In this paper we discuss the problem of how to divide the total cost of a round trip along several institutes among the institutes visited. We introduce two types of cooperative games—fixed-route traveling salesman games and traveling salesman games—as a tool to attack this problem. Under very mild conditions we prove that fixed-route traveling salesman games have non-empty cores if the fixed route is a solution of the classical traveling salesman problem. Core elements provide us with fair cost allocations. A traveling salesman game may have an empty core, even if the cost matrix satisfies the triangle inequality. In this paper we introduce a class of matrices defining TS-games with non-empty cores.

Traveling salesman games

The nucleolus of a TU game is a solution concept whose main attraction is that it always resides in any nonempty ɛ-core. In this paper we generalize the nucleolus to an arbitrary pair (Π,F), where Π is a topological space andF is a finite set of real continuous functions whose domain is Π. For such pairs we also introduce the “least core” concept. We then characterize the nucleolus forclasses of such pairs by means of a set of axioms, one of which requires that it resides in the least core. It turns out that different classes require different axiomatic characterizations. One of the classes consists of TU-games in which several coalitions may be nonpermissible and, moreover, the space of imputations is required to be a certain “generalized” core. We call these gamestruncated games. For the class of truncated games, one of the axioms is a new kind ofreduced game property, in which consistency is achieved even if some coalitions leave the game, being promised the nucleolus payoffs. Finally, we extend Kohlberg's characterization of the nucleolus to the class of truncated games.

The general nucleolus and the reduced game property

This paper analyzes the effects of anticipated and unanticipated domestic monetary and fiscal expansions on both the domestic and foreign economies The analysis is based on symmetric behavior, which is not only not an unreasonable first approximation, but also offers significant analytical advantages Specifically, it enables the dynamics of the system to be decoupled into (a) averages and (b) differences of relevant variables Not only does this render the analysis tractable, but it also helps provide economic insight One striking aspect is that the differences, but not the averages, respond to announcements The consequences of this for the dynamic adjustments of the two economies to the various disturbances are discussed at length

Monetary and Fiscal Policy Under Perfect Foresight: A Symmetric Two Country Analysis

This paper studies the stability of price competition in a horizontally differentiated duopoly. The firms' demand is derived from a distribution of consumer preferences. This description of the consumer sector is applicable to a large class of differentiated commodity markets, including spatial competition models. The author shows that there is a (pure) price-setting equilibrium when consumer tastes are sufficiently dispersed. Further conditions on the dispersedness of preferences guarantee uniqueness of the equilibrium. In addition, the author examines the relation between consumer preferences and the competitiveness and efficiency of the equilibrium outcome. Copyright 1992 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association. (This abstract was borrowed from another version of this item.)

Bertrand equilibrium in a differentiated duopoly

Indicators of the sustainability of fiscal policies play an important role in the conduct of the international surveillance of fiscal policies. The construction of these indicators, however, is beset with serious problems. To illustrate, many authors have observed that conventional measures of public debt are potentially misleading indicators of public wealth and the effects of fiscal policy on the intergenerational distribution of resources (see, for example, Blejer and Cheasty (1 99 1 ) and Blanchard et al. (1990)). In particular, policies that do not directly result in an increase in public debt may yield similar effects to the accumulation of public debt in that they impose long-term budgetary costs and require an increase in tax rates or a cut in spending in the future. Examples of these policies include selling public assets, reducing public investments and public loans, and introducing unfunded public pensions. Indicators of fiscal sustainability should measure the long-run costs of these policies in order to avoid unsustainable fiscal policies that erode the stock of public wealth. Most studies that attempt to construct internationally comparable indicators of fiscal sustainability focus on forecasting government spending. The OECD and the IMF, for example, have examined how ageing would affect spending on social security pensions and health care into the next century (see, for example, Heller, Hemming and Konhert (1986) and Hagemann and Nicoletti (1989)). In this paper we focus on two issues that the literature on fiscal sustainability has largely ignored. The first issue concerns the way governments finance social security old-age pensions and the pensions of their own employees (Section 11). The second issue involves the relationship between, on the one hand, supplementary pension saving and, on the other hand, future revenues from the personal income tax (Section 111).

Public debt and pension policy

Financial integration and fiscal policy in interdependent two-sector economies with real and nominal wage rigidity

This paper considers a two-country-two-sector world with tradables and non-tradables, floating exchange rates, perfect capital mobility and sluggish labour markets. The model assumes either nominal or real wage rigidity and either perfect or imperfect substitution between home and foreign-produced tradables. The effects and spillover effects of fiscal and monetary shocks are compared with the standard results from well-known macroeconomic two-country counterparts of the model. The purpose is to establish the degree of robustness of the latter with respect to disaggregation and to gain insight into the sectoral transmissions of the shocks.

Rob de Groof

Papers

Financial integration and fiscal policy in interdependent two-sector economies with real and nominal wage rigidity

Monetary and fiscal policy in interdependent two-sector economies

Twin debt reduction, government policies and interdependence