Disequilibrium Model Research Articles

The relationship between an electricity supply ceiling and economic growth: An application of disequilibrium modeling to Taiwan

Using a disequilibrium model, we investigate the relationship between the supply constraint of electricity generation capacity and electricity demand in Taiwan. We find that electricity consumption faced supply constraints in Taiwan between 1959 and 1972, but that generation capacity grew rapidly after 1973, such that economic growth came to be the major determinant of electricity consumption. Our experience in fitting this disequilibrium model suggests that simple causality tests are not a proper means to understand the relationship between electricity consumption and economic growth. Our results also suggest, at least for developing countries, that an electricity supply constraint sometimes plays an important role when investigating the relationship between energy consumption and economic growth.

MIT and the Other Cambridge

In the late 1950s and early 1960s MIT economists, led by Paul Samuelson and Robert Solow, became involved in a long controversy with economists in Cambridge, England, led by Joan Robinson, Luigi Pasinetti, and Nicholas Kaldor, over the theory of capital. This article looks at that controversy from the perspective of MIT, trying to establish why Samuelson and Solow became so involved. It is argued that Robinson was challenging propositions about linear models and their relationship to models with smooth substitution, on which they had been working, in Samuelson’s case, since the 1940s. The article then turns a by-product of the controversy—the model of short-run disequilibrium by Solow and Joseph Stiglitz—arguing that this marked a turning point in macroeconomics at MIT. Throughout it is argued that the close personal contacts between MIT economists and their Cambridge counterparts are important to understand how the debate evolved.

Treeline (Pinus sylvestris) landscape evolution in the Swedish Scandes – a 40-year demographic effort viewed in a broader temporal context

The article reports the outcome of long-term demographic monitoring of elevational treeline ecotonal stands of Scots pine (Pinus sylvestris L.) in the southern Swedish Scandes. Annual censuses were undertaken of recruitment, mortality, growth, seed viability, and causes of mortality during the period 1973–2012 in a set of 18 permanent plots. A net gain in total population size occurred over the study period as the result of periodic fluctuations in recruitment and mortality, broadly congruent with annual variations in summer and winter temperatures. Summer temperatures affected seed viability, establishment, and height growth. Winter temperatures exerted an impact foremost by changing the incidence of winter desiccation injury. As a result of infilling, pine has become a more prominent and vital component of the landscape around the forest limit, which has advanced insignificantly into the bordering mountain birch forest. The results highlight a rigid climate-forest disequilibrium and falsify models suggesting extensive and swift expansion of the treeline ecotone and closed forest at the expense of alpine tundra in response to anticipated future warming during the present century. The balance of evidence suggests that patchy forest expansion is likely to occur at a very slow (plurisecular) pace, given that climate warming prevails.

Modelling the Demand and Supply Determinants of Australian Wine Grapes

This study presents an econometric investigation of the demand and supply determinants of the dominant premium wine grapes in the warm inland regions of Australia. Motivated by the extensive use of long‐term contracts, market concentration, the lag between vine planting and grape production and the lingering impact of unexpected export demand, a market disequilibrium model is employed to estimate demand and supply elasticities. Demand is found to statistically significantly depend upon own prices, and fluctuations in income, exchange rates and the level of wine stocks. Important identified supply determinants include current prices, a quantity partial adjustment process, a time trend and lagged relative prices with regard to non‐premium and other premium varieties. The resulting elasticity estimates provide important information for model simulations relating to potential tax changes and the impact of research and development. The results also identify key changes in market conditions, including the export‐driven excess demand of the 1990s and measures of the subsequent excess supply of the 2000s.

WHY DO HOUSEHOLD HEADS IN RURAL CHINA NOT WORK MORE IN THE MARKET?

This study estimates a modified disequilibrium model to ascertain the relative importance of reasons why household heads in rural China do not work more in the market. Household heads in the Central and Western regions do not so because they have fewer young children, live with their grown-up children or must help their family members with economic crops or livestock production. Household heads in the Eastern region do not work extra because nearly 40% of them are constrained in the labor market. This constraint seems to come from traditional economic structure which demands more temporary workers than permanent ones.

