The paper studies a market of horizontally differentiated good under increasing return to scale and exogenous number of firms. Three concepts of equilibria are compared: Cournot, Bertrand and monopolistic competition. Under fairly general assumptions on consumer’s preferences, it is shown that Lerner index is the highest in Cournot case, monopolistic competition provides the lowest one and Bertrand equilibrium takes intermediate position. When the number of firms N increases, both oligopolistic equilibria converge to monopolistic competitive equilibrium with rate 1 / N . Thus the study generalizes the similar results on markets of homogeneous goods.
In this paper, we model the deposit market with costly information on bank risks. The model adds to the volume of literature related to the Diamond Dybvig mod el and related models of information based bank runs. The inclusion of costly information signals indicates that depositors must decide whether to pay for information regarding changes in the riskiness of banking activities; these costs may involve, for instance, time and other resources needed to find and read financial information. We show that an efficient bank run is the only equilibrium even in case of non negative information costs. To ensure the uniqueness of the efficient bank run equilibrium it is enough to lower the costs for at least one group of the depositors or introduce the deposit insurance system with co insurance.
Under fiscal stress the government often turns to practice of financial repression to lower the debt service cost. Captive pension fund is one of the targets for enlarging the demand for public debt. We propose an extension of the overlapping generations model with the fully-funded pension system and fiscal policy to question the optimality of financial repression in the form of non-market placement of the public debt. Despite its negative impact on the capital accumulation, financial repression is used to finance public goods and can be an element of optimal tax policy of the benevolent government.
Overdue reforms in Russia cannot only be defined as «structural» or «economic». It is about the package of changes in all major public spheres, the modernization of all sectors of life. However, among these reforms the key point, on which depends the fate of all transformations and the main political obstacle of economic modernization of the country is the extremely low efficiency of the current system of public administration. That is why numerous programs of socio-economic development of the country, developed over the last 15 years, have never been implemented in practice. The illustration are unsatisfactory situation of the pension system, health care, immigration policy and other areas that affect the quality of human capital - the most important factor of modernization. Public administration reform is a necessary condition for the success of the transformation of all sides of Russian life, including the economy. This reform should be built on the principles of decentralization of power, transferring many of its functions to self-regulating and public organizations, privatization of the economy.
The paper discusses the involvement of regional authorities in the implementation of programs of structural transformation. It suggests that regional authorities are more likely to discover and develop previously undetected competitive advantages of their territories, and it is easier for them to stimulate the cooperation of local economic agents. This predetermines the necessity to integrate regional authorities in the implementation of structural policies pursued by the federal government. The paper reviews recent experiences with the implementation of structural policies by the regions of the Russian Federation using the cases of Voronezh and Kaluga Oblasts and the Republic of Tatarstan. It highlights the success factors that have been shaping the development strategies in these regions, as well as challenges these regions face, including excessive centralization in decision-making; the underutilized role of small and medium-sized business; weaknesses in educational and training systems. Furthermore, the paper points to the fundamental constraints faced by Russia’s regions in their pursuit to replicate the best regional practices.
On the basis of statistical balances and turnovers subaccounts Russian banking system built description liquidity needs of banks. Initial accounts combined into 35 units (which include loans and deposits by macroeconomic agents) are ranked by the rate of turnover. Based on this classification, there is a group of units that characterize the level of liquidity in the banking system . It is shown that the use of information about the turnover of aggregates can significantly extend the class of models needs of the banking system 's liquidity. Econometric model is presented describing both balances and transactions liquidity. The model is calibrated on monthly data from January 2007 to June 2013. The observed pattern previously linking volume of loans granted by the banking system, and accepted deposits can be explained by balancing units having turnover rate of the same order.
One of the key issues of optimal fiscal policy is public goods financing. Financial repression is commonly used by governments as an implicit taxation of financial sector along with explicit labor and capital taxes. In this paper we consider the optimal choice of benevolent government in an overlapping generations’ model with an endogenous labor supply and defined contribution pension system. Financial repression is modeled as an artificial increase in demand on government bonds of the pension fund with the reduced rate of return. The optimal choice depends on the population growth: when the growth is negative the government does not resort to the financial repression, and public good is financed by the labor tax revenues. When the population growth is positive optimal choice of the government includes financial repression coupled with capital tax. In this case the interest rate on the government debt is –1. Stronger financial repression leads to the decrease in pension savings, substituted by voluntary savings, which leads to higher capital and output per unit of labor.
