Equilibrium Effects Research Articles

From Micro to Macro Development

Macroeconomic development remains an important policy goal because of its ability to lift entire populations out of poverty. In our review of the literature, we emphasize that the best way to achieve this objective is to embrace a synthesis of methods and ideas, with the science of experiments as a unifying feature. Randomized controlled trials need representative data and structural modeling, and macro models need to be designed and disciplined to the realities and data of developing-country economies. Macroeconomic models have key lessons for gathering and analyzing micro evidence and for moving to an evaluation of macro policy. Resource constraints, heterogeneity, general equilibrium effects, obstacles to trade, dynamics, and returns to scale can all play key roles. A synthesis for macro development is well under way. (JEL C93, D00, E00, O10, O11, O12)

STRUCTURAL INTERVENTIONS IN NETWORKS

AbstractTwo types of interventions are commonly implemented in networks: characteristics interventions, which influence individuals' intrinsic incentives, and structural interventions, which target the social links among individuals. In this article, we provide a general framework to evaluate the distinct equilibrium effects of both types of interventions. We show that any structural intervention is outcome‐equivalent to an endogenously determined characteristics intervention. We present a wide range of applications of our theory, including evaluating a potential new link in a community, identifying the most wanted criminal(s) in delinquent networks, and determining whether a structural intervention improves certain welfare measures.

Multipole theory of optical spatial dispersion in crystals

Natural optical activity is the paradigmatic example of an effect originating in the weak spatial inhomogeneity of the electromagnetic field on the atomic scale. In molecules, such effects are well described by the multipole theory of electromagnetism, where the coupling to light is treated semiclassically beyond the electric-dipole approximation. That theory has two shortcomings: it is limited to bounded systems, and its building blocks -the multipole transition moments- are origin dependent. In this work, we recast the multipole theory in a translationally-invariant form that remains valid for crystals. Working in the independent-particle approximation, we introduce "intrinsic" multipole transition moments that are origin independent and transform covariantly under gauge transformations of the Bloch eigenstates. Electric-dipole transitions are given by the interband Berry connection, while magnetic-dipole and electric-quadrupole transitions are described by matrix generalizations of the intrinsic magnetic moment and quantum metric. In addition to multipole-like terms, the response of crystals at first order in the wavevector of light contains band-dispersion terms that have no counterpart in molecular theories. The full response is broken down into magnetoelectric and quadrupolar parts, which can be isolated in the static limit where electric and magnetic fields become decoupled. The rotatory-strength sum rule for crystals is found to be equivalent to the topological constraint for a vanishing chiral magnetic effect in equilibrium, and the formalism is validated by numerical tight-binding calculations.

Mortgage Design and Slow Recoveries: The Role of Recourse and Default

Abstract We show that mortgage recourse systems, by discouraging default, magnify the impact of nominal rigidities. They cause deeper and more persistent recessions. This mechanism can account for up to 31% of the recovery gap during the Great Recession between the U.S., mostly a non-recourse economy, and Spain, a recourse economy. General equilibrium effects explain most of the differences between mortgage systems. With recourse, highly indebted homeowners dramatically cut consumption in a crisis, and account for a larger share of the aggregate consumption decline. However, without recourse, mortgages would be more expensive for riskier households, and homeownership rates would be lower.

Food subsidies in general equilibrium

The Atkinson-Stiglitz theorem on uniform consumption taxation breaks down if prices are endogenous. This paper investigates the implications for optimal food subsidies in China. To do so, we build a general equilibrium model where low-skilled workers have a comparative advantage in the production of food. Food subsidies raise the relative demand for low-skilled workers, which reduces the skill premium and indirectly redistributes income from high-skilled to low-skilled workers. The optimal food subsidy balances these distributional gains against the costs of distorting consumption decisions. We calibrate our model to match key moments from the Chinese economy, including sectoral production and spending patterns that we obtain from micro-level survey data. Our results suggest that general equilibrium effects rationalize only very modest food subsidies that generate tiny welfare gains.

Toward a general equilibrium theory of financial reporting

AbstractWe present a model in which investment capacity is reallocated in response to aggregate shocks and examine the resulting general equilibrium effects. The theory predicts a positive association between aggregate liquidity shocks, cost of capital, and conservative accounting. When capital becomes scarce, the accounting system is designed to preserve collateral, which depletes the supply of traded capital and leads to a higher cost of capital. The economy may accelerate small shocks with large (discontinuous) readjustments in financial reporting policies, cost of capital, and investment activity. We show that accounting policies set by firms to increase their market value may imply multiple equilibria, with self‐fulfilling inefficient equilibria exhibiting excessive collateral requirements and reduced aggregate investment.

