Asset Pricing in a Two-Country General Equilibrium Model with Jumps and Stochastic Output Growth Rate

2009 ◽  
Author(s):  
Ciprian Necula
Keyword(s):  
Growth Rate ◽  
Asset Pricing ◽  
General Equilibrium ◽  
Equilibrium Model ◽  
Output Growth ◽  
General Equilibrium Model

scholarly journals Social capital, sociopolitical instability, and economic development: A general equilibrium model

2014 ◽  
Vol 9 (1) ◽  
Author(s):  
Javier Alcántar-Toledo ◽  
Yannis P. Venieris
Keyword(s):  
Social Capital ◽  
General Equilibrium ◽  
Social Development ◽  
Equilibrium Model ◽  
Multiple Equilibria ◽  
Social Conflict ◽  
Output Growth ◽  
General Equilibrium Model ◽  
Empirical Literature ◽  
Stable Steady State

This essay describes the main features of a general equilibrium model of social capital and social conflict. According to the model, agents decide to participate in a number of conflict events while, at the same time, accumulate social capital. In the process, the government interacts with the economic actors by discouraging civil disobedience and social violence. The results show that social conflict is decreasing with the accumulation of physical capital, human capital, social capital, and government expenses on social development programs. Output growth in the economy depends positively upon accumulation of all types of capitals and social development funding, and negatively upon social conflict. More importantly, social capital is found to have a considerable positive effect on growth not only directly via investment, as suggested by recent empirical literature, but also indirectly by reducing the levels of social conflict. The model shows that the growth trajectories of the economy display a history-dependent pattern of growth with multiple-equilibria where countries converge to a nontrivial stable steady-state in the long-run. We also provide evidence in favor of the “club convergence” hypothesis which is predicated upon the initial levels of all types of capitals and the underlying level of social conflict.

Comments on "Shadow Pricing and Macroeconomic Analysis: Some Illustrations from Pakistan" by Squire et al.

1979 ◽  
Vol 18 (2) ◽  
pp. 113-115
Author(s):  
T. N. Srinivasan
Keyword(s):  
General Equilibrium ◽  
Equilibrium Model ◽  
General Equilibrium Model ◽  
Equilibrium Analysis ◽  
Partial Equilibrium ◽  
Shadow Prices ◽  
Essential Point ◽  
Economic Issues ◽  
Shadow Pricing ◽  
Extreme Sensitivity

The paper is too long for conveying the message that shadow pricing used as a method of analysis in micro-economic issues of project selection is also useful for analysing macro-economic issues, such as foreign and domestic borrowing by the government, emigration, etc. Much of the methodological discussion in the paper is available in a readily accessible form in several publications of each of the coauthors; In contrast, the specific application of the methodology to Pakistani problems is much too cavalier. While it is hard to disagree with the authors' claim that shadow pricing "constitutes a relatively informal attempt to capture general equilibrium effects" (p. 89, emphasis added), their depiction of traditional analysis is a bit of a caricature: essentially it sets up a strawman to knock down. After all in the traditional partial equilibrium analysis, the caveat is always entered that the results are possibly sensitive to violation of the ceteris paribus assumptions of the analysis, though often the analysts will claim that extreme sensitivity is unlikely. Analogously, the shadow pricing method presumes "stationarity" of shadow prices in the sense that they are “independent of policy changes under review" (p. 90). The essential point to be noted is that the validity of this assertion or of the "not too extreme sensitivity" assertion of partial equilibrium analysts can be tested only with a full scale general equilibrium model! At any rate this reviewer would not pose the issue as one of traditional partial equilibrium macro-analysis versus shadow pricing as an approximate general equilibrium analysis, but would prefer a description of project analysis as an approach in which a macro-general equilibrium model of a manageable size (implicit or explicit) is used to derive a set of key shadow prices which are then used in a detailed micro-analysis of projects.

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