Showing papers on "Consumption (economics) published in 2011"

Identifying Government Spending Shocks: It's all in the Timing*

Abstract: Standard vector autoregression (VAR) identification methods find that government spending raises consumption and real wages; the Ramey–Shapiro narrative approach finds the opposite. I show that a key difference in the approaches is the timing. Both professional forecasts and the narrative approach shocks Granger-cause the VAR shocks, implying that these shocks are missing the timing of the news. Motivated by the importance of measuring anticipations, I use a narrative method to construct richer government spending news variables from 1939 to 2008. The implied government spending multipliers range from 0.6 to 1.2.

Predicted vs. Actual Energy Performance of Non-Domestic Buildings

Abstract: With the increasing demand for more energy efficient buildings, the construction industry is faced with the challenge to ensure that the energy efficiency predicted during the design is realised once a building is in use. There is, however, significant evidence to suggest that buildings are not performing as well as expected and initiatives such as PROBE and CarbonBuzz aim to illustrate the extent of this so called "Performance Gap". This paper discusses the underlying causes of discrepancies between detailed energy modelling predictions and in-use performance of occupied buildings (after the twelve month liability period). Many of the causal factors relate to the use of unrealistic input parameters regarding occupancy behaviour and facilities management in building energy models. In turn, this is associated with the lack of feedback to designers once a building has been constructed and occupied. This paper aims to demonstrate how knowledge acquired from Post-Occupancy Evaluation (POE) can be used to produce more accurate energy performance models. A case study focused specifically on lighting, small power and catering equipment in a high density office building is presented. Results show that by combining monitored data with predictive energy modelling, it was possible to increase the accuracy of the model to within 3% of actual electricity consumption values. Future work will seek to use detailed POE data to develop a set of evidence based benchmarks for energy consumption in office buildings. It is envisioned that these benchmarks will inform designers on the impact of occupancy and management on the actual energy consumption of buildings. Moreover, it should enable the use of more realistic input parameters in energy models, bringing the predicted figures closer to reality.

Overborrowing and Systemic Externalities in the Business Cycle

Abstract: Credit constraints that link a private agent’s debt to market-determined prices embody a credit externality that drives a wedge between competitive and constrained socially optimal equilibria, inducing private agents to \overborrow." The externality arises because agents fail to internalize the price efiects of additional borrowing when the credit constraint binds. We quantify the efiects of this ine‐ciency in a two-sector DSGE model of a small open economy calibrated to emerging markets. The credit externality increases the probability of flnancial crises by a factor of 7 and causes the maximum drop in consumption to increase by 10 percentage points.

The Crisis of Neoliberalism

Abstract: This book examines "the great contraction" of 2007-2010 within the context of the neoliberal globalization that began in the early 1980s. This new phase of capitalism greatly enriched the top 5 percent of Americans, including capitalists and financial managers, but at a significant cost to the country as a whole. Declining domestic investment in manufacturing, unsustainable household debt, rising dependence on imports and financing, and the growth of a fragile and unwieldy global financial structure threaten the strength of the dollar. Unless these trends are reversed, the authors predict, the U.S. economy will face sharp decline. Summarizing a large amount of troubling data, the authors show that manufacturing has declined from 40 percent of GDP to under 10 percent in thirty years. Since consumption drives the American economy and since manufactured goods comprise the largest share of consumer purchases, clearly we will not be able to sustain the accumulating trade deficits. Rather than blame individuals, such as Greenspan or Bernanke, the authors focus on larger forces. Repairing the breach in our economy will require limits on free trade and the free international movement of capital; policies aimed at improving education, research, and infrastructure; reindustrialization; and the taxation of higher incomes.