On the effects of income heterogeneity in monopolistically competitive markets

This paper studies the market and welfare effects of income heterogeneity in monopolistically competitive product markets in the context of nonhomothetic preferences. In a closed economy, where richer individuals' expenditures are less sensitive to price change compared to poorer ones', a mean-preserving contraction of income distribution entices firms to charge higher markups, reduce output, and fosters creation of new varieties. General equilibrium effects have a negative impact on poorer individuals and, in specific circumstances, on the whole population. In an open economy with free trade, lower income inequality in one country creates price divergence between trading countries. Lower inequality not only further decreases trade volumes and values but also creates a general equilibrium effect that may negatively affect poor individuals. Finally, general equilibrium effects are shown to be quantitatively nonnegligible.

A novel method based on eddy‐current equilibrium for improving the sensitivity of fiber orientation detection

AbstractFiber orientation deviation is a typical defect type in carbon fiber reinforced polymer composites (CFRPs) manufacturing process. Unlike other defect types, fiber orientation deviation has minimal influence on the local conductivity of CFRPs, so it is difficult to be detected by eddy current (EC) detection methods. Based on the principle of eddy‐current equilibrium, a new method is proposed in this paper to improve the sensitivity of fiber orientation detection. In this method, an EC field with eddy‐current equilibrium distribution inside the specimen is excited by means of a special double D‐shaped probe. When there is a deviation from the fiber orientation, the eddy‐current equilibrium state is broken, resulting in a rapid increase in the intensity and distribution range of the induced EC inside the specimen, and finally lead to a drastic change in the probe signal. The experimental results show that the double D‐shaped probe with an eddy‐current equilibrium effect can detect the fiber orientation of CFRPs, and the changes in fiber orientation can cause up to a 423.1% variation in the probe signal. Compared with the traditional rectangular probe, the designed probe is more sensitive than the former to small changes in fiber orientation in the range of −20° to 20° under high frequency excitation above 3 MHz. In addition, the proposed method can also be used for rapidly identifying fiber waviness with a deviation angle of 7.4° inside unidirectional CFRPs, which can be achieved effectively and intuitively through defect imaging.

Quantifying the role of higher order neoclassical corrections to gyrokinetics in tokamak plasmas

We implement the higher order gyrokinetic theory developed in Dudkovskaia et al (2023 Plasma Phys. Control. Fusion 65 045010), reduced to the limit of , where B 0 is the tokamak equilibrium magnetic field, and B ϑ is its poloidal component, in the local gyrokinetic turbulence code, GS2. The principal motivation for this extension is to quantify the importance of neoclassical flows in electromagnetic gyrokinetics, with a particular interest in sharp pressure gradient regions where the bootstrap current becomes dominant. To incorporate neoclassical equilibrium physics, GS2 is coupled to NEO, a multi-species drift kinetic solver. It is found that the regions where microinstabilities are most likely to be influenced by neoclassical equilibrium effects are in a pedestal plasma and a spherical tokamak core plasma.

Removal of Methyl Orange from Water Using Microalgae: Effect of Operating Parameters, Equilibrium, Kinetic and Thermodynamic Studies

Removal of Methyl Orange from Water Using Microalgae: Effect of Operating Parameters, Equilibrium, Kinetic and Thermodynamic Studies

Equilibrium and kinetic isotope effects in heterogeneous catalysis: A density functional theory perspective

Equilibrium and kinetic isotope effects in heterogeneous catalysis: A density functional theory perspective

How to Use Natural Experiments to Estimate Misallocation

We propose a method to estimate the effect of firm policies (e.g., bankruptcy laws) on allocative efficiency using (quasi-)experimental evidence. Our approach takes general equilibrium effects into account and requires neither a structural estimation nor a precise assumption on how the experiment affects firms. Our aggregation formula relies on treatment effects of the policy on the distribution of output-to-capital ratios, which are easily estimated. We show this method is valid for a large class of commonly used models in macrofinance. We apply it to the French banking deregulation episode of the mid- 1980s and find an increase in aggregate TFP of 5 percent. (JEL G21, G24, G28, G31, G32, H25)

