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Articles 1 - 30 of 34
Full-Text Articles in Finance
Long-Term Rates, Capital Shares, And Income Inequality, Edmond Berisha, John Meszaros
Long-Term Rates, Capital Shares, And Income Inequality, Edmond Berisha, John Meszaros
Department of Economics Faculty Scholarship and Creative Works
Using Piketty and Zucman’s (Q J Econ 129(3):1255-1310, 2014) recently published capital share data, this paper uses structural VARs to understand the relationship between long-term interest rates, capital shares, and the distribution of income in the United States. The results indicate that increases in capital shares increase income inequality. Moreover, the relationship between the interest rate and capital shares is found to be negative and statistically significant. The results suggest that low long-term rates, through an equity and business investment channel, further increase the unequal distribution of income in the U.S. The results further illuminate the channels through which monetary …
Household Debt, Expected Economic Conditions, And Income Inequality, Edmond Berisha, John Meszaros
Household Debt, Expected Economic Conditions, And Income Inequality, Edmond Berisha, John Meszaros
Department of Economics Faculty Scholarship and Creative Works
The high level of debt among households outside the top end of the income distribution has led many economists to assert that household debt has been an important component of the increase in income inequality in the United States. In addition, the yield spread provides information about the overall condition of the economy and may also be tied into the distribution of income. The paper's results show that increases in the yield spread and household debt correspond with increases in top income shares, resulting in increases in income inequality. However, as household debt and income inequality increase, the yield spread …
Household Debt, Consumption, And Income Inequality, Edmond Berisha, John Meszaros
Household Debt, Consumption, And Income Inequality, Edmond Berisha, John Meszaros
Department of Economics Faculty Scholarship and Creative Works
Using the Johansen and Engle–Granger cointegration tests, we show that there is one cointegrating relationship between household debt, consumption, and income inequality in the United States for the period from 1929 to 2009. Given this result, we use a Vector Error-Correction model to further understand the dynamics among the three variables. Results indicate that increases in income inequality and consumption directly contribute to increases in household debt. Interestingly, the results reveal some feedback from household debt to income inequality. We also show that debt-driven consumption should be viewed with caution as the results show that increases in household debt correspond …
Income Inequality, Equities, Household Debt, And Interest Rates: Evidence From A Century Of Data, Edmond Berisha, John Meszaros, Eric Olson
Income Inequality, Equities, Household Debt, And Interest Rates: Evidence From A Century Of Data, Edmond Berisha, John Meszaros, Eric Olson
Department of Economics Faculty Scholarship and Creative Works
Using Philippon's (2015) recently published historical household debt data, this paper uses Diebold and Yilmaz's (2012) generalized variance decompositions and generalized impulse responses to understand the relationship between interest rates, the stock market, household debt, and the distribution of income in the U.S. The results indicate that increases in the stock market and household debt increase income inequality. Moreover, the relationship between the interest rate and income inequality is found to be negative and statistically significant. We interpret our results as suggesting that high income earners derive a larger portion of their income from interest rate sensitive assets.
Trickle Down? A Little Bit, Edmond Berisha
Trickle Down? A Little Bit, Edmond Berisha
Department of Economics Faculty Scholarship and Creative Works
The new tax plan approved by the U.S. Senate, the Tax Cuts and Jobs Act, claims to offer the largest benefits to individuals in the middle of the income distribution. In this article, I examine the impact exogenous tax changes have on income shares of individuals in the bottom 50 percent of the income distribution. The findings suggest that lower taxes, that are exogenous to fluctuations in business conditions, have minimal direct benefits for individuals in the bottom 50% of the income distribution. Claims that trickle-down economics lift all income shares through lower taxes are not supported by the empirical …
Say At Home, Or Stay At Home? Policy Implications On Female Labor Supply And Empowerment, Vidya Atal
Say At Home, Or Stay At Home? Policy Implications On Female Labor Supply And Empowerment, Vidya Atal
Department of Economics Faculty Scholarship and Creative Works
