An agent-based approach to value theory and wealth distribution in economics

Any attempt to model an economy requires foundational assumptions about the relations between prices, values and the distribution of wealth. These assumptions exert a profound influence over the results of any model. Unfortunately, there are few areas in economics as vexed as the theory of value. I argue in this paper that the fundamental problem with past theories of value is that it is simply not possible to model the determination of value, the formation of prices and the distribution of income in a real economy with analytic mathematical models. All such attempts leave out crucial processes or make unrealistic assumptions which significantly affect the results. There have been two primary approaches to the theory of value. The first, associated with classical economists such as Ricardo and Marx were substance theories of value, which view value as a substance inherent in an object and which is conserved in exchange. For Marxists, the value of a commodity derives solely from the value of the labour power used to produce it - and therefore any profit is due to the exploitation of the workers. The labour theory of value has been discredited because of its assumption that labour was the only ‘factor’ that contributed to the creation of value, and because of its fundamentally circular argument. Neoclassical theorists argued that price was identical with value and was determined purely by the interaction of supply and demand. Value then, was completely subjective. Returns to labour (wages) and capital (profits) were determined solely by their marginal contribution to production, so that each factor received its just reward by definition. Problems with the neoclassical approach include assumptions concerning representative agents, perfect competition, perfect and costless information and contract enforcement, complete markets for credit and risk, aggregate production functions and infinite, smooth substitution between factors, distribution according to marginal products, firms always on the production possibility frontier and firms’ pricing decisions, ignoring money and credit, and perfectly rational agents with infinite computational capacity. Two critical areas include firstly, the underappreciated Sonnenschein-Mantel- Debreu results which showed that the foundational assumptions of the Walrasian general-equilibrium model imply arbitrary excess demand functions and therefore arbitrary equilibrium price sets. Secondly, in real economies, there is no equilibrium, only continuous change. Equilibrium is never reached because of constant changes in preferences and tastes; technological and organisational innovations; discoveries of new resources and new markets; inaccurate and evolving expectations of businesses, consumers, governments and speculators; changing demand for credit; the entry and exit of firms; the birth, learning, and death of citizens; changes in laws and government policies; imperfect information; generalized increasing returns to scale; random acts of impulse; weather and climate events; changes in disease patterns, and so on. The problem is not the use of mathematical modelling, but the kind of mathematical modelling used. Agent-based models (ABMs), objectoriented programming and greatly increased computer power however, are opening up a new frontier. Here a dynamic bargaining ABM is outlined as a basis for an alternative theory of value. A large but finite number of heterogeneous commodities and agents with differing degrees of market power are set in a spatial network. Returns to buyers and sellers are decided at each step in the value chain, and in each factor market, through the process of bargaining. Market power and its potential abuse against the poor and vulnerable are fundamental to how the bargaining dynamics play out. Ethics therefore lie at the very heart of economic analysis, the determination of prices and the distribution of wealth. The neoclassicals are right then that price is the enumeration of value at a particular time and place, but wrong to downplay the critical roles of bargaining, power and ethics in determining those same prices.

The spenders-hoarders theory of capital accumulations, wealth distribution and fiscal policy

This paper proposes a simple OLG model which is consistent with the essential facts about consumer behavior, capital accumulation and wealth distribution, and yields some new and surprising conclusions about fiscal policy. By considering a society in which individuais are distinguished according to two characteristics, altruism and wealth preference, we show that those who in the long run hold the bulk of private capital are not so rnuch motivated by dynastic altruism as by preference for wealth. Two types of social segmentation can result with different wcalth distribution. To a large extcnt our results seem to fit reality better than those obtained with standard optimal growth models in which dynastic altruism ( or r ate o f impatience) is the only source of heterogeneity: overaccumulation can appear, public debt and unfunded pensions are not neutra!, estate taxation can improve the welfare of the top wealthy.

