Equilibrium Perspective Research Articles

Hierarchical cooperativity mediated by chromatin remodeling; the model of the MMTV transcription regulation

Chromatin remodeling machineries are abundant and diverse in eukaryotic cells but their importance in gene expression remains unclear. Although the influence of nucleosome position on the regulation of gene expression is generally envisioned under the equilibrium perspective, it is proposed that given the ATP-dependence of chromatin remodeling enzymes, certain mechanisms necessitate non-equilibrium treatments. In particular, examination of the celebrated chromatin remodeling system of the mouse mammary tumor virus, in which the binding of transcription factors opens the way to other ones, reveals that breaking equilibrium offers a subtle mode of transcription factor cooperativity, avoids molecular trapping phenomena and allows to reconcile previously conflicting experimental data. The mechanism proposed here provides a control lever of promoter sensitivity and responsiveness, increasing the discernment of gene expression.

A Dynamic Game for Essentiality of Fiat Money from the Perspective of GE

This paper addresses firstly why people have to use fiat money and then why they are rationally willing to accept it from the perspective of general equilibrium by using dynamic game to determine agents' expectation of its purchasing power in unrevealed future. Its model formulates the process that agents determine fiat money's nominal value in an infinite-time decentralized sequence economy where agents use fiat money to bridge markets to avoid huge transaction cost. It is proved that all agents' accepting fiat money with expectation of unchanged nominal value of it is Nash equilibrium so as to guarantee fiat money's essentiality.

Assessing the Macroeconomic Impact of Water Supply Restrictions Through an Input–Output Analysis

Water supply restrictions due to droughts generate significant costs to many economic agents. Although these costs are difficult to assess, this article presents a methodology to quantify, from a general equilibrium perspective, the macroeconomic impact of water supply restrictions through the estimation of aggregate production functions that include water consumption by sectors. Simulations with an Input–output model suggest a loss of 0.34% of GDP in the case of modest restrictions on the water supply and 2.8% in the case of more extreme restrictions for 2005 for the Catalonia region in Spain.

Implications of a long-term increase in oil prices for tourism

It is expected that global oil prices will increase in the future. Assessing the overall economic impacts on tourism is difficult, as oil price rises will be concomitant with global changes in other commodity prices, exchange rates, and incomes. A general equilibrium perspective is therefore presented in this paper. The model couples a global general equilibrium model with a purpose-built CGE model of New Zealand, which focuses on describing tourism supply and demand in some detail. The results indicate a decrease in real gross national disposable income of 1.7% for a doubling of oil price and a 9% reduction in the real value of tourism exports. As a result of segment-specific price increases and differing income and exchange rate effects and elasticities, the reduction in demand for tourism in New Zealand by 18 segments differs substantially. The greatest reduction in demand is observed for tourists from the United Kingdom.

Why Aren't More Families Buying Life Insurance?

This paper explores life insurance holdings from a general equilibrium perspective. Drawing on the data explored in Chambers, Schlagenhauf, and Young (2003), we calibrate an overlapping generation’s life cycle economy with incomplete asset markets to match facts regarding the uncertainty of income and demographics. We then estimate that life insurance holdings for the purpose of smoothing family consumption are so large that they constitute a puzzle from the perspective of standard economic theory. Furthermore, the welfare gains from a life insurance market are concentrated in the minds of households who use the real world market very little.

How Do New Ventures Evolve? An Inductive Study of Archetype Changes in Science-Based Ventures

This paper presents a process study on the evolution of new ventures. We adopt the theoretical lens of “archetypes,” which allows us to take a holistic perspective on new venture evolution and to provide rich insights into the interdependencies between the multiple contributory factors that shape the evolutionary process. Our analysis identifies three distinct “venture archetypes,” which typically emphasize one focal area of a business, and it sheds light on the sequencing of these archetypes. We show how the case ventures go through interarchetype transitions, which are triggered by collective cognitive dissonance between the venture leaders' understanding of the old interpretive scheme and the emerging reality and are resolved through internal negotiations. The research provides insights into new venture evolution, the theory of organizational archetypes, and punctuated equilibrium perspectives on organizational change.

