Thesis (doctoral)--Université de Genève, 1980. / Includes bibliographical references (p. [443]-449).

This thesis is mainly concerned with the question whether 'conventional' economic theory - especially the neoclassical theory of general equilibrium - is sufficiently flexible to accommodate the particular conditions prevailing in the developing countries. It is argued that most existing theories of economic underdevelopment adopt an interpretative approach which essentially amounts to relaxing some of the chief assumptions of the neoclassical theory. When applied to the two-sector model of general equilibrium, these theories generally yield predictions which are vastly different from those associated with the neoclassical assumptions of perfect competition, unlimited factor substitutability and unrestricted resource mobility. Several theories seek to explain the development problem in terms of the specific production processes used in poor countries. Myrdal's (1957) theory of cumulative causation, for example, effectively introduces increasing returns to scale in at least one sector or region of the economy; in contrast to the neoclassical theory, he thus nvisages a cumulative process of regional divergence in the output level per worker. Similarly, Richard Eckaus's (1955) explanation of the "factor-proportions problem" is based on the assumption of limited factor substitutability. This enables him to establish the existence of a so-called "unemployment equiIibrium", thus implying that developing countries may be faced with a conflict between the objective of maximizing social -welfare on the one hand, and that of full employment on the other. More recently, Leibenstein (1960) has shown that this trade-off may be complicated by the introduction of capital-biased technological inventions and innovations. The solution to the factor-proportions problem consists in the adoption of more appropriate, usually labour-biased technologies, increased capital formation and a reduction in the rate of population growth. Much of the postwar literature on economic development has focused on the imperfectly competitive structure of the product and the factor markets in developing countries. Myint (1954) has highlighted the role played by monopolies and ligopolies during the "opening-up" process of economic development. Likewise, both Lewis's (1954) dualist theory and Todaro's (1969; 1971) model of rural-urban migration attempt to explain the unemployment problem in terms of various factor price distortions. In an international context, Prebisch (1950; 1959) and Singer (1950) have again shown how prevailing differences in the structure of markets between developed and developing countries may turn the terms of trade against the latter; using a two-sector model, Bhagwati (1958) has demonstrated that such a deterioration in the terms of trade could bring about a net decrease in the welfare level of the countries concerned. Generally, the policy measures relevant to the "market imperfections" problem include the creation of job opportunities in the rural (rather than urban) sector, the encouragement of informal-sector enterprises,and the imposition of factor taxes and subsidies as a means of counteracting the adverse effect of factor price distortions on employment. A more recent approach to the unemployment problem is the plea by the International Labor Office (1970; 1972) for a redistribution of income within the developing countries. In terms of the two-sector model, such a policy may well succeed in eliminating labour unemployment caused by fixed factor proportions and/or factor price distortions. It should be realized, though, that a redistribution of income may lower the aggregate savings level, and hence also the growth rates of capital and labour employment in the economy. On the whole, it would seem that these theories do indeed adopt a modified version of the neoclassical theory in providing a fairly comprehensive explanation of the economic problems of labour unemployment, low incomes and inequality.

This dissertation describes two theories of risky choice based on a normatively axiomatized partial order. The first theory is an atemporal alternative to von Neumann and Morgenstern's Expected Utility Theory that accommodates the status quo bias, violations of Independence and preference reversals. The second theory is an extension of the Inter-temporal von Neumann-Morgenstern theory of Kreps and Porteus (1978) that features a normatively deduced preference for flexibility. A substantial part of the thesis is devoted to examining equilibrium implications of the inter-temporal theory. In particular, a multi-agent multi-period Bayesian rational expectations equilibrium is shown to exist under certain conditions. Implications to asset pricing are then investigated with an explicit parameterization of the model. / Business, Sauder School of / Finance, Division of / Graduate

