Marc-Alexandre Sénégas

LEARNING THE OPTIMAL BUFFER-STOCK CONSUMPTION RULE OF CARROLL

This article questions the rather pessimistic conclusions of Allen and Carroll (2001) about the ability of consumer to learn the optimal buer-stock based consumption rule. To this aim, we develop an agent based model where alternative learning schemes can be compared in terms of the consumption behaviour that they yield. We show that neither purely adaptive learning, nor social learning based on imitation can ensure satisfactory consumption behaviours. By contrast, if the agents can form adaptive expectations, based on an evolving individual mental model, their behaviour becomes much more interesting in terms of its regularity, and its ability to improve performance (which is as a clear manifestation of learning). Our results indicate that assumptions on bounded rationality, and on adaptive expectations are perfectly compatible with sound and realistic economic behaviour, which, in some cases, can even converge to the optimal solution. This framework may therefore be used to develop macroeconomic models with adaptive dynamics. JEL classification: E21, D91, D83, D84,

Bilateral trade, colonial heritage and common currency arrangements: An Oceanian perspective

We reassess the trade impact of common currency arrangements – the Rose effect – on the basis of new empirical evidence stemming from the Oceanian Island Countries. In particular, we investigate how the conjunction of a common colonial heritage and membership in a common currency arrangement can impact bilateral trade. To do this, we use different specifications of the gravity equation over an original panel dataset covering the period from 1980 to 2009. Our results first show that the trade impact of common currency arrangements is much more prominent and significant for country pairs that share a common colonial heritage than for country pairs with distinct former colonizers. Second, while a common colonial heritage does significantly and positively affect trade, whether the underlying country pair is in a common currency arrangement or not, the pro-trade effect of a common colonial heritage is nonetheless enhanced by the existence of such a common currency arrangement. These results suggest, more generally, that further steps towards monetary integration in the zone could not be contemplated without taking historical factors into account.