Bertrand Crettez

Time Preference and Labour Migration in an OLG Model with Land and Capital

This paper constructs a two-country migration model in the lines of Galor (1986), in which the world population consists of individuals of two types who have different time preferences. Production uses three inputs: mobile labour, immobile capital and land. It is shown that both countries are necessarily inhabited by agents of both types and exhibit equal density of population and equal interest rate at the steady state equilibrium of the integrated economy. The steady state welfare implications of international labour migration are studied.

Economically rational expectations equilibrium

Abstract At the economically rational expectations equilibrium introduced in this paper, agents choose between costly rational expectations and costless adaptive expectations. We show that the sequence of economically rational expectations equilibria converges to the rational expectations equilibrium, and that all agents will ultimately choose adaptive expectations.

Optimal Monetary Policy, Taxes, and Public Debt in an Intertemporal Equilibrium

This article is devoted to a study of the optimal monetary and fiscal policies within the framework of an overlapping generations model with cash-in-advance constraints. We first characterize the intertemporal equilibrium. Then we show how to decentralize the optimal growth path using available policy instruments (i.e., labor income and capital taxes, public debt, money supply). Between the four instruments: wages and capital taxes, debt and monetary policy, one is redundant among the three last which implies that the Friedman Rule is only a special case. Copyright 2002 by Blackwell Publishing Inc.

Terrorists’ Eradication Versus Perpetual Terror War

We study an infinite-horizon sequential dynamic game where the players are a government and an international terrorist organization. We provide conditions for the existence of equilibria in which the terrorists’ resources are totally destroyed by a government’s strike. Specifically, we study strong eradication equilibria in which the government’s strike annihilates the terrorists’ resources, preventing the terrorists from acting. We also pay attention to weak eradication equilibria in which the terrorists’ resources are destroyed but in which the initial value of the terrorists’ strike is nevertheless positive. We also show the existence of an equilibrium in which war is perpetual between the government and the terrorists. Perpetual war can only coexist with weak eradication equilibria. For these cases, we provide conditions under which the government would be better off in a weak eradication equilibrium.

A theory of the optimal amount of public ownership of land

A major issue in reforming previously planned economies is the creation of assets markets. In this paper, it is argued that the mere characteristics of the assets to be privatized matter. Indeed, private ownership of land. It is the purpose of this paper to provide a theory of such rate. We make use of a two-sectors overlapping generations model economy with land and capital. We find a version of the second welfare theorem : the command optimum can be decentralized using one and only one instrument, i.e. the rate of land publicly held. We call such a rate the optimal rate of public ownership of land.

A NOTE ON LUENBERGER'S ZERO-MAXIMUM PRINCIPLE FOR CORE ALLOCATIONS

In this note, we state a zero-maximum principle for core allocations, a result which was foreseen by Luenberger (1995). We prove a generalization of the first-zero maximum theorem of Luenberger. Roughly said, an allocation is in the core if for every coalition, the sum of individual benefit functions is non-positive. We also provide some partial converses which give a generalization of the second-zero maximum theorem of Luenberger.

An analytic narrative of Caesar’s death: Suicide or not? That is the question:

On the Ides of March, 44 BC, in the Senate House of Pompey in Rome, Julius Caesar was assassinated by conspirators, the most famous of those being Brutus. Are there objectively valid reasons to confirm the possibility of a suicidal wish on the part of Caesar raised by Suetonius? By building and solving a two-player non-cooperative game that models the historical strategic aspects of the relationship between Caesar and Brutus, our article shows that there is no need to subscribe to the suicide thesis to explain Caesar’s death. We formulate our conclusion via the solution concept of mixed-strategy Nash equilibrium.

Optimal growth with investment enhancing labor

We study a non-convex optimal growth problem with investment enhancing labor. We prove that there exists an optimal growth path, that all optimal paths are interior and we provide a condition under which at least one of them is monotonic. We also study the existence and uniqueness of the steady state. We show in particular that a rise in the efficiency of the investment enhancing labor does not necessarily lead to an increase in the steady state value of this labor. Furthermore we provide a complete study of the dynamics of the optimal solution in the special case of a logarithmic utility function and a Cobb–Douglas production function.

Convergence of Legal Rules: Comparing Cooperative and Non-Cooperative Processes

Abstract Legal scholars distinguish two modes of international legal cooperation: minimum legal harmonization and full harmonization (i.e. legal unification). These cooperative choices imply more or less stringent requirements and are opposed to non cooperative, unilateral legal changes. This paper is an attempt to model these alternative modes of legal adjustments and to compare their properties regarding legal convergence. We show that all arrangements can lead to legal uniformity. We also show that decentralized processes can be better than more centralized arrangements.

Vieillissement et inégalités intergéné rationnelles en france

This paper investigates the impact of demographic shocks and budgetary policy on the welfare of all generations. For this purpose, we build a large scale OLG model that captures most crucial variables for the analysis of population shocks conse- quences in France. We introduce life uncertainty (implying precautionary saving) and a bequest motive (stimulating wealth accumulation at old age) so as to repro- duce realistic wealth profiles per age. The microeconomic foundations provide an intertemporal indicator of welfare for each generation. Five policy scenarios are distinguished (indexation of pension through transfer adjustments, imperfect index- ation of transfers on growth in order to keep the tax rate constant, the creation of an implicit fund, increase in the public debt, or increase in the retirement age).