Life Cycle Models, Heterogeneity of Initial Assets,and Wealth Inequality

Life cycle general equilibrium models with heterogeneous agents have a very hard time reproducing the American wealth distribution. A common assumption made in this literature is that all young adults enter the economy with no initial assets. In this article, we relax this assumption – not supported by the data - and evaluate the ability of an otherwise standard life cycle model to account for the U.S. wealth inequality. The new feature of the model is that agents enter the economy with assets drawn from an initial distribution of assets, which is estimated using a non-parametric method applied to data from the Survey of Consumer Finances. We found that heterogeneity with respect to initial wealth is key for this class of models to replicate the data. According to our results, American inequality can be explained almost entirely by the fact that some individuals are lucky enough to be born into wealth, while others are born with few or no assets.

Essays on health care reform, wealth inequality, and demography

This thesis contains three chapters. The first chapter uses a general equilibrium framework to simulate and compare the long run effects of the Patient Protection and Affordable Care Act (PPACA) and of health care costs reduction policies on macroeconomic variables, government budget, and welfare of individuals. We found that all policies were able to reduce uninsured population, with the PPACA being more effective than cost reductions. The PPACA increased public deficit mainly due to the Medicaid expansion, forcing tax hikes. On the other hand, cost reductions alleviated the fiscal burden of public insurance, reducing public deficit and taxes. Regarding welfare effects, the PPACA as a whole and cost reductions are welfare improving. High welfare gains would be achieved if the U.S. medical costs followed the same trend of OECD countries. Besides, feasible cost reductions are more welfare improving than most of the PPACA components, proving to be a good alternative. The second chapter documents that life cycle general equilibrium models with heterogeneous agents have a very hard time reproducing the American wealth distribution. A common assumption made in this literature is that all young adults enter the economy with no initial assets. In this chapter, we relax this assumption – not supported by the data – and evaluate the ability of an otherwise standard life cycle model to account for the U.S. wealth inequality. The new feature of the model is that agents enter the economy with assets drawn from an initial distribution of assets. We found that heterogeneity with respect to initial wealth is key for this class of models to replicate the data. According to our results, American inequality can be explained almost entirely by the fact that some individuals are lucky enough to be born into wealth, while others are born with few or no assets. The third chapter documents that a common assumption adopted in life cycle general equilibrium models is that the population is stable at steady state, that is, its relative age distribution becomes constant over time. An open question is whether the demographic assumptions commonly adopted in these models in fact imply that the population becomes stable. In this chapter we prove the existence of a stable population in a demographic environment where both the age-specific mortality rates and the population growth rate are constant over time, the setup commonly adopted in life cycle general equilibrium models. Hence, the stability of the population do not need to be taken as assumption in these models.

Essays on investment, growth and income distribution

In this dissertation, I examine both theoretically and empirically the relationship between stock prices and income distribution using an endogenous growth model with social status impatience.^ The theoretical part looks into how status impatience and current economic status jointly determine time preference, savings, future economic status, stock prices, growth and wealth distribution in the steady state. This work builds on Burgstaller and Karayalcin (1996).^ More specifically, I look at (i) the effects of the distribution of status impatience levels on the distribution of steady state assets, incomes and consumption and (ii) the effects of changes in relative levels of status impatience on stock prices. Therefore, from (i) and (ii), I derive the correlation between stock prices, incomes and asset distribution. Also, the analysis of the stack market is undertaken in the presence of adjustment costs to investments.^ The empirical chapter looks at (i) the correlation between income inequality and long run economic growth on the one hand and (ii) the correlation between stock market prices and income inequality on the other. The role of stock prices and social status is examined to better understand the forces that enable a country to grow overtime and to determine why output per capita varies across countries. The data are from Summers and Heston (1988), Barro and Wolf (1989), Alesina and Rodrik (1994), Global financial Database (1997) and the World Bank. Data for social status are collected through a primary sample survey on the internet. Twenty-five developed and developing countries are included in the sample.^ The model developed in this study was specified as a system of simultaneous equations, in which per capita growth rate and income inequality were endogenous variables. Additionally, stock price index and social status measures were also incorporated. The results indicate that income inequality is inversely related to economic growth. In addition, increase in income inequality arising from higher stock prices constrains growth. Moreover, where social status is determined by income levels, it influences long run growth. Therefore, these results support findings of Persson and Tabellini (1994) and Alesina and Rodrik (1994). ^

