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Incorporating Risk in an Optimization Model of Reliability Engineering
Akio Matsumoto,
Ferenc Szidarovszky,
Miklós Szidarovszky
Issue:
Volume 3, Issue 2-1, April 2015
Pages:
1-4
Received:
21 November 2014
Accepted:
25 November 2014
Published:
27 December 2014
Abstract: A non-repairable system is considered and the problem of finding its optimal preventive replacement time is revisited. In addition to minimizing the expected cost per unit time in a cycle, we also consider its variance as the measure of the risk of the optimal decision. A multi-objective optimization problem is then formulated where the two objective functions are the expectation and the variance. A sufficient condition is given for the existence of finite optimum in the case of the weighting method, where either the weight of the variance or the replacement costs are sufficiently small. In applying the ε - constraint method there is always finite optimum if the upper bound for the expectation is close to its minimal value.
Abstract: A non-repairable system is considered and the problem of finding its optimal preventive replacement time is revisited. In addition to minimizing the expected cost per unit time in a cycle, we also consider its variance as the measure of the risk of the optimal decision. A multi-objective optimization problem is then formulated where the two objecti...
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New Methods of Decision Making Under Uncertainty
Sándor Molnár,
Ferenc Szidarovszky
Issue:
Volume 3, Issue 2-1, April 2015
Pages:
5-9
Received:
4 December 2014
Accepted:
9 December 2014
Published:
27 December 2014
Abstract: The classical formula of certainty equivalent is reconsidered. Based on a modified proof of the original formula several alternative methods are derived with different orders of magnitude of their errors. This new method is then compared with the classical formula in a computer study showing the advantage of the new approach. Practical applications are also outlined to illustrate the methodology.
Abstract: The classical formula of certainty equivalent is reconsidered. Based on a modified proof of the original formula several alternative methods are derived with different orders of magnitude of their errors. This new method is then compared with the classical formula in a computer study showing the advantage of the new approach. Practical applications...
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Existence of a Unique Equilibrium in Asymmetric Contests with Interdependent Preferences
Issue:
Volume 3, Issue 2-1, April 2015
Pages:
10-14
Received:
7 December 2014
Accepted:
15 December 2014
Published:
27 December 2014
Abstract: By relaxing the common assumption of purely self-interested preferences in contests, we study contests in which players care not only about their own material payoffs but also about other players’ payoffs, a scenario we term “interdependent preferences.” In addition, we identify three possible types of heterogeneity among players in contests. First, players may have asymmetric preferences toward each other. Second, players may have various abilities to convert expenditures to productive efforts. Third, players may face various financial constraints. This paper presents a proof of the existence and uniqueness of a pure Nash equilibrium in asymmetric contests with interdependent preferences.
Abstract: By relaxing the common assumption of purely self-interested preferences in contests, we study contests in which players care not only about their own material payoffs but also about other players’ payoffs, a scenario we term “interdependent preferences.” In addition, we identify three possible types of heterogeneity among players in contests. First...
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Determinacy of Equilibrium in a New Keynesian Model with Monetary Policy Lag
Issue:
Volume 3, Issue 2-1, April 2015
Pages:
15-22
Received:
11 December 2014
Accepted:
12 January 2015
Published:
22 January 2015
Abstract: We use the New Keynesian continuous-time framework to theoretically investigate the effects of a lag in a central bank’s response to economic fluctuations (i.e., monetary policy lag) on local equilibrium determinacy. In the case of a policy without lag, equilibrium is indeterminate even though a central bank’s policy response is sufficiently active. However, in the case of a policy with lag, an active monetary policy can contribute to local equilibrium determinacy if the lag is modest.
Abstract: We use the New Keynesian continuous-time framework to theoretically investigate the effects of a lag in a central bank’s response to economic fluctuations (i.e., monetary policy lag) on local equilibrium determinacy. In the case of a policy without lag, equilibrium is indeterminate even though a central bank’s policy response is sufficiently active...
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The Balanced Budget Multiplier and Labour Intensity in Home Production
Masatoshi Yoshida,
Stephen J. Turnbull
Issue:
Volume 3, Issue 2-1, April 2015
Pages:
23-30
Received:
14 January 2015
Accepted:
17 January 2015
Published:
27 February 2015
Abstract: This paper shows that the labour intensity of home production of a final consumption good affects national income and income multiplier effects of public expenditure financed by taxation. A reduction in labour intensity increases the level of national income but decreases the magnitude of the balanced budget multiplier effect. This result holds whether the tax instrument is distortionary or non-distortionary. It follows that the recent diffusion of labour-saving innovations such as washing machines and vacuum cleaners may have the effect of decreasing the effectiveness of fiscal policy.