北京市商品住房市场供求状态的非均衡分析

北京市商品住房市场供求状态的非均衡分析

Irving Fisher's debt deflation analysis: From the Purchasing Power of Money (1911) to the Debt-deflation Theory of the Great Depression (1933)

In 1933, Irving Fisher proposed an explanation for the Great Depression based on the distinction between the price level and price change effect of deflation in a context of over-indebtedness. This paper compares the debt-deflation theory of Fisher (1933) with the dynamic depression process he had expounded almost 20 years earlier in the Purchasing Power of Money (1911). The role played by both price level and price change effects in the analyses of Fisher (1933, 1911) are clarified in the context of the disequilibrium model of Tobin (1975). More precisely, we show that the stationary equilibrium is assumed to be locally unstable according to Fisher's 1911 insights and globally unstable according to his 1933 analysis.

Capital Market Efficiency in the British Industrial Revolution: The Case of the Lancashire Cotton Industry, 1760-1840

Recent debates on the industrial revolution have continued to showcase the role of the cotton textile industry. These discussions have centred on the Schumpeterian view of rapid growth based on a disequilibrium model in which capital market imperfections allow innovative firms to restrict entry, thereby earning long run super-normal profits. Neo-classical interpretations, in contrast, argue that firms were relatively untroubled by capital market imperfections and experienced few problems accessing finance, facilitating entry and rapid adjustments to equilibrium profit levels, with the gains from technological innovation transmitted through falling prices. Important questions can therefore be addressed by examining further the question of capital market efficiency. To operate efficiently, inter alia, a capital market should allow freedom of access, equalise rates of profit across sectors and accurately price the risk of economic activity. To investigate efficiency of the capital market in these respects, the paper uses firm level data to examine whether or not, first the firm’s access to capital was restricted by outdated business practices, second, whether capital goods suppliers were able to charge monopoly rents to textile firms and third, whether the cost of finance accurately reflected the risk of the enterprise. The research uses archival evidence for a sample of cotton textile firms and the steam engine manufacturer, Boulton and Watt. These records are investigated to examine how, and at what cost, firms accessed financial resources. The results show that an important source of disequilibrium was the slow pace of capital market development relative to the technological pace and demands of industrialisation. The underdeveloped capital market perpetuated pre-industrial methods of finance, including high dependency on bills of exchange at prescriptive interest rates. Although some entrepreneurs took advantage of the most efficient steam technology, returns did not systematically reflect underlying risk. At the same time, profitable opportunities remained for firms entering the market using old technology and traditional organisational networks. For these reasons, cotton firms had the potential of super-normal profits but these opportunities were dissipated by the costs of circulation arising from capital market inefficiencies and the rents associated with monopoly, asset mispricing, arbitrage and fraud. As a consequence, although the story of the industrial revolution is one of Schumpeterian disequilibrium, the apparent lack of sustained abnormal profits in manufacturing reflected embedded local networks of capital and transaction cost, rather than the neo-classical story of rapid adjustment to equilibrium.

Ancestry Inference in Complex Admixtures via Variable-length Markov Chain Linkage Models

Inferring the ancestral origin of chromosomal segments in admixed individuals is key for genetic applications, ranging from analyzing population demographics and history, to mapping disease genes. Previous methods addressed ancestry inference by using either weak models of linkage disequilibrium, or large models that make explicit use of ancestral haplotypes. In this paper we introduce ALLOY, an efficient method that incorporates generalized, but highly expressive, linkage disequilibrium models. ALLOY applies a factorial hidden Markov model to capture the parallel process producing the maternal and paternal admixed haplotypes, and models the background linkage disequilibrium in the ancestral populations via an inhomogeneous variable-length Markov chain. We test ALLOY in a broad range of scenarios ranging from recent to ancient admixtures with up to four ancestral populations. We show that ALLOY outperforms the previous state of the art, and is robust to uncertainties in model parameters.

Structural change and income distribution: An inverted-U relationship

This paper constructs a disequilibrium model in order to analyse the structural transition characterized by the emergence of a new sector. We show that, in an economy where preferences and technology adapt over time, multiple long-term outcomes are mainly brought about by different distributive rules governing the assignment of innovative rents between workers and entrepreneurs. We robustly establish that a successful transition to a two-sector economy is ensured by a balanced distribution restoring the co-ordination of investment and consumption plans. Instead, when innovative rents are too concentrated in favor of either workers or entrepreneurs, the system does not fully accomplish the transition and unemployment might emerge, in contrast, with the standard view of a negative relationship between real wages and employment.