Fisher market models and market equilibrium computation algorithms have long been central research topics in economics, operations research, and theoretical computer science. Recently, they have found diverse applications in the design of Internet marketplaces. In this thesis, we develop tractable optimization models and algorithms for computing market equilibria under various practically relevant settings. In Chapter 1, we study first-order methods for computing market equilibria under a finite number of buyers with linear, quasilinear or Leontief utilities. For linear and Leontief utilities, we show that their corresponding convex programs---whose solutions are market equilibria and vice versa---exhibits strong-convexity-like structures after simple reformulations. This allows us to design the first gradient-based algorithms that achieve a linear rate of convergence for computing market equilibria. For buyers with quasilinear utility functions, we propose a new convex program capturing market equilibria, which is analogous to the Shmyrev convex program for linear utilities. Applying the mirror descent algorithm to this convex program leads to a distributed and interpretable Proportional Response (PR) dynamics that converges to equilibrium prices and utilities. This generalizes the classical PR dynamics and its convergence guarantees, previously known for linear utilities, to the case of quasilinear utilities. In Chapter 2, we consider a generalization of a linear Fisher market where there is a finite set of buyers and a measurable item space. We introduce generalizations of the Eisenberg-Gale convex program and its dual to this setting, which leads to infinite-dimensional Banach-space optimization problems. We show that these convex programs always have optimal solutions and these optimal solutions correspond to market equilibria. In particular, a market equilibrium always exists. We also show that KKT-type optimality conditions for these convex programs imply the defining properties of market equilibria and are necessary and sufficient for a solution pair to be optimal. Then, we show that, similar to the classical finite-dimensional case, a market equilibrium is Pareto optimal, envy-free and proportional. Moreover, when the item space measure is atomless, we show that there always exists a pure equilibrium allocation, which can be viewed as a generalized fair division, that is, a Pareto optimal, envy-free, and proportional partition of the item space. This leads to generalizations of classical results on the existence and characterizations of fair divisions of a measurable set. When the item space is a closed interval and buyers have piecewise linear valuations, we show that the infinite-dimensional Eisenberg-Gale-type convex program can be reformulated as a finite-dimensional convex conic program, which can be solved efficiently using off-the-shelf optimization software. Based on the convex conic reformulation, we also develop the first polynomial-time algorithm for finding a fair division of an interval under piecewise linear valuations. For general buyer valuations or a very large number of buyers, we propose computing market equilibria using stochastic optimization and give high-probability convergence guarantees. Finally, we show that most of the above results easily extend to the case of quasilinear utilities. In Chapter 3, we consider an online market setting where items arrive sequentially and must be allocated to buyers irrevocably. We define the notion of an online market equilibrium as time-indexed allocations and prices which guarantee buyer optimality and market clearance in hindsight. We propose simple, scalable and interpretable allocation and pricing dynamics termed as PACE (Pacing ACcording to Estimated utilities). When items are drawn independently from an unknown distribution with a possibly continuous support, we show that PACE leads to an online market equilibrium asymptotically. In particular, PACE ensures that buyers' time-averaged utilities converge to the equilibrium utilities of a static market with item supplies being the unknown distribution and that buyers' time-averaged expenditures converge to their per-period budget. Hence, many desirable properties of market equilibrium-based fair division such as envy-freeness, Pareto optimality, and the proportional-share guarantee are also attained asymptotically in the online setting. Next, we extend the dynamics to handle quasilinear buyer utilities, which gives the first online algorithm for computing pacing equilibria in first-price auctions. Finally, numerical experiments show that the dynamics converges quickly under various metrics.

This dissertation consists of three chapters on game theory and its application to social segregation and discrimination. In the first chapter, we discuss two interpretations of the Nash equilibrium and connect the remaining two chapters based on such interpretations. The first chapter also provides the motivations and the summary of Chapters 2 and 3. In the second chapter, we consider an extension of an almost strictly competitive game in n-person extensive games by incorporating Seiten's subgame perfection. We call this extension a subgame perfect weakly-almost (SPWA) strictly competitive game, in particular, a SPW A strictly competitive game in strategic form is simply called a WA strictly competitive game. We give some general results on the structure of these classes of games. One result gives an easy way to verify almost strict competitiveness of a given extensive game. We show that a two-person weakly unilaterally competitive extensive game and a finitely repeated WA strictly competitive game are SPW A strictly competitive. In the third chapter, we consider segregations, discriminatory behaviors, and prejudices in a recurrent situation of a game called the festival game with merrymakers. We show that segregation and discriminatory behaviors may occur in Nash equilibria in the sense that players of one ethnic group go to one festival, and, if any member of one ethnic group tries to go to a different festival, he will be treated differently only for the reason of nominal differences in ethnicities between them. One of our results states that if a player tries to enter a larger festival from a smaller one, he would be discriminated against by some people in the larger festival, but not necessarily if one goes from a larger one to a smaller one. We use the theory of stable conventions for the considerations of the entire recurrent situation and of the epistemic assumptions for each individual player. We show that the central parts of the stable conventions are captured by the Nash equilibria. Associating our results with the theory of stable conventions and the cognitive and moral views called subjectivism and retributionism, we discuss the emergence of fallacious views of each player about the utility functions of all the players. One such view explains prejudicial attitudes as a rationalization of discriminatory behaviors. / Ph. D.