Abstract: This paper shows that the labour intensity of home production of a final consumption good affects national income and income multiplier effects of public expenditure financed by taxation. A reduction in labour intensity increases the level of national income but decreases the magnitude of the balanced budget multiplier effect. This result holds whe...
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R&D and Innovations on Tertiary Sector’s Performance and Its Contribution to the World Economic Growth
Yasuyuki Nishigaki,
Leisa Cristina Sena Moreno
Issue:
Volume 3, Issue 2-1, April 2015
Pages:
31-38
Received:
28 January 2015
Accepted:
19 February 2015
Published:
6 March 2015
Abstract: Growth effects of R&D, especially in the service sector, are focused in this paper. By using a Romer type growth model with a R&D sector and a final goods retailing sector, we point out growth effects from the labor share of the R&D sector and the service sector. From the empirical analysis on the steady state equation, a positive per-capita income contribution from service sector’ GDP share is put out at light as well as the number of researcher is here indicated for its weight on understanding the subject. And for world growth data we apply principal component analysis: a strong causality effect among per-capita GDP, R&D investment, and service sector share is deduced.
Abstract: Growth effects of R&D, especially in the service sector, are focused in this paper. By using a Romer type growth model with a R&D sector and a final goods retailing sector, we point out growth effects from the labor share of the R&D sector and the service sector. From the empirical analysis on the steady state equation, a positive per-capita income...
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Equally Efficient Competitor and the Case of Deutsche Telekom: Economic Perspective
Yasuo Kawashima,
Nobufumi Nishimura
Issue:
Volume 3, Issue 2-1, April 2015
Pages:
39-45
Received:
2 February 2015
Accepted:
26 February 2015
Published:
18 March 2015
Abstract: We examine the implication of the assumption in two types of regulatory environments that a new entrant is an equally efficient competitor, on which the price squeeze test is built. Under partial regulation the entrant exits a market because of the higher access rates set by the authority. If we consider this assumption under no regulation, the entrant exits the market by its own inefficiency, and not by the exclusionary strategies of the incumbent. Regardless of the regulatory environments, the incumbent is not responsible for the exit and the assumption is contradictory to the EC decision.
Abstract: We examine the implication of the assumption in two types of regulatory environments that a new entrant is an equally efficient competitor, on which the price squeeze test is built. Under partial regulation the entrant exits a market because of the higher access rates set by the authority. If we consider this assumption under no regulation, the ent...
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Education and Research in Public Policy
Keiko Nakayama,
Masatoshi Shirai
Issue:
Volume 3, Issue 2-1, April 2015
Pages:
46-51
Received:
3 March 2015
Accepted:
24 March 2015
Published:
30 March 2015
Abstract: This paper constructs an endogenous growth model where the educational sector (higher education) produces human capital and social knowledge by education and research activities. The steady state growth paths are studied for market economy where the educational sector is financed by the income tax imposed on household and the rent on use of social knowledge by firm. We show that the education-research allocation in the educational sector determines the income tax rate and also the growth rate for the market economy. We conclude that there exists a certain education-research allocation maximizing the steady state growth rate, and that the optimal income tax rate is not necessarily zero.
Abstract: This paper constructs an endogenous growth model where the educational sector (higher education) produces human capital and social knowledge by education and research activities. The steady state growth paths are studied for market economy where the educational sector is financed by the income tax imposed on household and the rent on use of social ...
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Capital Adjustment and Limit Cycles: An Empirical Analysis Based on the Threshold Autoregressive Model
Yasuyuki Nishigaki,
Daiki Maki,
Mitsuhiko Satake
Issue:
Volume 3, Issue 2-1, April 2015
Pages:
52-59
Received:
13 March 2015
Accepted:
31 March 2015
Published:
11 April 2015
Abstract: In this study, we investigate the non-linearity of the Japanese business cycle based on the theoretical concept of the limit cycle. To analyze the time series of capital stock and GDP simultaneously based on the theoretical relationships predicted by the limit cycle, we incorporate the capital coefficient into a Kaldor-type dynamic model and apply the threshold autoregressive (TAR) model to it to investigate fluctuations in the coefficient that are concurrent to the underlying oscillation of the limit cycle. The estimation results indicate that these time series are subject to the three-regime TAR model and that the middle regime has divergence and the outside regimes have convergence, suggesting that the process has a non-linear phenomenon typically caused by limit cycles.