Share of polluting input as a sufficient statistic for burden sharing

By investigating the general equilibrium effects with theoretical analysis and computational experiments, we observe that the value share of polluting input is a sufficient statistic for the welfare incidence of a quantity-based policy in a competitive economy for short-term and commonly implemented mitigation policy. This result is robust with respect to the sectoral, regional disaggregation and consumer preference. In contrast, with a given pollution tax, the imputed welfare incidence could vary under economies with different production technologies and consumer preferences. The quantity-based policy instrument leads to a more explicit welfare incidence than the price instrument. On this basis, outcome-based criteria used in pollution reduction burden sharing across regions can simply choose the value share of polluting input as a reference base for allocation.

The ripple effects of large‐scale transport infrastructure investment

AbstractWe analyze the general equilibrium effects of an asymmetric decrease in transport costs, combining a large‐scale spatial dynamic general equilibrium model for 267 European NUTS‐2 regions with a detailed transport model at the level of individual road segments. As a case study, we consider the impact of the road infrastructure investments in Central and Eastern Europe of the European Cohesion Policy. Our analysis suggests that the decrease in transportation costs benefits the targeted regions via substantial increases in gross domestic product (GDP) and welfare compared to the baseline, and a small increase in population. The geographic information embedded in the transport model leads to relatively large predicted benefits in peripheral countries such as Greece and Finland, which hardly receive funds, but whose trade links cross Central and Eastern Europe, generating profit from the investments there. The richer, Western European nontargeted regions also enjoy a higher GDP after the investment in the East, but these effects are smaller. Thus, the policy reduces interregional disparities. There are rippled patterns in the predicted policy spillovers. In nontargeted countries, regions trading more intensely with regions where the investment is taking place on average benefit more compared to other regions within the same country, but also compared to neighboring regions across an international border. We uncover that regions importing goods from Central and Eastern Europe enjoy the largest spillovers. These regions become more competitive and expand exports, to the detriment of other regions in the same country.

Scale transition: Pore network study of how pore structure affects the macroscopic parameters of the continuum model for drying

The scale transition from discrete pore network model (PNM) simulations to one-equation continuum model (CM) of drying has been investigated in previous studies for uniformly structured porous media. This investigation is extended in the present work to porous media with widely different pore size distributions, as well as to those with spatially correlated networks of small and large pores. The key questions examined here are how and to what extent pore-structural features can be reflected in the local macroscopic parameters of the one-equation CM derived by traditional homogenization. For this purpose, three-dimensional model capillary structures with monomodal and bimodal pore size distributions are generated and drying simulations are conducted at the limit of viscous-capillary dominated regime. By leveraging volume-averaged data obtained from PNM simulations the one-equation CM is parameterized and thus its local parameters are expressed in dependence on the pore structure. The simulation results show that for the monomodal and bimodal pore structures the profiles of the moisture transport coefficients are complex and non-unique over the entire drying process. Moreover, the deviation of the water vapor partial pressure from the saturation vapor pressure in the presence of liquid water – which is referred to as non-local equilibrium effect – is less pronounced for the bimodal pore structure compared to the monomodal pore structures. Finally, comparisons are performed between the volume-averaged data obtained at different stages of drying by the discrete simulations with monomodal and bimodal pore structures and results of the continuum model of drying.

Economic incentives and political inequality in the management of environmental public goods

We study how the allocation of power in a voting procedure affects the regulation and extraction of environmental public goods. In an appropriation game experiment, different endowments induce heterogeneous preferences among the three group members regarding their preferred quota, aimed at increasing social efficiency by restricting aggregate extraction. The players vote by submitting a proposal; one among the submitted proposals is implemented, selected at random, but across treatments, we vary the odds that a type sets the regulation.Participants vote for their selfishly preferred quota between half and two-thirds of the time. Although setting quotas decreased aggregate extraction by roughly 10%, we do not find differences between treatments. Once quotas are removed, extraction rises back to inefficient levels. Our results suggest that, although participants are reciprocal, they neglect the positive equilibrium effects of a stricter regulation.

