A survey on strategic market games
The Strategic Market Game (SMG) is the general equilibrium mechanism of strategic reallocation of resources. It was suggested by Shapley and Shubik in a series of papers in the 70s and it is one of the fundamentals of contemporary monetary macroeconomics with endogenous demand for money. This survey highlights features of the SMG and some of the most important current applications of SMGs, especially for monetary macroeconomic analysis.
The paper analyzes the effect of positive trend inflation in the framework of a standard New Keynesian model with Calvo price setting and capital accumulation. We are building on the work of Carlstrom and Fuerst (Carlstrom, Charles T., and Timothy S. Fuerst. 2005. “Investment and Interest Rate Policy: A Discrete-Time Analysis.” Journal of Economic Theory 123: 4–20.) and Ascari and Ropele (Ascari, Guido, and Tiziano Ropele. 2007. “Optimal Monetary Policy under Low Trend Inflation.” Journal of Monetary Economics 54 (8): 2568–2583., Ascari, Guido, and Tiziano Ropele. 2009. “Trend Inflation, Taylor Principle, and Indeterminacy.” Journal of Money, Credit and Banking 48 (1): 1557–1584.) who separately considered effects of capital accumulation and trend inflation in a similar context. It is shown that the simultaneous presence of positive trend inflation and capital accumulation greatly affect the determinacy property of equilibrium under this setup. Namely, in the presence of positive trend inflation the determinacy region shrinks, and it is virtually impossible to produce a determinate equilibrium with the Taylor-type rule given a steady state of inflation of more than 5%. Even for a moderate value of 2.5%, the design of the rule that ensures the uniqueness of the equilibrium requires detailed knowledge of the parameters of an economy. We also show that for a large set of plausible parameters, the standard Taylor rule leads to indeterminacy. Alternative monetary policy rules such as interest rate smoothing, output growth targeting and price level targeting are also analyzed. It is shown that the latter improves the determinacy of the model solution, and the best way to guarantee the determinate equilibrium is to use price level targeting in the policy rule.
We propose a general model of monopolistic competition, which encompasses existing models while being flexible enough to take into account new demand and competition features. Even though preferences need not be additive and/or homothetic, the market outcome is still driven by the sole variable elasticity of substitution. We impose elementary conditions on this function to guarantee empirically relevant properties of a free-entry equilibrium. Comparative statics with respect to market size and productivity shocks are characterized through necessary and sufficient conditions. Furthermore, we show that the attention to the CES based on its normative implications was misguided: we propose a new class of preferences, which express consumers' uncertainty about their love for variety, that yield variable markups and may sustain the optimum. Last, we show how our approach can cope with heterogeneous firms once it is recognized that the elasticity of substitution is firm-specific.
Smoking is a problem, bringing signifi cant social and economic costs to Russiansociety. However, ratifi cation of the World health organization Framework conventionon tobacco control makes it possible to improve Russian legislation accordingto the international standards. So, I describe some measures that should be taken bythe Russian authorities in the nearest future, and I examine their effi ciency. By studyingthe international evidence I analyze the impact of the smoke-free areas, advertisementand sponsorship bans, tax increases, etc. on the prevalence of smoking, cigaretteconsumption and some other indicators. I also investigate the obstacles confrontingthe Russian authorities when they introduce new policy measures and the public attitudetowards these measures. I conclude that there is a number of easy-to-implementanti-smoking activities that need no fi nancial resources but only a political will.
One of the most important indicators of company's success is the increase of its value. The article investigates traditional methods of company's value assessment and the evidence that the application of these methods is incorrect in the new stage of economy. So it is necessary to create a new method of valuation based on the new main sources of company's success that is its intellectual capital.