Poverty in the fisheries, inductors, causes and intervention

The study is prompted by the poverty that persisted among the fishing communities of lake victoria at time of considerable cash inflow into the fisheries development of fish processing industry. There has been need for understanding of the poverty and what strategies would be most appreciate for it's reduction.This study has attempted to respond to the needby identifying the nature and distribution of the poverty within the fisheries lake victoria,Uganda, the factor responsible for itand the options for poverty reduction intervention. The study examined the global and regional perspectives of poverty and wealth distribution, noting that wide disparities existed between the developed and the developing world and also between the developing countries themselves. A historical review of development policies and strategies revealed that while successive strategies were able to contribute to growth, their achievement towards poverty alleviation were less than satisfactory, hence the need for continually developing new strategies. A background to Uganda’s society and economy is provided, examining the demographic, political, environmental and economic conditions of the country. Uganda’s development strategies are reviewed, highlighting the role of the Poverty Eradication Action Plan, Uganda’s main strategy for implementing the policy of poverty reduction and wealth distribution. At the agricultural sector level, the Plan for the Modernisation of Agriculture has been formulated, followed by the National Fisheries Policy, aimed at providing a policy framework for the management and development of the fisheries. An appropriate definition of poverty was formulated, considered relevant to the situation of Lake Victoria. The dimensions of poverty included inadequate basic necessities, low education and health achievements, a sense of insecurity and exposure to risk. The research methodology was enhanced by the examination of the Lélé Model of the Poverty–Environmental Degradation problem, the World Bank Model of Poverty Causation and the subsequent Lake Victoria Model developed in this study. It has provided a plan for the research, the consideration of criteria and a data collection plan. The data collection instruments included secondary data search, key informant interviews and a sample survey based on a structured questionnaire. The study identified all the four dimensions of poverty in the fisheries, provided poverty profiles with respect to the different activities, groups of people and regions in the fisheries, based on consumption poverty. Among the people identified to be in poverty were the fishing labourers, fishers of Oreochromis niloticus and those operating with non-powered boats. In the post-harvest fisheries, large proportions of processors involved in salting and sun-drying, market stall and bicycle traders were in the poverty category. The ethnic groups most affected included the Samia, Basoga and Bakenye while the Districts of Jinja, Bugiri and Busia had the highest proportions of fishers in the poverty category. With respect to the other dimensions of poverty, the study showed that educational achievement was low within the fishing communities. The health status was poor, due mainly to the prevalence of malaria, diarrhoea, bilharzia and HIV/AIDS. There was a sense of insecurity within certain sections of the fishing community, due to leadership weaknesses within the local as well as the Government institutions. Some community members operated in a state of risk because they were vulnerable to episodes of income, health and education. The causes of poverty in fisheries included weaknesses within the institutional and social environment, limitations in the technology available to the poor, resource degradation and unfavourable economic factors. The recommendations of the study for poverty reduction included strengthening of policies, developing links, improving capacities and increasing resources, to be applied at the levels of Central Government, Local Government and of the community. In view of the achievements of the methodology used on this study, involving reference to the models, it is recommended that future research should build upon this model approach, as it will continue to produce results, especially when attempting to forecast changes relating to interventions.

Measuring Economic Insecurity

We provide a systematic treatment of the notion of economic insecurity, assuming that an individual’s sentiment of insecurity depends on the current wealth level and its variations experienced in the past. We think of wealth as a comprehensive variable encompassing anything that may help in coping with adverse occurrences. The current wealth level could also be interpreted as incorporating the individual’s evaluation of future prospects. Variations in wealth experienced in the recent past are given higher weight than experiences that occurred in the more distant past. Two classes of measures are characterized with sets of plausible and intuitive axioms.

Gestão e sucessão de empresas familiares: uma revisão de literatura.