This paper develops a theory of female labor supply in a general equilibrium framework in the context of a developing economy. In stage 1, men and women decide whether to get married foreseeing the power and market dynamics in stage 2. Single people make their own decisions whereas married couples make decisions together, the power distribution among partners is determined endogenously. It is shown that female labor supply can take different shapes due to structural differences between economies and multiple equilibria might occur, causing low female labor force participation trap. As for policy implications, we find that tax-break to the …
Yield Spread And The Income Distribution, Edmond Berisha
Yield Spread And The Income Distribution, Edmond Berisha
Department of Economics Faculty Scholarship and Creative Works
The yield spread is known to be closely related with business cycles identified by the National Bureau of Economic Research. It is low near peaks and high near troughs. This paper builds on this known relationship and examines the response of the income distribution in the U.S. due to variation in the yield spread. The purpose is to identify the significance and sign of the impact changes in economic conditions have on the distribution of income over the period 1927–2011. Clark and McCracken's (2001) 1-step ahead encompassing tests from nested linear models are initially estimated to determine the predictive power …
A Note On Social Welfare Orders Satisfying Pigou-Dalton Transfer Principle, Ram Dubey
A Note On Social Welfare Orders Satisfying Pigou-Dalton Transfer Principle, Ram Dubey
Department of Economics Faculty Scholarship and Creative Works
This paper studies the constructive nature of social welfare orders on infinite utility streams defined on X = Yℕ, satisfying the Pigou-Dalton transfer principle (PD), which are known to be representable (see Alcantud (2010) and Sakamoto (2012)). We describe the restrictions on domain Y for explicit representation or construction of the social welfare orders satisfying (i) PD and monotonicity; or (ii) PD only. We show that the restrictions on Y for either (a) construction; or (b) explicit representation of the social welfare orders are identical in both cases.
On Construction Of Social Welfare Orders Satisfying Hammond Equity And Weak Pareto Axioms, Ram Dubey
On Construction Of Social Welfare Orders Satisfying Hammond Equity And Weak Pareto Axioms, Ram Dubey
Department of Economics Faculty Scholarship and Creative Works
This paper examines the constructive nature of a social welfare order that respects Hammond equity axiom and Weak Pareto axiom. It describes the domains (of the one period utilities) on which an explicit construction is possible. A social welfare order satisfying the Hammond equity and Weak Pareto admits an explicit construction if and only if the domain is a well-ordered set.
Project Selection: Commitment And Competition, Vidya Atal, Talia Bar, Sidartha Gordon
Project Selection: Commitment And Competition, Vidya Atal, Talia Bar, Sidartha Gordon
Department of Economics Faculty Scholarship and Creative Works
We examine project selection decisions of firms constrained in the number of projects they can handle at once. A new project opportunity arises every period. Taking on a project requires a commitment of uncertain duration, preventing the firm from selecting another project in subsequent periods until the commitment ends. In our dynamic game, when two firms are free of commitment, they move sequentially in random order. Symmetric pure strategy Markov perfect equilibria always exist. In equilibrium, the first mover strategically rejects some projects that are then selected by the second mover, even when the value of the project is the …
Open Questions In Open Source: Exploring Incentives, Licensing And Competition, Vidya Atal, Kameshwari Shankar
Open Questions In Open Source: Exploring Incentives, Licensing And Competition, Vidya Atal, Kameshwari Shankar
Department of Economics Faculty Scholarship and Creative Works
Open Source Software (OSS) has grown in importance over the last few decades and now constitutes an important part of the software market particularly in mobile and web technology. In this paper, we provide a preliminary theoretical framework for analyzing currently unexamined issues regarding developer participation in OSS and competition between open source and proprietary software. We start by looking at the upstream market where developers voluntarily contribute effort into the development of OSS without claiming any copyright for their contributions. We explore the relationship between open source licensing and developers' effort provision and suggest an empirical test of developer …
Income Inequality And Household Debt: A Cointegration Test, Edmond Berisha, John Meszaros, Eric Olson
Income Inequality And Household Debt: A Cointegration Test, Edmond Berisha, John Meszaros, Eric Olson
Department of Economics Faculty Scholarship and Creative Works
This article employs the Johansen and Engle–Granger methodology to determine if there is a cointegrating relationship between household debt and income inequality as measured by Atkinson, Piketty and Saez (2011). The results suggest a cointegrating relationship between the two series. A vector error correction model is estimated showing that a shock to household debt has statistically significant effects on income inequality in the United States over the time period 1919–2009.