Dynamic information aggregation: Learning from the past

With dispersed information, how much can agents learn from past endogenous aggregates such as prices or output? In a rational-expectations equilibrium, if general equilibrium effects are strong enough, aggregates no longer perfectly reveal underlying fundamentals. In this confounding regime, the effects of informational frictions are persistent over time, and the aggregate outcome displays an initial under-reaction followed by a delayed over-reaction relative to its perfect-information counterpart. In a standard New Keynesian model, we show that endogenous information aggregation helps bring the model predictions on aggregate forecasts closer to the data.

Effect of Partial Equilibrium and Redox Reactions in a Zirconia Solid Electrolyte on the Electromotive Force in a Zirconia Oxygen Sensor

A zirconia oxygen sensor is an electrochemical device for rapidly measuring oxygen concentrations in molten metals at high temperatures. It is desirable to make the sensors capable of continuous, long-time measurements. Here, the effect on the electromotive force of a partial equilibrium state on the surface of a zirconia solid electrolyte in a zirconia oxygen sensor was investigated to reveal the factors preventing long-time measurements. The reference electrode was a mixture of W and WO2. Continuous measurements were performed in molten iron containing carbon for deoxidization. The electromotive force between the positive reference electrode and the negative sample electrode of the sensor decreased from a positive value to zero over time. This was because a metallic tungsten layer formed on the surface of the zirconia electrolyte by the reduction of the tungsten oxide via oxygen diffusion through the zirconia tube. In addition, the equilibrium in the reference electrode was disturbed during the measurements. A direct electrical current was applied to the sensor to examine the relationship between the surface and measured values. The electromotive force during the current was maintained at a higher value than that without the current because of induced re-oxidation at the zirconia surface. However, a long-time application could cause over-oxidation and dissolution of the reference electrode surface.

Financial constraints and economic development: The role of firm productivity investment

This paper demonstrates that accounting for firms' endogenous productivity growth over lifecycle plays an important role in understanding the link between financial and economic development. It incorporates firm productivity investment into a span-of-control model, and compares the effects of firm financing constraints arising in this model to the effects of the same constraints in the model in which firm productivity growth is assumed to be exogenous. It finds that, depending on the severity of firm financing constraints, endogenizing firm productivity growth increases the adverse effects of the constraints on steady state output by 1.5-3 times, both due to a large decrease in average productivity and due to a bigger equilibrium effect on capital used in production.

Non-local thermodynamic equilibrium analysis of the methylidyne radical molecular lines in metal-poor stellar atmospheres

Aims. An analysis of the methylidyne (CH) radical in non-local thermodynamic equilibrium (NLTE) is performed for the physical conditions of cool stellar atmospheres typical of red giants (log ɡ = 2.0, Teff = 4500 K) and the Sun. The aim of the present work is to explore whether the G band of the CH molecule, which is commonly used in abundance diagnostics of carbon-enhanced metal-poor stars, is sensitive to NLTE effects. Methods. LTE and NLTE theoretical spectra were computed with the MULTI code. We used one-dimensional (1D) LTE hydrostatic MARCS model atmospheres with parameters representing eleven red giant stars with metallicities ranging from [Fe/H] = −4.0 to [Fe/H] = 0.0 and carbon-to-iron ratios of [C/Fe] = 0.0, +0.7, +1.5, and +3.0. The CH molecule model was represented by 1981 energy levels, 18 377 radiative bound-bound transitions, and 932 photo-dissociation reactions. The rates due to transitions caused by collisions with free electrons and hydrogen atoms were computed using classical recipes. Results. Our calculations suggest that NLTE effects in the statistical equilibrium of the CH molecule are significant and cannot be neglected for precision spectroscopic analysis of C abundances. The NLTE effects are mostly driven by radiative over-dissociation, owing to the very low dissociation threshold of the molecule and significant resonances in the photo-dissociation cross-sections. The NLTE effects in the G band increase with decreasing metallicity. When comparing the C abundances determined from the CH G band in LTE and in NLTE, we show that the C abundances are always under-estimated if LTE is assumed. The NLTE corrections to C abundance inferred from the CH feature range from +0.04 dex for the Sun to +0.21 dex for a red giant with metallicity [Fe/H] = −4.0. Conclusions. Departures from the LTE assumption in the CH molecule are non-negligible, and NLTE effects have to be taken into account in the diagnostic spectroscopy based on the CH lines. We show here that the NLTE effects in the optical CH lines are non-negligible for the Sun and red giant stars, but further calculations are warranted to investigate the effects in other regimes of stellar parameters.