screening studies (ClaSS) project

OBJECTIVE: To investigate the cost effectiveness of screening for Chlamydia trachomatis compared with a policy of no organised screening in the United Kingdom. DESIGN: Economic evaluation using a transmission dynamic mathematical model. SETTING: Central and southwest England. PARTICIPANTS: Hypothetical population of 50,000 men and women, in which all those aged 16-24 years were invited to be screened each year. MAIN OUTCOME MEASURES: Cost effectiveness based on major outcomes averted, defined as pelvic inflammatory disease, ectopic pregnancy, infertility, or neonatal complications. RESULTS: The incremental cost per major outcome averted for a programme of screening women only (assuming eight years of screening) was 22,300 pounds (33,000 euros; $45,000) compared with no organised screening. For a programme screening both men and women, the incremental cost effectiveness ratio was approximately 28,900 pounds. Pelvic inflammatory disease leading to hospital admission was the most frequently averted major outcome. The model was highly sensitive to the incidence of major outcomes and to uptake of screening. When both were increased the cost effectiveness ratio fell to 6200 pound per major outcome averted for screening women only. CONCLUSIONS: Proactive register based screening for chlamydia is not cost effective if the uptake of screening and incidence of complications are based on contemporary empirical studies, which show lower rates than commonly assumed. These data are relevant to discussions about the cost effectiveness of the opportunistic model of chlamydia screening being introduced in England.

Epidemiological, social, diagnostic and economic evaluation of population screening for genital chlamydial infection

OBJECTIVES: To investigate epidemiological, social, diagnostic and economic aspects of chlamydia screening in non-genitourinary medicine settings. METHODS: Linked studies around a cross-sectional population-based survey of adult men and women invited to collect urine and (for women) vulvovaginal swab specimens at home and mail these to a laboratory for testing for Chlamydia trachomatis. Specimens were used in laboratory evaluations of an amplified enzyme immunoassay (PCE EIA) and two nucleic acid amplification tests [Cobas polymerase chain reaction (PCR), Becton Dickinson strand displacement amplification (SDA)]. Chlamydia-positive cases and two negative controls completed a risk factor questionnaire. Chlamydia-positive cases were invited into a randomised controlled trial of partner notification strategies. Samples of individuals testing negative completed psychological questionnaires before and after screening. In-depth interviews were conducted at all stages of screening. Chlamydia transmission and cost-effectiveness of screening were investigated in a transmission dynamic model. SETTING AND PARTICIPANTS: General population in the Bristol and Birmingham areas of England. In total, 19,773 women and men aged 16-39 years were randomly selected from 27 general practice lists. RESULTS: Screening invitations reached 73% (14,382/19,773). Uptake (4731 participants), weighted for sampling, was 39.5% (95% CI 37.7, 40.8%) in women and 29.5% (95% CI 28.0, 31.0%) in men aged 16-39 years. Chlamydia prevalence (219 positive results) in 16-24 year olds was 6.2% (95% CI 4.9, 7.8%) in women and 5.3% (95% CI 4.4, 6.3%) in men. The case-control study did not identify any additional factors that would help target screening. Screening did not adversely affect anxiety, depression or self-esteem. Participants welcomed the convenience and privacy of home-sampling. The relative sensitivity of PCR on male urine specimens was 100% (95% CI 89.1, 100%). The combined relative sensitivities of PCR and SDA using female urine and vulvovaginal swabs were 91.8% (86.1, 95.7, 134/146) and 97.3% (93.1, 99.2%, 142/146). A total of 140 people (74% of eligible) participated in the randomised trial. Compared with referral to a genitourinary medicine clinic, partner notification by practice nurses resulted in 12.4% (95% CI -3.7, 28.6%) more patients with at least one partner treated and 22.0% (95% CI 6.1, 37.8%) more patients with all partners treated. The health service and patients costs (2005 prices) of home-based postal chlamydia screening were 21.47 pounds (95% CI 19.91 pounds, 25.99) per screening invitation and 28.56 pounds (95% CI 22.10 pounds, 30.43) per accepted offer. Preliminary modelling found an incremental cost-effectiveness ratio (2003 prices) comparing screening men and women annually to no screening in the base case of 27,000 pounds/major outcome averted at 8 years. If estimated screening uptake and pelvic inflammatory disease incidence were increased, the cost-effectiveness ratio fell to 3700 pounds/major outcome averted. CONCLUSIONS: Proactive screening for chlamydia in women and men using home-collected specimens was feasible and acceptable. Chlamydia prevalence rates in men and women in the general population are similar. Nucleic acid amplification tests can be used on first-catch urine specimens and vulvovaginal swabs. The administrative costs of proactive screening were similar to those for opportunistic screening. Using empirical estimates of screening uptake and incidence of complications, screening was not cost-effective.

