1,720,967 research outputs found
The Euler Equation Approach: Critical Implications of Recent Developments in the Theory of Intertemporal Choice
No full textOn the role of the utility function in the estimation of preference parameters
No full textModern economic theory summarizes the main characteristics of individual preferences through a definite set of parameters: risk aversion, prudence, and the elasticity of intertemporal substitution. Despite their importance, the results of the literature devoted to the parameters’ estimation are controversial. This paper highlights the neglected role that may have been played by the constraints that the quantitative definition of the parameters and the utility functions employed impose on the estimation. A number of simulation exercises are presented, which show that the same saving behaviour can be associated with quite different values of the parameters depending on the utility function adopted
Determining the Normal Degree of Capacity Utilisation: Insights from the History of Economic Thought
No full textSeveral issues related to the normal degree of capacity utilisation have become crucial in the recent debate within demand-led growth theories. By going back over the history of economic thought, the paper aims to highlight the main findings that may nourish the current debate. Our reconstruction identifies the main factors affecting the firm's choice as to the size and degree of utilisation of productive capacity and draws attention to three points that appear to require particular attention in the debate on demand-led growth: firstly, the degree of utilisation corresponding to the maximum profit does not necessarily correspond to the minimum unit cost associated with the plant; secondly, the size of productive capacity depends on the variability of the output produced by the firm; finally, and in connection with the two previous points, the determination of normal utilisation requires defining the market structure in which the firm is supposed to operate and is therefore affected by the notion of competition adopted
The choice of the functional form in the consumption Euler equation: a critical view
Full text linkThis thesis deals with some analytical questions that arise in the modern theory of con-sumption based on the intertemporal utility maximization model, also known as the Euler equation approach. It thus builds on the theoretical and empirical literature which has stemmed from the seminal contribution by Hall (1978), who extended the basic life cycle – permanent income model of consumption to the case of uncertainty. In reviewing this literature and the theoretical developments and extensions that the original model has undergone due to the need of accounting for the puzzling empirical evidence, the thesis aims at highlighting the crucial role that the preference parameters play in the specifica-tion of the theoretical content of the model and its predictions, and in the definition of the policy implications that may be drawn from it.
Crucial as the role of preference parameters may be both in theory and practice, our analysis reveals, also by making use of some simulation exercises, the substantial inability of the Euler equation approach to give definite content to such parameters, due to the heavy dependence of the results of parameter estimation on the specification of the utility function.
The first paper offers a survey of the literature which, following Hall (1978), has en-gaged in the task of testing the model against empirical evidence and proposing successive extensions and refinements of the original model ending up in the current enriched ver-sions of it. The paper draws on other surveys but focuses in particular on an overall as-sessment of the theoretical implications of the extensions which the literature has proposed. The second paper focuses on the literature directly aiming to estimate the pa-rameters characterizing preferences – offering in this respect a specific survey which seems to be lacking in the literature – and highlights the crucial role of the specification of the utility function in such estimates. Drawing on this result, the third paper proposes a number of original simulation exercises aimed at showing that the same time profile of consumption and saving may give rise to the estimation of rather different values of the crucial preference parameters depending on the particular utility function adopted
La qualità dei rapporti tra banche e imprese: un indicatore di analisi territoriale
No full textL’obiettivo della presente ricerca è la costruzione di un indicatore sintetico indicativo
della qualità dei rapporti tra banca e impresa nelle diverse regioni italiane durante
il 2015. A tal fine, ci si avvale dei dati messi a disposizione dal monitoraggio
annuale sull’accesso al credito delle imprese a cura di Unioncamere. Mediante un
opportuno insieme di variabili, si mira a fotografare sia la qualità del credito erogato,
in termini di rischiosità e onerosità dello stesso, sia il sentiment delle imprese nei
confronti del sistema creditizio. L’analisi dell’indicatore messo a punto consente, da
un lato, di mettere a confronto le diverse aree del territorio italiano in rapporto allo
stato delle interazioni tra sistema bancario e sistema imprenditoriale, e, dall’altro, di
individuare alcune peculiarità e criticità delle singole realtà territoriali
Fine-grained classification of journal articles based on multiple layers of information through similarity network fusion: The case of the Cambridge Journal of Economics
Full text linkIn order to explore the suitability of a fine-grained classification of journal articles by exploiting multiple sources of information, articles are organized in a two-layer multiplex. The first layer conveys similarities based on the full-text of articles, and the second similarities based on cited references. The information of the two layers are only weakly associated. The Similarity Network Fusion process is adopted to combine the two layers into a new single-layer network. A clustering algorithm is applied to the fused network and the classification of articles is obtained. In order to evaluate its coherence, this classification is compared with the ones obtained by applying the same algorithm to each of two layers. Moreover, the classification obtained for the fused network is also compared with the classifications obtained when the layers of information are integrated using different methods available in literature. In the case of the Cambridge Journal of Economics, Similarity Network Fusion appears to be the best option. Moreover, the achieved classification appears to be fine-grained enough to represent the extreme heterogeneity characterizing the contributions published in the journal
The Euler Equation Approach: Critical Implications of Recent Developments in the Theory of Intertemporal Choice
No full textThe paper deals with the development of the mainstream theory of intertemporal choice based on the idea that individuals choose consumption and saving in order to maximize lifetime expected utility subject to an intertemporal budget constraint. This analytical framework
rests on the theories developed in the 1950s by Modigliani and Friedman and revisited in the 1970s with the introduction of the rational expectations assumption. Starting with Hall (1978), the literature focused on testing the model relying on the first order conditions of the optimization problem faced by the consumer — the Euler equation — and a number of empirical puzzles arose. Therefore, the subsequent decades were dedicated to progressively modifying the original model so as to render it able to
explain the data. The paper argues that the introduction of highly specific assumptions, needed to reconcile theory and empirical evidence, has affected the generality of the implications that can be drawn from the model. Furthermore, the ever more substantial departure from the original formulation seems to have resulted in a gradual abandonment of the very premises on which the neoclassical approach to consumption analysis was built
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