This dissertation is a collection of essays on bids and offer matching in a labor market for new entrants to white-collar jobs. The papers compare some of the different institutions for determining wages and conducting the hiring process in the market for new entrants to white collar jobs. The first essay analyzes how does a firm announce and commit to a wage prior to deriving specific information about applicants' productivity and the consequences of following this hiring process. In the model there are two firms and at least as many applicants as the number of firms. All applicants apply simultaneously to both firms in response to the job advertisement which also mentions a wage. Each firm derives the firm-specific productivity of the applicants from their applications which is private information to each firm. None of the applicants have any information about the firms' evaluation. There are four pure strategy Nash Equilibria in wage announcements. Both firms announce a high wage, both firms announce a low wage, both firms announce a high or a low wage, and one firm announces a high wage and the other firm announces a low wage. In the latter case there also exists a unique mixed strategy equilibrium reflecting a firm's uncertainty about the choice of the other firm. In equilibrium one or both firms may not hire and the equilibrium may not exhibit wage dispersion. The second essay analyzes the question; which is better, to announce and commit to a particular wage prior to deriving specific information about applicants' productivity or to offer wages privately after deriving the firm-specific productivity. The equilibrium policy, to be followed by the firms in the first place, is determined endogenously by comparing the ex ante expected profits associated with the equilibria under the different policies. Lack of prior information and the uncertainty about the possible match results in "offer wages privately" as always an equilibrium policy. However, if a low wage is the equilibrium strategy under all the policies, then "any pair of policies" is an equilibrium. This justifies one of the circumstances in which different policies might coexist. In equilibrium a firm's position is always filled and the equilibrium outcome may not exhibit wage dispersion. The third essay analyses the question, if "announcing a wage" is the strategy rule to be followed by the firms, then what should be the equilibrium timing of wage announcement, before or after receiving specific information about applicants' productivity. Two policies are compared. Under the first policy a firm announces and commits to a particular wage prior to deriving the match-specific productivity. Under the second policy a firm solicits applications, derives the firm-specific productivity, and then announces and commits to a wage. The equilibrium timing of wage, to be followed by the firms in the first place, is determined endogenously by comparing the ex ante expected profits associated with the equilibrium strategy under the different timings. It turns out that announcing and committing to a particular wage after deriving specific information is always an equilibrium timing because of the informational advantage. However, if a low wage is the equilibrium strategy under all the policies then any pair of policies is an equilibrium. In equilibrium one of the firm's position may remain unfilled. The equilibrium outcome may not exhibit wage dispersion. / Ph. D.

The purpose of this study is assess the domestic regional impacts of changes in federal fiscal policies and the nation's trade deficit. An attempt is made to fill a gap in the literature of regional economics by providing an explanation of how economic changes at national and international levels are transmitted to regions, and by providing general-equilibrium estimates of the effects of these changes. The level of regional economic activity is assumed to be linked to the federal budget through federal purchases of goods and services, through intergovernmental transfers, and through net transfers to households. Domestic regions are linked to the balance of trade through shifts in exports and imports and through shifts in net income transfers from abroad. An interregional computable general equilibrium (CGE) model is constructed and calibrated for Virginia and the rest of the United States (ROUS). Scenarios approximating federal fiscal policies and the trade deficit during the period 1981-85 are introduced, and the model is solved to obtain a new equilibrium. As a result of these shocks, it is concluded: (a) that the magnitude of sectoral effects differed in Virginia versus ROUS, (b) that in contrast to non-rural sectors, rural sectors in Virginia experienced slower growth in value added, (c) that investment in Virginia and in ROUS increased in response to the net inflow of savings from abroad, but the increase was mitigated by the rise in federal spending, and (d) that a tariff increase on the output of the apparel and textile industry would increase output in that industry in Virginia but would decrease it in other industries if the economy were fully employed. / Ph. D.

