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on Dynamic General Equilibrium |
| By: | Jared C. Carbone (Department of Economics and Business, Colorado School of Mines, Colorado, USA); Maxwell Fleming (Department of Economics and Business, Colorado School of Mines, Colorado, USA); Akio Yamazaki (National Graduate Institute for Policy Studies, Tokyo, Japan) |
| Abstract: | We investigate how demographic change affects the efficiency and equity of carbon pricing using an overlapping generations general equilibrium model of Japan. Demographic change erodes the tax base, so that the fiscal response has a larger impact on welfare than the carbon policy itself. We find that implementing a carbon policy during Japan’s projected population decline reduces welfare costs by 11% relative to a steady-state population, especially when revenues offset capital taxes. However, microsimulation indicates that low-income households face higher short-run welfare losses under policies that are most efficient in the long run, highlighting a trade-off between efficiency and progressivity. |
| Keywords: | Green fiscal reforms; Carbon pricing; Demographic changes |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:ngi:dpaper:25-11 |
| By: | Jared C. Carbone (Department of Economics and Business, Colorado School of Mines); Maxwell Fleming (Department of Economics and Business, Colorado School of Mines); Akio Yamazaki (National Graduate Institute for Policy Studies (GRIPS)) |
| Abstract: | How does carbon pricing perform in an economy with a declining population growth? We develop an overlapping generations model calibrated to Japan. Using this model, we examine how demographic change interacts with green fiscal reforms, in which revenues from carbon pricing are used to improve the efficiency of the tax system. Our results show that demographic change erodes the tax base, so the fiscal response has a larger impact on welfare than the carbon policy itself. Relative to a constant population growth benchmark, ignoring demographic change can overestimate the welfare costs of carbon pricing by 11 percent when pension benefits are reduced and carbon revenues are used to cut capital taxes. Microsimulation analysis indicates that low-income households face higher short-run welfare losses under policies that are most efficient in the long-run, highlighting a trade-off between efficiency and progressivity in the design of carbon pricing in aging economies. |
| Keywords: | green fiscal reforms, carbon pricing, demographic change |
| JEL: | H22 H23 Q52 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:mns:wpaper:wp202503 |
| By: | Josep Pijoan-Mas (CEMFI and CEPR); Pau Roldan-Blanco (UAB and BSE) |
| Abstract: | We study how the co-existence of fixed-term (FT) and open-ended (OE) contracts shapes firm dynamics, firm selection, worker allocation, aggregate productivity, and output. Using rich Spanish administrative data, we document that the use of fixedterm contracts is very heterogeneous across firms within narrowly defined sectors. Particularly, the relationship between the share of temporary workers and firm size is positive within firm but negative between firms. To explain these facts, we write a model of firm dynamics with technology heterogeneity, search-and-matching frictions, and a two-tier labor market structure. Our model emphasizes a key trade-off between contracts, namely, that while FT contracts give flexibility to firms, they also create more worker turnover, which is costly through the need to hire new workers and through the loss of firm-specific human capital. We find that limiting the use of FT contracts decreases the share of temporary employment and increases aggregate productivity —as better firm selection offsets increased misallocation of workers— but it also increases unemployment, output, and welfare. |
| Keywords: | Dual Labor Markets, Temporary Contracts, Firm Dynamics, Unemployment. |
| JEL: | D83 E24 J41 L11 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cmf:wpaper:wp2025_2530 |
| By: | Loureiro, Paulo Roberto Amorim |
| Abstract: | This paper develops a general equilibrium model in which ethics and greed coexist as opposing forces shaping social and economic stability. Individuals choose be- tween legal and illicit effort, while ethical agents internalize a moral cost, and the government sets enforcement and penalties. The dynamic interaction between moral restraint, institutional enforcement, and social respect determines the aggregate equilibrium. The model shows that, in the absence of virtue or enforcement, greed dominates and equilibrium collapses; yet, when moral costs or public integrity poli- cies rise, the economy converges to a stable and more equitable state. Mathematical stability is derived from Jury’s conditions, and an empirical strategy is proposed to test these mechanisms using crime, enforcement, and social capital data. Ultimately, morality emerges as an endogenous economic variable—an efficient complement to law, rather than its substitute. |
| Keywords: | Ethics, Greed, General Equilibrium, Crime, Enforcement, Welfare Policy, Spider-Man, Moral Economics |
| JEL: | D13 D5 I38 J12 K42 |
| Date: | 2025–05–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126613 |
| By: | Sandmann, Christopher; Bonneton, Nicolas |
| Abstract: | This paper proves the existence of a non-stationary equilibrium in the canonical search-and-matching model with heterogeneous agents. Non-stationarity entails that the number and characteristics of unmatched agents evolve endogenously over time. An equilibrium exists under minimal regularity conditions and for both paradigms considered in the literature: transferable and non-transferable utility. To address potential discontinuities in match opportunities across types, our analysis introduces a generalized Schauder fixed-point theorem suitable for models with discontinuous value functions. |
| Keywords: | equilibrium existence; search-and-matching; non-stationary search; mean field games; fixed point theorem |
| JEL: | C78 D83 E32 |
| Date: | 2025–11–26 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128071 |