O presente estudo contempla propostas para algumas lacunas encontradas nos trabalhos sobre empresas familiares, por meio de uma análise da produção científica, com enfoque conceitual e no relacionamento intergeracional, de todos os artigos publicados nos eventos da Associação Nacional de Pós-Graduação e Pesquisa em Administração (EnANPAD, Eneo, 3ES e EnGPR), e nos periódicos RAC, RAE, RAUSP e O&S, no período de 1961 a 2008, de acordo com a disponibilidade em seus sitios, realizada em outubro de 2008, além de consultas nas bibliotecas da Fundação Getúlio Vargas, no Rio de Janeiro (em dezembro de 2008) e em São Paulo (em dezembro de 2008 e em maio de 2009). Nove critérios de análise foram utilizados: pesquisas em empresas familiares, frequência das publicações, citações e referências, autores mais prolíficos, instituições que mais publicam, média de artigos publicados, fundamentação teórica das investigações, aspectos conceituais e pai e filho. Dos 154 artigos encontrados que, a priori, estavam direcionados para esta temática, somente 89 foram incluídos por apresentarem adequação aos objetivos da pesquisa. Os resultados alcançados revelam diversas contradições entre as pesquisas, tanto sob o ponto de vista conceitual quanto metodológico. Não é possível, ainda, encontrar um conceito de empresa familiar. Diversos fatores influenciam na imagem negativa associada a essas organizações, mas que não vão ser capazes de ofuscar o brilhantismo daquelas que são as principais responsáveis pela distribuição de riqueza, geração de emprego e crescimento econômico, no Brasil e no mundo. E quando aproveitam as vantagens competitivas que possuem, são capazes de se sobressair perante a concorrência e reverter qualquer situação que vá de contra aos seus interesses.

The rise in global demand for ethanol and poverty in Brazil

Incluye Bibliografía

The rise in global demand for ethanol and poverty in Brazil

Includes bibliography

Modelli non lineari statici e dinamici su dati microeconomici: analisi delle condizioni finanziarie delle famiglie italiane

The thesis studies the economic and financial conditions of Italian households, by using microeconomic data of the Survey on Household Income and Wealth (SHIW) over the period 1998-2006. It develops along two lines of enquiry. First it studies the determinants of households holdings of assets and liabilities and estimates their correlation degree. After a review of the literature, it estimates two non-linear multivariate models on the interactions between assets and liabilities with repeated cross-sections. Second, it analyses households financial difficulties. It defines a quantitative measure of financial distress and tests, by means of non-linear dynamic probit models, whether the probability of experiencing financial difficulties is persistent over time. Chapter 1 provides a critical review of the theoretical and empirical literature on the estimation of assets and liabilities holdings, on their interactions and on households net wealth. The review stresses the fact that a large part of the literature explain households debt holdings as a function, among others, of net wealth, an assumption that runs into possible endogeneity problems. Chapter 2 defines two non-linear multivariate models to study the interactions between assets and liabilities held by Italian households. Estimation refers to a pooling of cross-sections of SHIW. The first model is a bivariate tobit that estimates factors affecting assets and liabilities and their degree of correlation with results coherent with theoretical expectations. To tackle the presence of non normality and heteroskedasticity in the error term, generating non consistent tobit estimators, semi-parametric estimates are provided that confirm the results of the tobit model. The second model is a quadrivariate probit on three different assets (safe, risky and real) and total liabilities; the results show the expected patterns of interdependence suggested by theoretical considerations. Chapter 3 reviews the methodologies for estimating non-linear dynamic panel data models, drawing attention to the problems to be dealt with to obtain consistent estimators. Specific attention is given to the initial condition problem raised by the inclusion of the lagged dependent variable in the set of explanatory variables. The advantage of using dynamic panel data models lies in the fact that they allow to simultaneously account for true state dependence, via the lagged variable, and unobserved heterogeneity via individual effects specification. Chapter 4 applies the models reviewed in Chapter 3 to analyse financial difficulties of Italian households, by using information on net wealth as provided in the panel component of the SHIW. The aim is to test whether households persistently experience financial difficulties over time. A thorough discussion is provided of the alternative approaches proposed by the literature (subjective/qualitative indicators versus quantitative indexes) to identify households in financial distress. Households in financial difficulties are identified as those holding amounts of net wealth lower than the value corresponding to the first quartile of net wealth distribution. Estimation is conducted via four different methods: the pooled probit model, the random effects probit model with exogenous initial conditions, the Heckman model and the recently developed Wooldridge model. Results obtained from all estimators accept the null hypothesis of true state dependence and show that, according with the literature, less sophisticated models, namely the pooled and exogenous models, over-estimate such persistence.

