Kevin Reffett

NEW TECHNOLOGY SPILLOVERS INTO THE PAYMENT SYSTEM

In modern economies, multiple means of payment associated with the exchange of goods coexist. This paper examines one such payment system in an economy with endogenous technological change. It consists of money and a costly accounting system that receives spillovers from new technologies. Positive nominal interest rates are shown to produce welfare losses by inducing a reallocation of human capital into the payment system and out of the production of final goods and new knowledge. The former substitution produces level effects on output and the latter produces growth effects. At higher levels of inflation, these marginal effects are seen to be weaker. Copyright 1994 by Royal Economic Society.

Existence and Uniqueness of Equilibrium in Distorted Dynamic Economies with Capital and Labor

In this paper, we provide a set of sufficient conditions under which recursive competitive equilibrium exist and are unique for a large class of distorted dynamic equilibrium models with capital and elastic labor supply. We develop a monotone map approach to the problem. The class of economies for which we are able to obtain our existence result is apparently considerably larger than those considered in previous work. Additionally unlike previous work, we are able to also prove that this equilibrium is unique. We conclude by applying the new results to some important examples of monetary economies often used in applied work.

A Qualitative Approach to Markovian Equilibrium in Infinite Horizon Economies with Capital

Using lattice programming and order theoretic fixpoint theory, we develop a new class of monotone iterative methods that provide a qualitative theory of Markovian equilibrium decision processes for a large class of infinite horizon economies with capital. The class of economies includes models with public policy, valued fiat money, monopolistic competition, production externalities, and various other nonconvexities in the production sets. The results can be adapted to construct symmetric Markov equilibrium in models with many agents and market incompleteness. As the methods are constructive, they provide the foundations for a rigorous analysis of numerical approximation schemes that study extremal Markovian equilibrium. Equilibrium comparative statics results relative to the space of economies are available. Of independent interest, we provide new conditions for preserving complementarity under maximization, and new generalized envelope theorems for nonconcave dynamic programming problems. Our fixed point algorithms are sharp, and are able to distinguish sufficient conditions under which Markovian equilibrium form a complete lattice of Lipschitz continuous, uniformly continuous and semicontinuous monotone functions as well as unique continuously differentiable equilibrium.

Focusing on customer problems to improve service quality

Proposes that service quality can be improved by focusing on customer problems. Describes a problem‐centred research program used to establish the types and pervasiveness of customer problems and to evaluate the effect of each on customer satisfaction. Makes it possible to identifycritical problem areas and to establish service priorities accordingly. Offers recommended guidelines for designing and conducting problem‐centred consumer research.

Real interest rates and endogenous growth in a monetary economy

Abstract In endogenous growth models where the engine of growth is human capital acquired via formal education, inflation taxes may raise or lower real interest rates depending upon whether or not physical and/or human capital are liquidity constrained. Cases are examined.

Exogeneity and forward rate unbiasedness

Recent studies have rejected the forward rate efficiency hypothesis because of a failure to find support for the forward rate unbiasedness condition (FRUC). This condition states that spot and forward rates should be cointegrated with a unit cointegrating vector. These studies have focused on inferences drawn from partial system error-correction approaches that make critical assumptions concerning the exogeneity of forward rates. Taking a full systems approach to estimation without any a priori weak exogeneity assumptions, we find support for FRUC, and that spot rates, not forward rates, are weakly exogenous in the sense of Engle, Hendry, and Richard (1983). The latter finding implies that the rejection of the FRUC in prior research may be due to the incorrect implied exogeneity assumptions.

Trade credit in a monetary economy

Abstract This paper examines the importance of financial and technological stochastic trends in the context of a stochastic, dynamic, general equilibrium monetary economy with multiple means of payment. In contrast to earlier empirical work, we find support for both a long-run substitution condition between money, trade credit, and interest rates as well as a long-run transactions demand for alternative payments media consistent with real business cycle frameworks.

A Constructive Study of Markov Equilibria in Stochastic Games with Strategic Complementarities

We study a class of infinite horizon, discounted stochastic games with strategic complementarities. In our class of games, we prove the existence of a stationary Markov Nash equilibrium, as well as provide methods for constructing this least and greatest equilibrium via a simple successive approximation schemes. We also provide results on computable equilibrium comparative statics relative to ordered perturbations of the space of games. Under stronger assumptions, we prove the stationary Markov Nash equilibrium values form a complete lattice, with least and greatest equilibrium value functions being the uniform limit of approximations starting from pointwise lower and upper bounds.

Existence and uniqueness of equilibrium in nonoptimal unbounded infinite horizon economies

In applied work in macroeconomics and finance, nonoptimal infinite horizon economies are often studied in the the state space is unbounded. Important examples of such economies are single vector growth models with production externalities, valued fiat money, monopolistic competition, and/or distortionary government taxation. Although sufficient conditions for existence and uniqueness of Markovian equilibrium are well known for the compact state space case, no similar sufficient conditions exist for unbounded growth. This paper provides such a set of sufficient conditions, and also present a computational algorithm that will prove asymptotically consistent when computing Markovian equilibrium.

Time consistent Markov policies in dynamic economies with quasi-hyperbolic consumers

We study the question of existence and computation of time-consistent Markov policies of quasi-hyperbolic consumers under a stochastic transition technology in a general class of economies with multidimensional action spaces and uncountable state spaces. Under standard complementarity assumptions on preferences, as well as a mild geometric condition on transition probabilities, we prove existence of time-consistent solutions in Markovian policies, and provide conditions for the existence of continuous and monotone equilibria. We present applications of our methods to habit formation models, environmental policies, and models of consumption under borrowing constraints, and hence show how our methods extend the results obtained by Harris and Laibson (Econometrica 69:935–957, 2001) to a broad class of dynamic economies. We also present a simple successive approximation scheme for computing extremal equilibrium, and provide some results on the existence of monotone equilibrium comparative statics in the model’s deep parameters.