Coordinated Lot-sizing and Dynamic Prizing under a Supplier All-units Quantity Discount

We consider an economic order quantity model where the supplier offers an all-units quantity discount and a price sensitive customer demand. We compare a decentralized decision framework where selling price and replenishment policy are determined independently to simultaneous decision making. Constant and dynamic pricing are distinguished. We derive structural properties and develop algorithms that determine the optimal pricing and replenishment policy and show how quantity discounts not only influence the purchasing strategy but also the pricing policy. A sensitivity analysis indicates the impact of the fixed-holding cost ratio, the discount policy, and the customers' price sensitivity on the optimal decisions.

Locational policies in secondary capital cities: constructing a dynamic framework

Capital cities that are not the economic centers of their nations – so-called secondary capital cities (SSCs) – tend to be overlooked in the field of political science. Consequentially, there is a lack of research and resulting theory describing their local economy and their public policies. This paper analyzes how SCCs try to develop and position themselves through the formulation of locational policies. By linking three different theoretical strands – the Regional Innovation System (RIS) approach, the concept of locational policies, and the regime perspective – this paper aims for constructing a framework to study the economic and political dynamics in SCCs.

Exchange Rate Stabilization and IMF High Interest Rate Policy: A Critical Reconsideration Using a Dynamic Model

This paper examines whether the IMF high interest rate policy was suitable for crisis-ridden East Asian economies. Using an "overshoot" model similar to that of Dornbusch's (1976), it shows that this sort of policy might cause an unnecessary deflationary adjusting process and have no effect on containing the real depreciation of exchange rates in the long run. The study also demonstrates that Thai economic data coincides quite well with the model presented here. Finally, it points out that the high interest policy itself might provoke high risk-premium, the existence of which, in turn, justifies the policy. This means that the policy has a self-fulfilling property. In conclusion, a "one-size-fits-all" adaptation of high interest rate policy in a currency crisis is very dangerous in general, and was inappropriate for East Asia. The desirable policy would have been to let currencies depreciate and keep interest rates stable.

East Asia's Economic Development cum Trade "Divergence"

This paper addresses some salient features of how some of "successful" East Asian economies have been faring in terms of enhancing their export competitiveness. That export becomes more divergent in terms of its unit price as more technology-enhancing economic activity is undertaken within an economy, is the primary message that this study conveys. This is indeed what Schumpeter had addressed in conjunction with his "creative destruction" thesis. From this perspective, East Asia's export-led industrialization has been attained through a particular policy focus upon high "trade divergence" sectors underpinned by a generally high level of manufacturing flexibility. The experience of Malaysia's development serves as the strong case in point. As an East Asia-wide FTA is expected to facilitate "divergent" export-led industrialization through enhanced knowledge interaction, this dynamic or "divergent" impact that knowledge creation could exert should come to the fore of relevant policy arguments, together with static consideration of trade creation and diversion. A formal statistical test of the "divergence hypothesis" above is called for with a view to building upon this preliminary study.

Input-Output Based Economic Impact Evaluation System for Small City Development: A Case Study on Saemangeum's Flux City Design

The paper aims to develop a quasi-dynamic interregional input-output model for evaluating the macro-economic impacts of small city development. The features of the model are summarized as follows: (1) the consumption expenditure of households is regarded as an endogenous variable, (2) the technological change is determined by the change of industrial Location Quotient caused by firm's investment activities. (3) a strong feedback function between the city design and the economic analysis is provided. For checking the performance of the model, Saemangeum's Flux City Design Plan is used as the simulation target in our paper.