Territorial Intelligence of Vulnerability Systems 2- Sustainable Modelling of Globalization Challenge

Globalization as progress of economic development has increased population socioeconomical vulnerability when unequal wealth distribution within economic development process constitutes the main rule, with widening the gap between rich and poors by environmental pricing. Econological vulnerability is therefore increasing too, as dangerous substance and techniques should produce polluted effluents and industrial or climatic risk increasing (Woloszyn, Quenault, Faburel, 2012). To illustrate and model this process, we propose to introduce an analogical induction-model to describe both vulnerability situations and associated resilience procedures. At this aim, we first develop a well-known late 80?s model of socio-economic crack-up, known as 'Silent Weapons for Quiet Wars', which presents economics as a social extension of natural energy systems. This last, also named 'E-model', is constituted by three passive components, potential energy, kinetic energy, and energy dissipation, thus allowing economical data to be treated as a thermodynamical system. To extend this model to social and ecological sustainability pillars, we propose to built an extended E(Economic)-S(Social)-O(Organic) model, based on the three previous components, as an open model considering feedbacks as evolution sources. An applicative illustration of this model will then be described, through this summer's american severe drought event analysis

Tierras públicas y construcción del estado en Buenos Aires durante el siglo XIX : Las donaciones ejidales y condicionadas en una visión comparada

El objetivo del trabajo es realizar un análisis sobre la construcción del poder político post-independiente en la campaña de Buenos Aires. Para ello se examinan conjuntamente dos variables significativas: la política de tierras públicas -especialmente las donaciones ejidales y condicionadas- y la distribución de la riqueza. Se abordan dos casos de estudio de forma confrontada: la Guardia de Luján y los partidos de Azul y Tapalqué, donde las modalidades de donación se implementaron, estudiando las características de la legislación y su aplicación, el perfil socio-económico de los sectores beneficiados y su relación con la formación de los consensos sociales necesarios para erigir la potestad del Estado. Se presta especial atención a la conformación de las nuevas comunidades políticas, específicamente, durante el gobierno de Juan Manuel de Rosas y la etapa inmediatamente posterior

La distribución de la tierra y el crecimiento económico de la campaña de Buenos Aires : Un estudio de la región Oeste, 1839-1867

En Buenos Aires, el periodo que transcurre entre 1839 y 1869 se caracterizó por un crecimiento económico casi constante. Dicho proceso generó una creciente desigualdad en la distribución de la riqueza (fundamentalmente de la tierra) pero produjo una importante movilidad social, sobre todo entre 1839 y 1855. La región Oeste presenta particularidades bien marcadas en el proceso señalado que aún no han sido estudiadas en detalle. A partir del análisis conjunto del impuesto de la Contribución Directa y los expedientes de tierras, se estudian las causas del movimiento diferencial que se operó allí. Se analizan los partidos de Chivilcoy, Mercedes y Suipacha (ex partido de la Guardia de Luján hasta 1845) porque sintetizan muy bien los cambios operados en la región de estudio

Tierras públicas y construcción del estado en Buenos Aires durante el siglo XIX : Las donaciones ejidales y condicionadas en una visión comparada

El objetivo del trabajo es realizar un análisis sobre la construcción del poder político post-independiente en la campaña de Buenos Aires. Para ello se examinan conjuntamente dos variables significativas: la política de tierras públicas -especialmente las donaciones ejidales y condicionadas- y la distribución de la riqueza. Se abordan dos casos de estudio de forma confrontada: la Guardia de Luján y los partidos de Azul y Tapalqué, donde las modalidades de donación se implementaron, estudiando las características de la legislación y su aplicación, el perfil socio-económico de los sectores beneficiados y su relación con la formación de los consensos sociales necesarios para erigir la potestad del Estado. Se presta especial atención a la conformación de las nuevas comunidades políticas, específicamente, durante el gobierno de Juan Manuel de Rosas y la etapa inmediatamente posterior