Ramsey Equilibrium With Liberal Borrowing, Robert A. Becker, Kirill Borissov, Ram Dubey
Ramsey Equilibrium With Liberal Borrowing, Robert A. Becker, Kirill Borissov, Ram Dubey
Department of Economics Faculty Scholarship and Creative Works
This paper considers a multi-agent one-sector Ramsey equilibrium growth model with borrowing constraints. The extreme borrowing constraint used in the classical version of the model, surveyed in Becker (2006), and the limited form of borrowing constraint examined in Borissov and Dubey (2015) are relaxed to allow more liberal borrowing by the households. A perfect foresight equilibrium is shown to exist in this economy. We describe the steady state equilibria for the liberal borrowing regime and show that as the borrowing regime is progressively liberalized, the steady state wealth inequality increases. Unlike the case of a limited borrowing regime, an equilibrium …
Developers' Incentives And Open-Source Software Licensing: Gpl Vs Bsd, Vidya Atal, Kameshwari Shankar
Developers' Incentives And Open-Source Software Licensing: Gpl Vs Bsd, Vidya Atal, Kameshwari Shankar
Department of Economics Faculty Scholarship and Creative Works
One of the puzzling aspects of open-source software (OSS) development is its public good nature. Individual developers contribute to developing the software, but do not hold the copyright to appropriate its value. This raises questions regarding motives behind such effort. We provide an integrated model of developers' incentives to describe OSS development and compare restrictive OSS licenses that force all modifications to be kept open with non-restrictive OSS licenses that allow proprietary ownership of modified works. Different incentives govern effort provision at different stages of the software development process. We show that open-source licenses can provide socially valuable software when …
A Characterization Of Ramsey Equilibrium In A Model With Limited Borrowing, Kirill Borissov, Ram Dubey
A Characterization Of Ramsey Equilibrium In A Model With Limited Borrowing, Kirill Borissov, Ram Dubey
Department of Economics Faculty Scholarship and Creative Works
This paper considers a one-sector economic growth model with several infinitely-lived heterogeneous households, who differ both in the discount factors as well as preferences over consumption. Unlike the extreme form of borrowing constraint observed in the classical Ramsey model, recently surveyed in Becker (2006), we allow limited borrowing by the households and prove the existence of a perfect foresight equilibrium. We also show that irrespective of production technology employed by the firms, the capital stock sequence converges to the steady state stock and from some time onward all impatient households are in the maximum borrowing state, whereas the most patient …
Ordering Infinite Utility Streams: Efficiency, Continuity, And No Impatience, José Carlos R. Alcantud, Ram Dubey
Ordering Infinite Utility Streams: Efficiency, Continuity, And No Impatience, José Carlos R. Alcantud, Ram Dubey
Department of Economics Faculty Scholarship and Creative Works
We study two related versions of the no-impatience postulate in the context of transitive and reflexive relations on infinite utility streams which are not necessarily complete. Both are excluded by the traditional (weak) anonymity axiom. We show explicit social welfare relations satisfying Strong Pareto and the weaker version of no-impatience that are compatible with continuity in all the traditional topologies in this field. However the stronger version of no-impatience is violated by all lower semi-continuous (in the sup or Campbell topologies) social welfare relations satisfying the Weak Pareto axiom.
Open Source Software: Competition With A Public Good, Vidya Atal, Kameshwari Shankar
Open Source Software: Competition With A Public Good, Vidya Atal, Kameshwari Shankar
Department of Economics Faculty Scholarship and Creative Works
This paper looks at price and quality competition in software markets under two different forms of competition—one where two proprietary firms first choose quality and then engage in price competition, and second where a proprietary firm faces competition from an open source software (OSS) firm that allows its users to determine quality level and provides the software at zero price. We find that OSS competition never improves quality for consumers who value quality highly. However, it may provide greater quality to users with a low valuation for quality. In addition, we find that although OSS has a zero market price, …
Affirmative Action And Empowerment: Friends Or Foes?, Vidya Atal, Ram Dubey
Affirmative Action And Empowerment: Friends Or Foes?, Vidya Atal, Ram Dubey
Department of Economics Faculty Scholarship and Creative Works
We consider effects of quota or "affirmative action" for women at work-places on the societal outcomes. A simple model of household decision making with production and endogenously determined female power is studied. We show that even under standard economic modeling specifications, as a result of affirmative action, it could turn out to be the case that female labor force participation and social welfare rise but at the cost of diminished female power and wider male-female wage-gap.
