I prove that, in models with complementarities, some non-monotone comparative statics must select unstable equilibria; and, under additional regularity conditions, that monotone comparative statics selects stable equilibria. JEL Classification. C61, C62, C72, C73. Discussions with my advisers, Ilya Segal and Chris Shannon, were very important for this work. I am very grateful for their help. I ...

The paper analyzes how social barriers to communication affect economy-wide productivity and factor accumulation. Using a dynamic model of an economy that includes a reproducible capital stock (physical or human) and effective labor, a negative relationship is shown to exist between social barriers to communication and total factor productivity (TFP), per capita consumption and reproducible cap...

This article investigates common economic consequences of population aging and economic integration for agglomeration processes. We introduce demography into the New Economic Geography by generalizing the constructed capital approach to account for changes in the age structure of the population. Interestingly, the level of trade costs triggering catastrophic agglomeration is rather sensitive to...

When the seats in a parliamentary body are to be allocated proportionally to some given weights, such as vote counts or population data, divisor methods form a prime class to carry out the apportionment. We present a new characterization of divisor methods, via primal and dual optimization problems. The primal goal function is a cumulative product of the discontinuity points of the rounding rul...

This paper intends to estimate the potential impact of climate change on Taiwan’s agricultural sector. Yield response regression models are used to investigate the climate change’s impact on 60 crops. A price-endogenous mathematical programming model is then used to simulate the welfare impacts of yield changes under various climate change scenarios. Results suggest that both warming and climat...

When an irreversible decision is taken under uncertainty there is an option value of delay. If a small number of agents are in competition each one’s ability to delay is restricted by the fear of preemption, seeming to undermine the real options approach. We present a model in which two firms may invest in competing research projects with uncertain returns. Two distinct types of equilibria aris...

This paper studies the aggregate dynamics of durable and nondurable consumption under slow information diffusion (SID) due to noisy observations and learning within the permanent income framework. We show that SID can significantly improve the model’s predictions on the joint behavior of income, durable consumption, and nondurable consumption at the aggregate level. Specifically, we find that S...

Robust portfolio optimization has been developed to resolve the high sensitivity to inputs of the Markowitz mean-variance model. Although much effort has been put into forming robust portfolios, there have not been many attempts to analyze the characteristics of portfolios formed from robust optimization. We investigate the behavior of robust portfolios by analytically describing how robustness...

When firms make a decision about irreversible investment, they may not have complete confidence about their perceived probabilitymeasure describing future uncertainty. Theymay think other probabilitymeasures perturbed from the original one are also possible. Such uncertainty, characterized by not a single probability measure but a set of probability measures, is called “Knightian uncertainty.” ...

We endogenize the discount rate via a broad measure of wealth and provide empirical evidence that wealth affects the discount rate negatively. We demonstrate that the Pontryagin conditions require positive felicity for intuitive results, whereas the concavity of the Hamiltonian requires negative felicity for optimality. This dilemma also holds for the endogenizations of Obstfeld (1990) and foll...