Urbanization of Migrant Workers and Expansion of Domestic Demand

本文从一般均衡的视角，揭示农民工市民化与扩大内需的关系。中国之所以要立 足内需发展经济，应对外需下滑只是一个短暂的原因，其根本原因在于改变当前经济 内外失衡和产业结构失衡的“双失衡”格局，以及充分利用国内市场优势更好更快实 现工业化的需要。如果采取切实措施加快农民工市民化进程，则其潜在的消费需求就 可以充分释放出来。这不仅有助于抵消外需下滑对经济增长的负面影响，而且有助于 中国经济摆脱“双失衡”格局，全面提升中国工业化和城市化水平。 关键词: 农民工市民化 扩大内需 中国经济 This paper explores, from the perspective of general equilibrium, the relationship between urbanizing migrant workers and increasing domestic demand. Why should China adopt the strategy of relying on domestic demand to develop its economy? Countering the impact of declining external demand is only a temporary reason for doing so, and the more fundamental reason is the need to change the “dual imbalance” in today's economy: the imbalance between internal and external economic arrangements and the industry structural imbalance, as well as the need to take full advantage of the domestic market to achieve the goal of industrialization. The latent consumption demand of migrant workers will be fully released if realistic measures are taken to accelerate the pace of turning migrant workers into urban residents. This will help neutralize the negative impact of reduced external demand, as well as rectifying the structural imbalances in the Chinese economy and upgrading China's industrialization and urbanization.

Higher education system, skill premium and welfare

Our paper contributes to explore differences in high‐education systems, and to highlight the role of competition among tertiary education providers and more generally of tertiary education systems viewed from a general equilibrium perspective to explain changes in returns to skill, wage inequalities and output. An objective function is introduced for universities who seek to maximize their reputations and face a trade‐off between research and teaching activities. We propose an explanation to the stratification of higher education providers engaged in a competition process, which preserves the positive competitive effect of admission requirement, both on the size of the students’ body and on the quality of the research. We show that competition among higher education providers may have strong benefits on economic activities and output in particular.

Quality standards versus taxation in a dynamic environmental model of a tourism economy

The increasing economic importance of tourism activity stimulates research on the more adequate instruments to reach tourism policy targets. This paper concentrates on two tourism policy areas, namely the influence on the pattern of tourism specialization and the correction of environmental externalities, and two policy tools, that is, a tourism tax and an accommodation quality standard. Using a dynamic general equilibrium model for an economy specialized in tourism, we show that both instruments are effective in reaching those targets, although they differ in efficiency terms. The quality standard policy regime yields a more efficient tax system, as it makes Ricardian rents bear a higher share of the tax burden, but the quality standard is in itself distortionary and can create incentives for capital over-accumulation. Looking at the steady state, the quality standard allows for higher long run welfare than the tourism tax, provided that the former does not cause any dynamic inefficiency. More generally, the paper shows that a general equilibrium perspective can unveil possible unexpected complementarities between environmental and other policy targets and instruments as, in this case, quality standards aimed to influence the pattern of tourism specialization.

On the Identification of Fiscal Policy Behavior

In the current literature, fiscal policy is usually characterized by a single-equation rule, in which primary surplus is generally defined as a function of lagged government debt and other controlled variables. To apply Ordinary Least Squares (OLS) method on the single-equation rule has been one of the common approaches to identify fiscal policy behavior. From the rational expectations general equilibrium perspective, this paper illustrates that lagged government debt is generally endogenous and the OLS approach suffers from simultaneity bias. Consequently, the OLS-based identification of fiscal policy behavior is unreliable. As a solution, we apply the Generalized Method of Moments (GMM) for estimation and inference. Monte Carlo experiments demonstrate that GMM provides more reliable results than OLS in terms of accuracy of the estimator, size and power. In short, people should be cautious of the existing OLS-based identification results of fiscal policy behavior and the empirical researchers should not consider OLS regression as a reliable tool when trying to identify fiscal policy behavior in the future.

Market Equilibrium with Price-Beating Firms Under Imperfect Knowledge

It is unquestionable both theoretically and empirically that trade in competitive markets is the best way to promote the efficient allocation of goods. Nevertheless, there could be some traders’ strategies that interfere with competition, collusion among traders, which results in losses to society. In this work, I study the implication that guarantees have on the competitiveness of the market when information is imperfect and costly. In formal terms, I study the ‘price matching’ and ‘price beating’ guarantees that may be extended to other types of guarantee. From the theoretical model it results that both strategies are anti-competitive strategy but, contrary to ‘price matching’, ‘price beating’ is not in the best interest of sellers (in a Nash equilibrium perspective).

New Structures, New Strategies: CSIRO’s Changing Role in Australian Innovation

Abstract CSIRO’s role in Australian innovation has evolved over the years in response to changes in the external environment and within Australia’s national innovation system. The process of organisational change has been characterised by a series of restructurings—in 1978, 1988, 1996 and 2001—and accompanying shifts in the organisation’s strategic directions. In this paper we look at the process of organisational change in an historical context, looking at the evolving external environment, the legislative and management background, and the shifts in the organisation’s strategic directions. The change process is interpreted from a punctuated equilibrium perspective. We propose that discontinuous, rather than continuous change, is the way that a complex and diversified organisation like CSIRO adjusts to a changing external environment and, moreover, that independent public reviews have an important role in this process. In the light of major changes in the Australian and scientific landscapes over the past two decades we suggest it is time to look again at CSIRO’s role and the sustainability of its internal management arrangements.