Combining Monotonicity And Strong Equity: Construction And Representation Of Orders On Infinite Utility Streams, Ram Dubey, Tapan Mitra
Combining Monotonicity And Strong Equity: Construction And Representation Of Orders On Infinite Utility Streams, Ram Dubey, Tapan Mitra
Department of Economics Faculty Scholarship and Creative Works
This paper studies the nature of social welfare orders (SWO) on infinite utility streams, satisfying the efficiency principle known as monotonicity and the consequentialist equity principle known as strong equity. It provides a complete characterization of domain sets for which there exists such a SWO which is in addition representable by a real valued function. It then shows that for those domain sets for which there is no such SWO which is representable, the existence of such a SWO necessarily entails the existence of a non-Ramsey set, a non-constructive object.
Do All Constructive Strongly Monotone Inter-Temporal Orders Exhibit Impatience?, Kuntal Banerjee, Ram Dubey
Do All Constructive Strongly Monotone Inter-Temporal Orders Exhibit Impatience?, Kuntal Banerjee, Ram Dubey
Department of Economics Faculty Scholarship and Creative Works
In this paper we show that if a strongly monotone inter-temporal order exhibits no preference towards the advancement of timing of future utility on any infinite utility stream, then the existence of such an order must involve some non-constructive device.
Patent Quality And A Two-Tiered Patent System, Vidya Atal, Talia Bar
Patent Quality And A Two-Tiered Patent System, Vidya Atal, Talia Bar
Department of Economics Faculty Scholarship and Creative Works
In this paper, we study the determinants of patent quality and volume of patent applications when inventors care about perceived patent quality. We analyze the effects of various policy reforms, specifically, a proposal to establish a two-tiered patent system. In the two-tiered system, applicants can choose between a regular patent and a more costly, possibly more thoroughly examined, 'gold-plate' patent. Introducing a second patent-tier can reduce patent applications, reduce the incidence of bad patents, and sometimes increase social welfare. The gold-plate tier attracts inventors with high ex-ante probability of validity, but not necessarily applicants with innovations of high economic value.
On Ramsey Equilibrium: Capital Ownership Pattern And Inefficiency, Robert A. Becker, Ram Dubey, Tapan Mitra
On Ramsey Equilibrium: Capital Ownership Pattern And Inefficiency, Robert A. Becker, Ram Dubey, Tapan Mitra
Department of Economics Faculty Scholarship and Creative Works
We provide a sufficient condition on the production function under which eventually the most patient household owns the entire capital stock in every Ramsey equilibrium, called the turnpike property. This generalizes the result in the literature which establishes the turnpike property using the capital income monotonicity condition. We then provide an example of a Ramsey equilibrium in which the most patient household reaches a no capital position infinitely often. This is a strong refutation of the turnpike property on Ramsey equilibria. We also show that the constructed Ramsey equilibrium is inefficient in terms of the aggregate consumption stream that it …
On Construction Of Equitable Social Welfare Orders On Infinite Utility Streams, Ram Dubey, Tapan Mitra
On Construction Of Equitable Social Welfare Orders On Infinite Utility Streams, Ram Dubey, Tapan Mitra
Department of Economics Faculty Scholarship and Creative Works
This paper studies the nature of social welfare orders on infinite utility streams, satisfying the consequentialist equity principles known as Hammond Equity and the Pigou-Dalton transfer principle. The first result shows that every social welfare order satisfying Hammond Equity and the Strong Pareto axioms is non-constructive in nature for all non-trivial domains, Y. The second result shows that, when the domain set is Y = [0, 1], every social welfare order satisfying the Pigou-Dalton transfer principle is non-constructive in nature. Specifically, in both results, we show that the existence of the appropriate social welfare order entails the existence of a …
Impatience Implication Of Weakly Paretian Orders: Existence And Genericity, Kuntal Banerjee, Ram Dubey
Impatience Implication Of Weakly Paretian Orders: Existence And Genericity, Kuntal Banerjee, Ram Dubey
Department of Economics Faculty Scholarship and Creative Works
We study order theoretic and topological implications for impatience of weakly Paretian, representable orders on infinite utility streams. As a departure from the traditional literature, we do not make any continuity assumptions in proving the existence of impatient points. Impatience is robust in the sense that there are uncountably many impatient points. A general statement about genericity of impatience cannot be made for representable, weakly Paretian orders. This is shown by means of an example. If we assume a stronger sensitivity condition, then genericity obtains.