Business Management / (M.Sc.(Operation Research))

Thesis (PhD)--Stellenbosch University, 2014. / ENGLISH ABSTRACT: This dissertation considers the use of Dynamic Stochastic General Equilibrium (DSGE) models for the analysis of South African macroeconomic business cycle phenomena. It includes four separate, but interrelated parts, which follow a logical sequence. The rst part motivates the use of these models before establishing the theoretical foundations for these models. The theoretical foundations are accompanied by detailed derivations that are used to construct a model for a small open economy. The second part considers the properties of South African macroeconomic data that may be used to estimate the parameters in these models. It includes a discussion of the variables that may be included in such a model, as well as various methods that may be used to extract the business cycle. Thereafter, the sample size for the dataset is established, after investigating for possible structural breaks in the rst two moments of the data, using various univariate and multivariate techniques. The nal chapter of this part contains an investigation into the measures of core in ation, whereby a comparison of trimmed means, dynamic factor models and various wavelet decompositions are applied to data for South Africa. The third part considers the application of the dataset that was identi ed in part two, in a DSGE model that incorporates features that are typical of small open economies. It includes a discussion that relates to the role of the exchange rate in these models, which is found to contain key information. In addition, this part also includes a optimal policy investigation, which considers the reaction function of central bank. The nal part of this thesis considers more recent advances that have been applied to DSGE models for the South African economy. It includes an example of a nonlinear model that is estimated with the aid of a particle lter, which is then used for forecasting purposes. The forecasting results of both linear and nonlinear versions of the model are then compared with the results from various Vector Autoregression (VAR) and Bayesian VAR models. / AFRIKAANSE OPSOMMING: Hierdie proefskrif oorweeg die gebruik van Dinamiese Stogastiese Algemene Ewewig (Engels: Dynamic Stochastic General Equilibrium (DSGE)) modelle vir die analise van besigheidsiklus gebeure in die Suid Afrikaanse makroekonomie. Dit bestaan uit vier aparte dog onderling verwante dele wat in « logiese ontwikkeling vorm. Die eerste deel motiveer die gebruik van dié modelle en daarna word die teoretiese onderbou van die modelle daargestel. Die teoretiese onderbou word aangevul met gedetaileerde stappe van die a eiding van die verhoudings wat gebruik word om « model vir « klein oop ekonomie saam te stel. Die tweede deel oorweeg die eienskappe van Suid Afrikaanse makroekonomiese data wat relevant is vir « ekonometriese model in hierdie konteks. Dit sluit « bespreking in van die veranderlikes wat vir so « model gebruik kan word, asook « bespreking van die verskeie metodes wat gebruik kan word om die besigheidsiklus uit die data te identi seer. Die steekproefgrootte van die data word dan vasgestel, ná die moontlikheid van strukturele onderbrekings van tendens in die eerste en tweede momente van die data ondersoek is met behulp van verskeie enkel en meervoudige-veranderlike tegnieke. Die laaste hoofstuk van dié deel is « studie van verskeie maatstawwe van kern in asie (core in ation), waar « vergelyking getref word tussen die resultate van die volgende metodes toegepas op Suid Afrikaanse data: afgesnede gemiddeldes (trimmed means), dinamiese faktor modelle en verskeie golfvormige onderverdelings (wavelet decompositions). Die derde deel gebruik die datastel, wat in deel twee ontwikkel is, in die passing van « DSGE model wat die tipiese eienskappe van « klein oop ekonomie inkorporeer. Dit sluit « bespreking in van die rol van die wisselkoers in hierdie tipe modelle, en daar word empiries bevind dat die wisselkoers belangrike inligting bevat. Hierdie deel sluit ook « ondersoek in van optimale beleid in terme van die reaksie funksie van die sentrale bank. Die laaste deel van die proefskrif bestudeer die resultate van onlangse ontwikkellinge in DSGE modelle wat toegepas word op die Suid Afrikaanse ekonomie. Dit sluit « voorbeeld van « nie-liniêre model wat met behulp van « partikel lter (particle lter) geskat word en gebruik word vir vooruitskattings. Die vooruitskattings uit beide die liniêre en nie-liniêre modelle word dan vergelyk met dié verkry uit verskeie Vektor

M.Comm. / This study will quantify the economic impact of the FTA negotiated between SA and the EU. Two simulations are undertaken. The first simulation focus on the bi-lateral elimination of import tariffs between SA and the EU on non-agricultural products (industrial products). The second simulation considers the bi-lateral elimination of import tariffs on non-agricultural and agricultural products between SA and the EU. The quantitative analysis can only handle a limited number of arguments of the FTA. Notably, financial assistance, development, and social and cultural co-operation are examples of issues that will not be dealt with in a quantitative manner in this study. The goal of this study is to undertake an empirical analysis of the free trade agreement (FTA) between South Africa (SA) and the European Union (EU) using an applied equilibrium model.