Biofuels, Policy Options, and Their Implications: Analyses Using Partial and General Equilibrium Approaches

The biofuel industry has been experiencing a period of extraordinary growth, fueled by a combination of high oil prices, ambitious renewable fuel standards, subsidies, and import protection. This rapid growth has important consequences for the US and global economies. In this paper, we examine these consequences from partial and general equilibrium perspectives. We first examine US biofuel policy backgrounds to determine factors which caused the boom in the ethanol industry in recent years. Then we use a partial equilibrium model to investigate the economic consequences of further expansion in the ethanol industry for the key economic variables of the US agricultural and energy markets under alternative policy options which might be used to promote ethanol production in the future. Finally, we extend our analyses to examine consequences of further biofuel production at a global scale. One of the important conclusions of the research regards the importance of the link between energy and agricultural markets that has now come into being. That linkage has profound implications for the agricultural sector globally.

Optical studies on Mg x Zn1−x O wide band gap semiconductor in the perspective of phase equilibrium

Mg x Zn1−x O (x = 0.0–0.20) ternary alloyed thin films have been deposited by sol-gel technique at 550 °C. The studies on the change in c-axis lattice parameter, PL spectra, optical absorption coefficient, and band gap values suggest that the solubility limit of MgO in Mg x Zn1−x O lies within the composition range 0.05 < x < 0.08. Optical studies on the annealed films confirm the formation of equilibrium solid solution up to x = 0.05 and the phase for the composition range 0.05 < x ≤ 0.20 to be in the non-equilibrium range.

Consumer online privacy concerns and responses: a power–responsibility equilibrium perspective

We use the Power-Responsibility Equilibrium (PRE) framework and advance that consumers balance perceived deficits in privacy protection by power holders (businesses and regulators) with defensive actions. In our model, consumer privacy concern is the endogenous mediating entity linking business policy and regulatory perceptions to negative online user responses. The model was empirically tested and confirmed in an experimental setting. In a second study, we added the nature of consumer information involved into a sub-model. Here, we investi- gated the moderating role of information sensitivity and congruency on the business policy-concern relationship across three industry contexts. Both hypothesized two-way interactions were confirmed, suggesting that a strong business policy is effective in reducing concern when low sensitivity data are gathered, but insufficient in reducing concern for highly sensitive data. Furthermore, concern increased dramatically when sensitive data were collected that were incongruent with the business context.

Coherent measures of risk from a general equilibrium perspective

Coherent measures of risk defined by the axioms of monotonicity, subadditivity, positive homogeneity, and translation invariance are recent tools in risk management to assess the amount of risk agents are exposed to. If they also satisfy law invariance and comonotonic additivity, then we get a subclass of them: spectral measures of risk. Expected shortfall is a well-known spectral measure of risk. We investigate the above mentioned six axioms using tools from general equilibrium (GE) theory. Coherent and spectral measures of risk are compared to the natural measure of risk derived from an exchange economy model, which we call the GE measure of risk. We prove that GE measures of risk are coherent measures of risk. We also show that spectral measures of risk are GE measures of risk only under stringent conditions, since spectral measures of risk do not take the regulated entity’s relation to the market portfolio into account. To give more insights, we characterize the set of GE measures of risk via the pricing kernel property.

How to combine hermeneutics and Wide Reflective Equilibrium?

Empirical ethics is based upon the idea that empirical research can be used to develop new and better ethical theories. Empirical research can elucidate the relevance of ethical issues in daily life, and show which problems require normative analysis. It can also give insight into the considerations of practitioners, which might be morally relevant because they embody experience. In the literature, various methods for integrating empirical research on the considerations of practitioners in ethics have been proposed. One is the method of Wide Reflective Equilibrium (Delden and Thiel, 1998), which is based upon Rawls’ method for developing a theory of justice. Another one is pragmatic hermeneutics (Scheer and Widdershoven, 2004), which is inspired by Gadamer’s analysis of human experience. Ebbesen and Pedersen (2007) combine hermeneutics and Wide Reflective Equilibrium. The article gives a theoretical analysis of the two methods, exploring their common features. It also describes how the two methods were applied in a research project. The combination of hermeneutics and Wide Reflective Equilibrium, and their joint application in a concrete research project, is relevant for the discussion on empirical ethics. Yet, some questions can be raised concerning the way in which the authors relate both approaches to one another. In my comment I will first go into the theoretical comparison of the two methods. I will argue that on a theoretical level, the two approaches are in certain aspects more similar, and in other aspects more different than the authors claim. Next I will go into the practical application of hermeneutics and Wide Reflective Equilibrium in the research project. I will question the design of the project from the perspective of both hermeneutics and Wide Reflective Equilibrium. My conclusion will be that a successful combination of hermeneutics and Wide Reflective Equilibrium in empirical ethics requires further theoretical and practical efforts.