Asset pricing with disequilibrium price adjustment: theory and empirical evidence

Breeden [J. Financial Econ., 1979, 7, 265–196], Grinols [J. Finance, 1984, 39(5), 1571–1595] and Cox et al. [Econometrica, 1985, 53, 363–384] describe the importance of including the supply side in capital asset pricing. Black [Am. Econ. Rev., 1976, 66, 767–779] derives a dynamic, multi-period CAPM, integrating endogenous demand and supply. Based upon the papers of Black and Lee et al. [Q. Rev. Econ. Finance, 2009, 49, 811–828], we first derive a simultaneous equation asset pricing model. Then we test the simultaneous equation asset pricing model in terms of the disequilibrium models developed by Fair and Jaffee [Econometrica, 1972, 40, 497–514], Amemiya [Econometrica, 1974, 42, 759–762], Quandt [The Econometrics of Disequilibrium, 1988], and others. We also discuss two methods of estimating an asset pricing model with a disequilibrium price adjustment effect. Finally, using price per share, dividend per share, and shares outstanding, we empirically test the existence of a price disequilibrium adjustment process with international index data and U.S. equity data. We find that a disequilibrium price adjustment process does, in fact, exist in our empirical data. Our results support the finding of Lo and Wang [Rev. Financial Stud., 2000, 13, 257–300] that trading volume is an important factor in capital asset pricing.

The Suess effect in Fiji coral δ13C and its potential as a tracer of anthropogenic CO2 uptake

In the context of increasing anthropogenic CO2 emissions, determining the rate of oceanic CO2 uptake is of high interest. Centennial-scale changes in δ13C of the surface water dissolved inorganic carbon (DIC) reservoir have been shown to be influenced by the carbon isotopic composition of atmospheric CO2. However, the availability of direct oceanic δ13C measurements is limited and methods for reconstructing past δ13C variability of the oceanic DIC are needed. Geochemical reconstructions of DIC variability can help in understanding how the ocean has reacted to historical changes in the carbon cycle. This study explores the potential of using temporal variations in δ13C measured in five Fijian Porites corals for reconstructing oceanic δ13C variability. A centennial-scale decreasing δ13C trend is observed in these Fiji corals. Other studies have linked similar decreasing δ13C trends to anthropogenic changes in the atmospheric carbon reservoir (the “13C Suess effect”). We conclude that solar irradiance is the factor influencing the δ13C cycle on a seasonal scale, however it is not responsible for the centennial-scale decreasing δ13C trend. In addition, variations in skeletal extension rate are not found to account for centennial-scale δ13C variability in these corals. Rather, we found that water depth at which a Fijian Porites colony calcifies influences both δ13C and extension rate mean values. The water depth-δ13C relationship induces a dampening effect on the centennial-scale decreasing δ13C trend. We removed this “water depth effect” from the δ13C composite, resulting in a truer representation of δ13C variability of the Fiji surface water DIC (δ13CFiji-DIC). The centennial-scale trend in this Fiji coral composite δ13CFiji-DIC time-series shares similarities with atmospheric δ13CCO2, implicating the 13C Suess effect as the source of the this coral δ13C trend. Additionally, our study finds that the δ13C variability between the atmosphere and the ocean in this region is not synchronous; the coral δ13C response is delayed by ~10years. This agrees with the previously established model of isotopic disequilibrium between atmospheric δ13CCO2 and oceanic surface water DIC.

In Search for a Credit Crunch in Germany

The purpose of this paper is to investigate whether a credit crunch occurred in Germany during the recent financial crisis and to analyze the underlying factors. In order to disentangle credit supply and demand we specify a theory-based dynamic disequilibrium model of the German credit market. To estimate this model we use a new approach based on Bayesian Inference suggested by Bauwens and Lubrano (2007). Besides the analysis of the whole banking sector we will apply the model to five groups of banks (big private banks, “Landesbanken”, savings banks, credit cooperatives, regional institutions of credit cooperatives) that were affected differently by the financial crisis. The results suggest that a credit crunch did not occur in Germany during the recent economic crisis as well as during the following recovery starting in 2010. Furthermore, we find that especially those banks that were more affected by the financial crisis through huge impairments restricted their credit supply more than others. Both supply and demand side factors contributed to the stabilization of credit financing. This suggests that the structure of the German banking sector as well as economic policy measures avoided a credit crunch.

