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Older papers

This page will (eventually) have abstract and links for older papers, published and un-published.

Published papers

Risk preferences and the welfare cost of business cycles

This paper reexamines the ‘‘cost of business cycle’’ calculations made by Lucas (‘‘Models of Business Cycles,’’ Basil Blackwell, New York, 1987) under alternative specifications of individuals’ risk preferences and using alternative specifications of the stochastic process for per capita consumption.  I find that for a class of preferences used by Epstein and Zin (J. Monetary Econom. 26, 1990, 387-407), in an analysis of the equity premium puzzle, which display ‘‘first-order’’ risk aversion, the welfare cost of business cycles is potentially much larger than previous estimates. Journal of Economic Literature Classification Numbers: E32, D81.
 

On the political economy of immigration and income redistribution

Joint with Greg Huffman
 
In this paper, we study several general equilibrium models in which the agents in an economy must decide on the appropriate level of immigration into the country. Immigration does not enter directly into the native agents' utility functions, and natives have identical preferences over consumption goods. However, natives may be endowed with different amounts of capital, which alone gives rise to alternative levels of desired immigration. We show that the natives' preferences over desired levels of immigration are influenced by the prospect that new immigrants will be voting in the future, which may lead to higher taxation to finance government spending from which they will benefit. We also show that changes in the degree of international capital mobility, the distribution of initial capital among natives, the wealth or poverty of the immigrant pool, and the future voting rights and entitlements of immigrants can all have a dramatic effect on the equilibrium immigration and taxation policies. Both the model and the empirical evidence support the notion that inequality can lead to reduced immigration. The results suggest that opposition to immigration can be mitigated by enhanced capital mobility, as well as from removing some of the benefits that immigrants ultimately receive, either in the form of government transfers, or the franchise to vote.
 
Technical appendix to the paper is here.  An earlier working paper version is here.
 
 

An exploration into the effects of dynamic economic stabilization

This is one that I'm surprised is available digitally.  This was a paper Greg Huffman and I wrote for a conference on stabilization policy, organized by Franck Portier, Pierre-Yves Henin and Jean-Olivier Hairault, in Paris in 1996.  I'm not sure if the whole conference volume is available on Google Books, but our chapter is there in full.
 
This paper analyzes the stochastic properties of a dynamic general equilibrium model under two government policies which might be interpreted as 'countercyclical' fiscal policies.  In one case we examine the effects on fluctuations of government infrastructure investment in an economy in which public capital is an input to the aggregate production function.  In the other we examine the effects on business cycle fluctuations of a proportional tax on lay-offs.  Our results find only weak evidence for the stabilizing effect of either policy.
 

Endogenous growth in multisector Ramsey models

In this paper, I give sufficient conditions for the existence of endogenously growing optimal paths in a general multisector Ramsey model of optimal capital accumulation.  The key assumption involves the existence of a positive vector of capital stocks which admits strictly positive consumption and expansibility in inverse proportion to the utility discount factor.  If the technology set contains the ray through such a point, in addition to standard convexity and interiority assumptions, then optimal paths grow without bound from any strictly positive initial stocks.  The result unifies a number of existing models in the growth theory literature.
 
[The Jones-Manuelli condition emerges as a special case of the growth condition in this model, which allows for n capital stocks, m consumption goods, involves no differentiability assumptions, and allows for features of technology like capital adjustment costs.  Regrettably, "Dolmas condition" never replaced "Jones-Manuelli condition" in the literature.]
 

Balanced-growth-consistent recursive utility

Koopmans’s ‘recursive utility’ has proven useful in a number of dynamic modelling contexts.  Nonetheless, recursive utility has not made significant inroads into what one would expect to be a natural haven - models of balanced growth, whether ‘exogenous’
or ‘endogenous’.  Mainly, this is due to the dearth of interesting recursive utilities which are consistent with balanced growth. In this paper I provide conditions on the aggregator which guarantee the existence of a recursive utility function which is consistent with balanced growth.  The result in turn shows how a family of such utility functions may be constructed. I also provide a generalization of Jones and Manuelli’s theorem on the existence of optimal endogenous growth.
 
[This is avenue that seemed quite promising at the time - as you can tell from the abstract.  Ben-Gad (1998) and Farmer & Lahiri (2005) later showed that preferences of this sort really don't buy you anything in terms of the amount of agent heterogeneity you can accommodate in models with sustained growth - along a balanced growth path, it still must be the case that all agents share a common discount factor, leading to the same problems of determinacy of the long-run wealth distribution one encounters under fixed discounting.]
 

Time-additive representations of preferences when consumption grows without bound

Koopmans' classic theorem on the representation of intertemporal preference orders by time-additively separable utility functions is inapplicable to economies where consumption streams grow without bound. This paper provides a 'Koopmans-like' theorem for the case of unbounded consumption growth.  Feasible consumption streams obey an asymptotic growth condition, growing in the limit no faster than an arbitrary, fixed reference stream.
 
[The question here is what do you need to add to Koopmans' (mostly) straightforward axioms for the bounded case, in order to handle unbounded consumption paths.  The approach I took was to impose some structure on the consumption set (it's a Riesz ideal generated by a strictly positive program) and add a weak form of monotonicity and some impatience to Koopmans' basic axioms.  The essentially "technical" axioms---those above and beyond Koopmans' basic stationarity & separability axioms---are implied by order continuity of the preference relation.  So, the cleanest (though not the most general) statement of the result would be that a preference relation on a Riesz ideal generated by a strictly positive program, that staisfies Koopmans' more basic axioms and is order continuous, has a TAS representation.  A recent paper by Bleichrodt, Rohde & Wakker (2008) in the Journal of Mathematical Psychology takes an alternative route (in particularly imposing minimal structure on the consumption set).  In the process of comparing and contrasting their result to others in the literatue, Bleichrodt et al. also give a nice summary of most of the work that's been done on this problem.]