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Stockman and Dellas (1986) demonstrated that in the presence of complete international asset markets, the relative welfare implications of a small tariffare reversed from standard trade theory. This paper examines the robustness of that result to change in preference parameters and asset market structure. For nearly all values of substitution elasticity and risk aversion, the reversal remains. ...

Modern neoclassical business cycle theories posit that the observed fluctuations in consumption and employment correspond to decisions of an optimizing representative individual. We estimate three first-order conditions that represent three tradeoffs faced by such an optimizing individual. He can trade off present for future consumption, present for future leisure, and present consumption for p...

A major obstacle for the transformation to a low-carbon economy is the risk of a carbon lock-in: fossil fuel-based (“dirty”) technologies dominate the market although their carbon-free (“clean”) alternatives are dynamically more efficient. We study the interaction of learning-by-doing spillovers and the substitution elasticity between the clean and the dirty sector in an intertemporal general e...

We consider a broad class of intertemporal economic problems and characterize the short-run long-run responses demand for good to permanent increase in its market price. Depending on interplay between self-productivity time discounting, we show that dynamic substitution effects can generate price elasticities opposite signs short run long run. (JEL D11, D15, H20, J22, J24)

Abstract The goal of this article is to provide a detailed introduction infinite-horizon investment–consumption problems for agents with preferences described by Epstein–Zin (EZ) stochastic differential utility (SDU). In the setting Black–Scholes–Merton market, we seek describe all parameter combinations that lead well-founded problem in sense not just mathematically well posed, but solution al...

Abstract In this paper we provide the first estimate of intertemporal substitution for leisure in Spain, accounting impact human capital accumulation. This would allow uncovering whether labour supply Spanish workers is affected by capital. Our empirical strategy consists estimating equation with and without capital, what allows to detect hypothetical estimation biases associated omitting To th...