In the rational choice problem Zutler (2011) proposed a model of choice by continuous Markov random walk on a set of alternatives to find the best. In this paper we investigate the optimal properties of obtained solutions.
It is shown that the result of this choice is the maximal element on a set of lotteries with respect to relation for special function that has a natural interpretation as flow of probability from one to another lottery.
It is shown the relationship between the problems of choosing the best alternative and non-cooperative games solution. It is proved that Nash equilibrium is a stationary point of a dynamical system of the continuous random walk of players on the set of available strategies. The intensity transition of the player from one strategy to another is equal to his assessment of increase of payoff in the alleged current rival’s strategies.
Optimization of coefficients in monetary policy rules is performed on the base of the DSGE-model with two independent monetary policy instruments estimated on the Russian data. It was found that welfare maximizing policy rules lead to inadequate result and pro-cyclical monetary policy. Optimal coefficients in Taylor rule and exchange rate rule allow decreasing about 20% of volatility estimated on Russian data of 2001–2012. The degree of exchange rate flexibility parameter was found to be lower than its current value. It means that Bank of Russia has to systematically smooth exchange rate dynamics when it will adopt inflation targeting in 2015.
The article reviews the theory of rational irrationality according to which people might retain irrational beliefs indefinitely if the material costs of error are minimal. Irrational beliefs mean systematic rather than random errors. Voters frequently vote according to their embedded prejudices because the private costs of their errors are equal to zero. Zero costs are the result of practically zero chance to be decisive voter: the single vote has no effect on the election outcome. In this case it is rational to receive psychological benefits from manifestation of beliefs taking any devastating decisions at the poll station. As a result political irrationality may be compared with environment pollution. In both cases, the private benefits of self-restraints are absent. The burden of welfare state in the West and massive support of counter-sanctions in Russia reveal voter’s rational irrationality. For the welfare state vote and those for whom tax increase is expensive: in fact, each of the losers know that his personal choice in the voting does not affect the result. Instead they satisfy their sense of justice. The situation with the popular support of counter-sanctions in Russia is rather similar. Psychological benefits as the result of symbolic counter-sanctions support are clearly not zero in contrast to the costs of personal choice at the national elections where the weight of single vote means nothing. An analysis of voter behavior clearly shows that universal and unrestricted suffrage allows irrational beliefs of the masses to form an ineffective policy. From the standpoint of economic theory, it is equivalent to negative externalities.
The article reveals the concepts and the specific characteristics of the cluster policy, describes its generic problems inherent in the transition economies, including Russia. Authors describe possible directions of cluster policy realization in Russia. It is shown that many vital issues of the cluster policies implementation lie in its organization. Based on the example of the Scandinavian countries, that recognize the importance of the cluster approach, authors describe the organizational aspects of the implemented cluster programs. Authors define three types of cluster policy organizational structure and reveal the central role of the specialized agencies, whose analogues in Russia can be the regional centers of cluster development. Authors propose a typology of cluster policy organizationalstructuresthat differ in the number of involved ministries and specialized agencies, the types of relationship and object of regulation, functions and status of the authorized agencies. This typology is used to categorize the experience of cluster policy implementation in different countries. It is shown that under similar conditions the organization of cluster policy can take many forms and vary with time.
Global trends and structural shifts in the development of international trade, which have a fundamental character, and will continue to develop for more than a decade, are considered. It is noted that significant changes were particularly impressive in the communication sphere, which, in turn, affected the most socially sensitive sector of the economy - services. The article analyzes the causes of crisis phenomena in the multilateral system of trade regulation based on liberalization and harmonization of rules for traditional forms of trade, as well as the growth of protectionism in the conditions of the formation of trade continents - modern forms of regional agreements. The article deals with the influence of regionalism scaling on the narrowing of the free market space and the aggravation of problems of interaction between economic agents. The risks associated with the slowdown in world trade and the application of trade restrictions, as well as problems in the regulation of global trade, are considered. Special attention is paid to the dynamics of changes in the structure of Russian exports; and there is a clear discrepancy between the structures of Russian exports to global demand. It is assumed that this effect can be explained by increased competition in the world market, slowly recovering from the crisis, deepening stagnation of the domestic output, widening technological gap, as well as accumulated internal problems that have reduced the dynamism and capabilities of the Russian economy. Attention is drawn to the fact that among the TOP 10 non-raw material Russian exporters, there are no enterprises which activities are related to digital technologies, in contrast to the results of world rankings that put technology companies in the foreground.