Stochastic facility location with general long-run costs and convex short-run costs

Stochastic facility location with general long-run costs and convex short-run costs

This paper addresses the problem of minimizing the expected cost of locating a number of single product facilities and allocating uncertain customer demand to these facilities. The total costs consist of two components: firstly linear transportation cost of satisfying customer demand and secondly the costs of investing in a facility as well as maintaining and operating it. These facility costs ...

Adjustment Costs and Long Run Spatial Agglomerations1

We introduce knowledge spillovers as an externality in the production function of competitive firms operating in a finite spatial domain under adjustment costs. Spillovers are spatial as productive knowledge flows more easily among firms located nearby. When knowledge spillovers are not internalized by firms spatial agglomerations may emerge endogenously in a competitive equilibrium, however, t...

On the Trade-off between Short Run Insurance Benefits vs. Long Run Incentive Costs

The Long-Run Costs of Moderate Inflation

L ong-run price stability is generally considered to be a primary goal of monetary policymakers in many countries. One reason policymakers care about inflation is that it can harm economic performance. Numerous studies of the impact of inflation on economic performance have focused on whether increases in inflation reduce economic growth in the long run (Barro, Fischer 1993, Bruno and Easterly,...

Welfare Costs of Long-Run Temperature Shifts

This article makes a contribution towards understanding the impact of temperature fluctuations on the economy and financial markets. We present a long-run risks model with temperature related natural disasters. The model simultaneously matches observed temperature and consumption growth dynamics, and key features of financial markets data. We use this model to evaluate the role of temperature i...