Does food aid have disincentive effects on local production? A general equilibrium perspective on food aid in Ethiopia

This paper examined impacts of food aid on domestic food production employing a computable general equilibrium modelling technique and using data from Ethiopia. The simulation experiments have shown that food aid has unambiguous disincentive effects on domestic food production. The removal of food aid caused a modest increase in food prices but this stimulated food production. Employment and income generation effects of the latter outweighed the adverse effect of the former. Consequently, the removal of food aid led to improvements in aggregate household welfare. Contrary to some concerns in the food aid literature that any reduction in food aid would hurt the poor, the simulation experiments suggested that actually poor rural households and urban wage earners are the ones who benefit most in absence of food aid but entrepreneurs are more likely to encounter a marginal welfare decline. We have distinguished between in-kind food aid and cash equivalent transfers in order to isolate the disincentives that in-kind transfers would make to domestic production from those that are related to household purchasing power problem. The expansionary effect of removing food aid becomes significantly larger when it is accompanied by cash equivalent payments because the latter would provide demand side stimulus to agriculture while the removal of in-kind transfers would stimulate supply side, with the supply and demand side effects reinforcing each other. In our modelling framework, the only adverse effect would be a modest deterioration in the external current account, because the expansionary effects of food aid would cause imports to rise but exports to fall.

Using Micro Data to Estimate the Intertemporal Substitution Elasticity for Labor Supply in an Implicit Contract Model

Economists have devoted substantial resources to estimating the intertemporal substitution elasticity for labor supply because this elasticity plays a crucial role in the real business cycle literature. Generally, the estimates of the elasticity have been too low to explain business cycles. Economists have responded by trying to modify real business cycle models to allow for smaller elasticities, but they have experienced mixed success at best. However, the standard intertemporal substitution model has not done well when tested, and if this model is incorrect, so will be the estimated labor supply elasticities based upon it. An equilibrium alternative to the standard intertemporal labor supply model is the implicit contract model. In this latter model firms and workers bargain over state-contingent contracts denominated in terms of consumption and hours of work. Further, the price of leisure is the marginal product of labor or the shadow wage, which differs from the observed wage. A number of studies have found that the data are compatible with an implicit contract model; in particular in Ham and Reilly (2002) we found that we could reject a separable (within period) implicit contract model but not a non-separable one. If an implicit contract model is appropriate, this is the context in which we should try to estimate the intertemporal labor supply elasticity. However this estimation is potentially quite difficult with micro data since the shadow wage (marginal product of labor) is unobserved. In this paper we first develop a procedure that allows one to estimate the intertemporal substitution elasticity in an implicit contract model from micro data. We then implement this procedure using the Panel Study of Income Dynamics (PSID) and the Consumer Expenditure Survey (CES). We obtain statistically significant elasticities of 0.9 with the PSID and 1.0 with the CES. The consistency of the estimate across the data sets is impressive given that we use different estimation approaches (micro data versus synthetic cohorts) and different consumption measures (food consumption versus total nondurable consumption) in the two data sets. These results are three times larger than existing estimates based on the standard intertemporal supply elasticity from this data set and thus offer more hope that equilibrium perspectives on the labor market are capable of tracking the data. Given that the implicit contract model is less likely to be rejected than the standard model in our work and other research, we believe that our approach should prove to be quite useful.

Coherent Measures of Risk from a General Equilibrium Perspective

Coherent measures of risk defined by the axioms of monotonicity, subadditivity, positive homogeneity, and translation invariance are recent tools in risk management to assess the amount of risk agents are exposed to. If they also satisfy law invariance and comonotonic additivity, then we get a subclass of them: spectral measures of risk. Expected shortfall is a well-known spectral measure of risk is. We investigate the above mentioned six axioms using tools from general equilibrium (GE) theory. Coherent and spectral measures of risk are compared to the natural measure of risk derived from an exchange economy model, that we call GE measure of risk. We prove that GE measures of risk are coherent measures of risk. We also show that spectral measures of risk can be represented by GE measures of risk only under stringent conditions, since spectral measures of risk do not take the regulated entity’s relation to the market portfolio into account. To give more insights, we characterize the set of GE measures of risk.