The impact of ICT and business services on the Italian economy

This paper studies the role played by ICT in affecting the efficiency of business services (BS) industry, using a structural disequilibrium model of the Italian economy. The Italian BS sector presents a peculiar dynamics (compared to other EU countries) in that, after initially improving its efficiency by adopting ICT, from the early 90s it stagnated. Our estimates suggest that this anomaly can be traced back to a structural deficiency in absorbing new technologies. Our contribution adds to the explanations of the slowdown of the Italian productivity.

Migration in Germany

This article investigates migration in postunification Germany, focusing on three particular issues: Do Germans migrate to improve their net wages or for higher levels of amenities? Is migration behavior in East Germany the same as for unified Germany? And finally, is there a difference between age groups in terms of migration? In addition, the authors will control for spatial dependence in the migration model. The authors show that Germany has both equilibrium model and disequilibrium model aspects. The authors also find that migration behavior depends on both different stages in the life cycle and the location. Younger people value amenities higher, while middle-aged people and East Germans prefer regions with low unemployment. Surprisingly, retirees do not have a preference for amenities unless they are from East Germany.

The Extent of Equilibration between Melt and Residuum during Regional Anatexis and its Implications for Differentiation of the Continental Crust: a Study of Partially Melted Metapelitic Enclaves

Thisstudy presentsthefirst precise evaluation of the extent ofchem-ical equilibrium between felsic melt and crystalline residuumduring the crustal anatexis of metasediments.The high precision ofthese resultsstemsfrom thefactthat, in thiscase, the meltsare repre-sented by pristine glasses that occur in the matrices of partiallymelted metapelitic enclaves, and as abundant glassy melt inclusionstrapped by different minerals in the same enclaves. In previous stu-dies of anatexis, the composition of the melt has been approximatedby that of leucosomes in migmatites, which do not necessarily repre-sent the composition of the melt very well. The present study isbased on laser ablation analyses of 35 trace elements in the glassand principal minerals of enclaves included within Neogene peralu-minous dacites exposed at El Hoyazo, SE Spain. The enclaves,which contain the assemblage plagioclaseþbiotiteþsillimaniteþgarnet þglass þilmeniteþgraphite K-feldspar cordieritequartz, represent fragments of metapelitic continental crust thatwaspartiallymeltedatpressuresof5^7kbarduringaregionalmeta-morphic event. Matrix melt and melt inclusions within the enclaveswere quenched to glass upon eruption of the dacite.The glasses inthe melt inclusions are interpreted as the remains of melt producedby an initial melting reaction involving a muscovite-rich assemblageat 700^7508C, whereasthe matrixglassesare consistent with con-tinuedmeltingand/oralatermeltdominatedbytheincipientmeltingof biotite at 800^8508C.The distribution of trace elements be-tween residuum and melt duringanatexis of the enclaves isdifferentfrom that predicted by disequilibrium models that consider effectivedistribution coefficients close to unity. Instead, the bulk melt andthe major minerals (plagioclase, biotite, alkali feldspar, cordierite)were close to equilibrium (except for the case of garnet) duringthe generation of the melt inclusions and matrix glasses. Thequenchedmelts(meltinclusionsandparticularlythematrixglasses)were not in equilibrium with accessory zircon and monazite, andare depleted in zirconium and the light rare earth elements.Recrystallization of mineralsand diffusion in the melt were import-ant controls during the redistribution of trace elements betweenthe solids and the bulk melt. Local disequilibrium processes alsotook place at mineral^melt interfaces during the crystallizationof peritectic minerals and the recrystallization of residual phases,as shown by the depletion of compatible elements in the meltinclusions.

A Classical Partial Disequilibrium Model of the Gas Shipping Markets

In this paper we present a classical shipping model of the LPG, the ammonia and the petrochemical freight market that has recently been developed for use in industry practice. The aim is on the one hand to fill the gap of modeling the gas markets which to date have basically been ignored in the maritime literature. By innovating demand and productivity, as well as proposing supply with straightforward entry and exit on the other, we overcome the need of a flexible framework that in turn is applicable on modeling other shipping markets. Although this cumbersome exercise requires a considerable amount of information, the benefit of a model based on economic theory is that one can directly test the assumption of market equilibrium at the same time that it could effectively be used by the industry. By so doing, we confirm the positive albeit diffused relation between market utilization levels and freight rates, expounding that market information is instantaneously reflected in prices. A forecasting application of the model and a sensitivity example on some key variables conclude the analysis.

Model and algorithm for linkage disequilibrium analysis in a non-equilibrium population.