Abstract: In this study, we investigate the non-linearity of the Japanese business cycle based on the theoretical concept of the limit cycle. To analyze the time series of capital stock and GDP simultaneously based on the theoretical relationships predicted by the limit cycle, we incorporate the capital coefficient into a Kaldor-type dynamic model and apply ...
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The Hybrid New Keynesian Phillips Curve and Firm-Level Inflation Expectations in Japan
Issue:
Volume 3, Issue 2-1, April 2015
Pages:
60-72
Received:
16 March 2015
Accepted:
30 March 2015
Published:
13 April 2015
Abstract: This paper examines inflation dynamics in Japan through estimations of the hybrid New Keynesian Phillips Curve. The estimation with the observed inflation rate in the corporate goods price index and that with the estimated firm-level expected inflation rate are considered. The firm-level expected inflation rate is estimated by the Kanoh (2006)-type extended Carlson-Parkin method. In addition, the validity of the pure forward-looking New Keynesian Phillips Curve and the implication of the flattening of the hybrid New Keynesian Phillips Curve are taken into account as the underlying points of interest. Consequently, our empirical study leads us to the following conclusions. First, the backward-looking factor has a dominant impact on inflation dynamics compared with the future element. Second, the forward-looking element has an unignorable effect on the inflation process, even though it is weaker than the backward-looking factor. Third, our result implies the incompleteness of the pure forward-looking New Keynesian Phillips Curve. It gives us the policy implication that the discussion of monetary policy should include a certain degree of emphasis on the backward-looking perspective in addition to the forward-looking perspective and must examine inflation persistence, although the forward guidance policy by the central banks is a recent important topic. Fourth, the degree of rationality of firm-level inflation expectations is not sufficient: firms’ inflation expectations might not always be as exact as those made by the rational expectations hypothesis. Lastly, the slope of the hybrid New Keynesian Phillips Curve in Japan is very flat in recent years. It implies the Japanese central bank’s current difficulty in conducting monetary policy in that inflation would be less responsive to movements in the measures of aggregate economic activities.
Abstract: This paper examines inflation dynamics in Japan through estimations of the hybrid New Keynesian Phillips Curve. The estimation with the observed inflation rate in the corporate goods price index and that with the estimated firm-level expected inflation rate are considered. The firm-level expected inflation rate is estimated by the Kanoh (2006)-type...
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A Monetarist Model Reconsidered: The Emergence of Chaotic Fluctuations
Issue:
Volume 3, Issue 2-1, April 2015
Pages:
73-76
Received:
2 April 2015
Accepted:
10 April 2015
Published:
17 April 2015
Abstract: Friedman (1968) proposes a constant money growth rate rule to establish the stability of the market economy. We examine whether his suggestion is reasonable or not. We seek to develop the Vanderkamp (1975) model, which captures the essential points of monetarism: the quantity theory of money and the natural rate of unemployment. Our main finding is that the economy experiences chaotic fluctuations around the steady state when the adjustment speed of inflationary expectations is sufficiently slow.
Abstract: Friedman (1968) proposes a constant money growth rate rule to establish the stability of the market economy. We examine whether his suggestion is reasonable or not. We seek to develop the Vanderkamp (1975) model, which captures the essential points of monetarism: the quantity theory of money and the natural rate of unemployment. Our main finding is...
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Dynamic Economic Systems with Two Time Delays
Akio Matsumoto,
Ferenc Szidarovszky
Issue:
Volume 3, Issue 2-1, April 2015
Pages:
77-85
Received:
25 March 2015
Accepted:
25 March 2015
Published:
17 April 2015
Abstract: An elementary analysis is developed to determine the stability region of certain classes of ordinary differential equations with two delays. Our analysis is based on determining stability switches first where an eigenvalue is pure complex, and then checking the conditions for stability loss or stability gain. In the cases of both stability losses and stability gains Hopf bifurcation occurs giving the possibility of the birth of limit cycles.
Abstract: An elementary analysis is developed to determine the stability region of certain classes of ordinary differential equations with two delays. Our analysis is based on determining stability switches first where an eigenvalue is pure complex, and then checking the conditions for stability loss or stability gain. In the cases of both stability losses a...
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