On Equitable Social Welfare Functions Satisfying The Weak Pareto Axioma Complete Characterization, Ram Dubey, Tapan Mitra
On Equitable Social Welfare Functions Satisfying The Weak Pareto Axioma Complete Characterization, Ram Dubey, Tapan Mitra
Department of Economics Faculty Scholarship and Creative Works
The present paper examines the problem of aggregating infinite utility streams with a social welfare function that respects the Anonymity and Weak Pareto Axioms. The paper provides a complete characterization of domains (of the one period utilities) on which such an aggregation is possible. A social welfare function satisfying the Anonymity and Weak Pareto Axioms exists on precisely those domains that do not contain any set of the order typeof the set of positive and negative integers. The criterion is applied to decide on possibility and impossibility results for a variety of domains. It is also used to provide an …
Fleurbaey-Michel Conjecture On Equitable Weak Paretian Social Welfare Order, Ram Dubey
Fleurbaey-Michel Conjecture On Equitable Weak Paretian Social Welfare Order, Ram Dubey
Department of Economics Faculty Scholarship and Creative Works
The paper examines the problem of explicit description of a social welfare order over infinite utility streams, which respects anonymity and weak Pareto axioms. It provides a complete characterization of the domains of one period utilities, for which it is possible to explicitly describe a weak Paretian social welfare order satisfying the anonymity axiom. For domains containing any set of order type similar to the set of positive and negative integers, every equitable social welfare order satisfying the weak Pareto axiom is non-constructive. The paper resolves a conjecture by Fleurbaey and Michel (2003) that there exists no explicit (that is, …
'Mainline' Telecommunications Infrastructure, Levels Of Development And Economic Growth: Evidence From A Panel Of Developing Countries, Chandana Chakraborty, Banani Nandi
'Mainline' Telecommunications Infrastructure, Levels Of Development And Economic Growth: Evidence From A Panel Of Developing Countries, Chandana Chakraborty, Banani Nandi
Department of Economics Faculty Scholarship and Creative Works
This paper assesses the growth impact of telecommunications infrastructure investment in developing countries by subjecting country-specific data on mainline tele-density and per capita growth to a Granger causality test within a panel cointegration framework. The results suggest that growth effects vary widely across country groupings reflecting different levels of development. Mainline tele-density and per capita growth strongly reinforce each other for countries that are relatively less developed. The reinforcement effect is even stronger for emerging countries that can be identified by their higher than average growth rates. In contrast, there is, at best, weak evidence of bi-directional causal links between …
China And Brazil: Potential Allies Or Just Brics In The Wall?, Anthony Petros Spanakos
China And Brazil: Potential Allies Or Just Brics In The Wall?, Anthony Petros Spanakos
Department of Political Science and Law Faculty Scholarship and Creative Works
Brazil is an increasingly important actor in global governance and for China specifically. Sino-Brazilian relations have deepened considerably but they remain concentrated in areas of trade and investment. There is also considerable overlap in interests between the two countries in other areas, such as diplomatic and political relations. At the same time, China must manage carefully important differences that exist over the enlargement of the UN and the potential challenge to the Brazilian industry.
Minerals-Supply Security And Mineral-Use Efficiency: Some Observations From The 1970–2005 Interval, Ira Sohn
Minerals-Supply Security And Mineral-Use Efficiency: Some Observations From The 1970–2005 Interval, Ira Sohn
Department of Economics Faculty Scholarship and Creative Works
As a consequence of the powerful changes that have occurred over the last three decades in the principal 'drivers' of economic change, there have been significant realignments in the global patterns of production and consumption of natural resources, as well as in the intensity of their use, in the quest to raise the level of material wellbeing throughout the world. In this paper, three large minerals-consuming (and -producing) countries are examined - the USA, China and Russia - and the story of a generation's economic progress (or decline, as the case may be) is seen through the lens of resource …
Why Economic Performance Has Differed Between Brazil And China? A Comparative Analysis Of Brazilian And Chinese Macroeconomic Policy, Fernando Ferrari-Filho, Anthony Petros Spanakos
Why Economic Performance Has Differed Between Brazil And China? A Comparative Analysis Of Brazilian And Chinese Macroeconomic Policy, Fernando Ferrari-Filho, Anthony Petros Spanakos
Department of Political Science and Law Faculty Scholarship and Creative Works
This paper addresses a specific question: why has China grown so rapidly and Brazil not? To answer this question, it (i) establishes the basis for comparison between China and Brazil by contextualizing these countries within the BRICs concept, and (ii) presents a comparative analysis of Brazilian and Chinese reforms focusing only on the issue of macroeconomic policy, especially the monetary and exchange rate regimes, and its effect on growth.