The multilocus analysis of polymorphisms has emerged as a vital ingredient of population genetics and evolutionary biology. A fundamental assumption used for existing multilocus analysis approaches is Hardy–Weinberg equilibrium at which maternally- and paternally-derived gametes unite randomly during fertilization. Given the fact that natural populations are rarely panmictic, these approaches will have a significant limitation for practical use. We present a robust model for multilocus linkage disequilibrium analysis which does not rely on the assumption of random mating. This new disequilibrium model capitalizes on Weir’s definition of zygotic disequilibria and is based on an open-pollinated design in which multiple maternal individuals and their half-sib families are sampled from a natural population. This design captures two levels of associations: one is at the upper level that describes the pattern of cosegregation between different loci in the parental population and the other is at the lower level that specifies the extent of co-transmission of non-alleles at different loci from parents to their offspring. An MCMC method was implemented to estimate genetic parameters that define these associations. Simulation studies were used to validate the statistical behavior of the new model.

Lending Relationships and Credit Rationing: The Impact of Securitization

Banks have been heavily involved in securitization. We study whether the involvedness of a firm’s main bank into different types of securitization activity – asset backed securities (ABS) and covered bonds – influences credit supply before and during the 2007-8 financial crisis. Both types of securitization allow the bank to generate liquidity. To the extent that ABS activity lowers lending standards in normal times, banks with more ABS activity may reduce their lending more in crisis times as an ex-post effect of a previously higher risk adoption. Employing a disequilibrium model to identify credit rationing, we find that a longer relationship with a firm’s main bank considerable improve credit supply. In general, we find that a relationship with a bank that is more involved in securitization activities relaxes credit constraints in normal periods. In contrast, while a relationship with a firm’s main bank that issues covered bonds reduces credit rationing during crisis periods, the issuance of asset backed securities by a firm’s main bank aggravates these firm’s credit rationing in crisis periods.

Peninsular terrane basement ages recorded by Paleozoic and Paleoproterozoic zircon in gabbro xenoliths and andesite from Redoubt volcano, Alaska

Historically Sactive Redoubt volcano is an Aleutian arc basalt-to-dacite cone constructed upon the Jurassic–Early Tertiary Alaska–Aleutian Range batholith. The batholith intrudes the Peninsular tectonostratigraphic terrane, which is considered to have developed on oceanic basement and to have accreted to North America, possibly in Late Jurassic time. Xenoliths in Redoubt magmas have been thought to be modern cumulate gabbros and fragments of the batholith. However, new sensitive high-resolution ion microprobe (SHRIMP) U-Pb ages for zircon from gabbro xenoliths from a late Pleistocene pyroclastic deposit are dominated by much older, ca. 310 Ma Pennsylvanian and ca. 1865 Ma Paleoproterozoic grains. Zircon age distributions and trace-element concentrations indicate that the ca. 310 Ma zircons date gabbroic intrusive rocks, and the ca. 1865 Ma zircons also are likely from igneous rocks in or beneath Peninsular terrane basement. The trace-element data imply that four of five Cretaceous–Paleocene zircons, and Pennsylvanian low-U, low-Th zircons in one sample, grew from metamorphic or hydrothermal fluids. Textural evidence of xenocrysts and a dominant population of ca. 1865 Ma zircon in juvenile crystal-rich andesite from the same pyroclastic deposit show that this basement has been assimilated by Redoubt magma. Equilibration temperatures and oxygen fugacities indicated by Fe-Ti–oxide minerals in the gabbros and crystal-rich andesite suggest sources near the margins of the Redoubt magmatic system, most likely in the magma accumulation and storage region currently outlined by seismicity and magma petrology at ∼4–10 km below sea level. Additionally, a partially melted gabbro from the 1990 eruption contains zircon with U-Pb ages between ca. 620 Ma and ca. 1705 Ma, as well as one zircon with a U-Th disequilibrium model age of 0 ka. The zircon ages demonstrate that Pennsylvanian, and probably Paleoproterozoic, igneous rocks exist in, or possibly beneath, Peninsular terrane basement. Discovery of Pennsylvanian gabbro similar in age to Skolai arc plutons 500 km to the northeast indicates that the Peninsular terrane, along with the Wrangellia and Alexander terranes, has been part of the Wrangellia composite terrane since at least Pennsylvanian time. Moreover, the zircon data suggest that a Paleoproterozoic continental fragment may be present in the mid-to-upper crust in southern Alaska.