Why macroeconomics needs experimental evidence

This paper discusses how macroeconomics can and already has begun to make use of controlled experimental methods to address the assumptions and predictions of macroeconomic models as well as to evaluate the impacts of macroeconomic policy interventions. Specific issues addressed include rational expectations and alternatives, intertemporal optimization with an application to household consumption and savings decisions and the efficacy of various monetary policies.

Environmental degradation and indeterminacy of equilibrium selection

<p style='text-indent:20px;'>This paper analyzes an intertemporal optimization problem in which agents derive utility from three goods: leisure, a public environmental good and the consumption of a produced good. The global analysis of the dynamic system generated by the optimization problem shows that global indeterminacy may arise: given the initial values of the state variables, the economy may converge to different steady states, by choosing different initial values of the control variable.</p>

Introduction to Dynamic Macroeconomics

This chapter offers an introduction to the methods and main models used in dynamic macroeconomics. After reviewing key concepts such as lifetime utility maximization and the period-by-period and intertemporal budget constraints, first-order conditions for intertemporal optimization (the Euler equation and the labour-leisure choice) are developed. These methods are applied in developing the workhorse Ramsey model, with discussion of related concepts such as dynamic efficiency and market equilibrium versus the command optimum. An extension of the Ramsey model incorporates adjustment costs in investment and develops the user cost of capital. Furthermore, the Sidrauski model, with its implications for monetary economies, is reviewed. Finally, the discussion turns to another workhorse dynamic model, the overlapping-generations model and its implications. As an application of this model, the properties of various methods of funding social insurance are discussed.

Developments, Trends, and Challenges in Optimization of Ship Energy Systems

A review of developments, trends, and challenges in synthesis, design, and operation optimization of ship energy systems is presented in this article. For better understanding of the context of this review, pertinent terms are defined, including the three levels of optimization: synthesis, design, and operation (SDO). The static and dynamic optimization problems are stated mathematically in single- and multiobjective form. The need for intertemporal optimization is highlighted. The developments in ship energy systems optimization throughout the years is clearly presented by means of journal articles, giving the main characteristics of each article. After the review of what has been done up to now, ideas for future work are given. Further research needs for optimization of ship energy systems are mentioned: further development of methodology for synthesis optimization and SDO optimization, including transients, uncertainty, reliability, and maintenance scheduling. Hints are given for expansion of the system border in order to include aspects belonging to other disciplines, such as electrical and control engineering as well as hull and propulsor optimization, thus, opening a way to the holistic ship optimization.

How Efficient are Decentralized Auction Platforms?

We model a decentralized, dynamic auction market platform in which a continuum of buyers and sellers participate in simultaneous, single-unit auctions each period. Our model accounts for the endogenous entry of agents and the impact of intertemporal optimization on bids. We estimate the structural primitives of our model using Kindle sales on eBay. We find that just over one-third of Kindle auctions on eBay result in an inefficient allocation with deadweight loss amounting to 14% of total possible market surplus. We also find that partial centralization—for example, running half as many 2-unit, uniform-price auctions each day—would eliminate a large fraction of the inefficiency, but yield lower seller revenues. Our results also highlight the importance of understanding platform composition effects—selection of agents into the market—in assessing the implications of market redesign. We also prove that the equilibrium of our model with a continuum of buyers and sellers is an approximate equilibrium of the analogous model with a finite number of agents.