Risk Matters: The Real Effects of Volatility Shocks

Abstract: We show how changes in the volatility of the real interest rate at which small open emerging economies borrow have an important effect on variables like output, consumption, investment, and hours. We start by documenting the strong evidence of time-varying vola tility in the real interest rates faced by four emerging economies: Argentina, Brazil, Ecuador, and Venezuela. We estimate a stochastic volatility process for real interest rates. Then, we feed this process in a standard small open economy business cycle model. We find that an increase in real interest rate volatility triggers a fall in output, consumption, investment, hours, and debt. (JEL E13, E20, E32, E43, F32, F43, Oil) This paper shows how changes in the volatility of the real interest rate at which emerging economies borrow have a substantial effect on real variables like output, consumption, investment, and hours worked. These effects appear even when the realized real interest rate itself remains constant. We argue that, consequently, the time-varying volatility of real interest rates is an important force behind the distinc tive size and pattern of business cycle fluctuations of emerging economies. To prove our case, this paper makes two points. First, we document the strong evi dence of time-varying volatility in the real interest rates faced by four emerging small open economies: Argentina, Brazil, Ecuador, and Venezuela. We postulate a stochastic volatility process for real interest rates and estimate it using T-bill rates and country spreads with the help of the particle filter and Bayesian methods. We uncover large movements in the volatility of real interest rates and a systematic relation of those movements with output, consumption, and investment. Second, we feed the estimated stochastic volatility process for real interest rates in a standard small open economy business cycle model calibrated to match data from our set of countries. We find that

A dynamic attribute satiation model of variety seeking behavior

Abstract: This paper presents a model of individual consumer choice for separate choice occasions. Contrary to the notion that each choice is essentially independent of its predecessors, dependence is proposed as the key to variety-seeking behavior. As an individual's consumption history evolves, the pattern of attribute accumulations changes, leading to preference for items rich in different attributes at different points in time. The model is operationalized using soft drink consumption diaries, and predicts choices better than a model that ignores choice dependence.

Life cycle assessment of buildings: A review

Abstract: Sustainable development requires methods and tools to measure and compare the environmental impacts of human activities for various products (goods and services). Providing society with goods and services contribute to a wide range of environmental impacts. Environmental impacts include emissions into the environment and the consumption of resources as well as other inventions such as land use etc. In order to create an environmentally-conscious building, the environmental impacts of entire service life must be known. The aim of this study is to review various buildings at different places, whose LCA has been performed and to see that which phase of the life cycle of building and which type of building consumes more energy and have more greenhouse gas (GHG) emissions. It has been observed that operational phase alone contributes more than 50% to GHG emissions and is highest energy consumer (80–85%) which is a matter of concern and cannot be ignored. Now there is a need for some alternative ways to design buildings for a sustainable future.

Understanding change and continuity in residential energy consumption

Abstract: Practice theory has recently emerged within consumer studies as a promising approach that shifts focus from the individual consumer towards the collective aspects of consumption, and from spectacul...

Intertemporal Substitution in Macroeconomics

Abstract: 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 present leisure. The aggregate U. S. data lend no support to this model. The overidentifying restrictions are rejected, and the estimated utility function is often convex. Even when it is concave, the estimates imply that either consumption or leisure is an inferior good.

Exposure to food advertising on television: associations with children's fast food and soft drink consumption and obesity.

Abstract: A B S T R A C T There is insufficient research on the direct effects of food advertising on children’s diet and diet-related health, particularly in non-experimental settings. We employ a nationallyrepresentative sample from the Early Childhood Longitudinal Survey–Kindergarten Cohort (ECLS-K) and the Nielsen Company data on spot television advertising of cereals, fast food restaurants and soft drinks to children across the top 55 designated-market areas to estimate the relation between exposure to food advertising on television and children’s food consumption and body weight. Our results suggest that soft drink and fast food television advertising is associated with increased consumption of soft drinks and fast food among elementary school children (Grade 5). Exposure to 100 incremental TV ads for sugar-sweetened carbonated soft drinks during 2002–2004 was associated with a 9.4% rise in children’s consumption of soft drinks in 2004. The same increase in exposure to fast food advertising was associated with a 1.1% rise in children’s consumption of fast food. There was no detectable link between advertising exposure and average body weight, but fast food advertising was significantly associated with body mass index for overweight and obese children (85th BMI percentile), revealing detectable effects for a vulnerable group of children. Exposure to advertising for calorie-dense nutrient-poor foods may increase overall consumption of unhealthy food categories.

Consumption and saving over the life cycle: how important are consumer durables?

Abstract: In this paper we investigate whether a standard life-cycle model in which households purchase nondurable consumption and consumer durables and face idiosyncratic income and mortality risk as well as endogenous borrowing constraints can account for two key patterns of consumption and asset holdings over the life cycle. First, consumption expenditures on both durable and nondurable goods are hump-shaped. Second, young households keep very few liquid assets and hold most of their wealth in consumer durables. In our model durables play a dual role: they both provide consumption services and act as collateral for loans. A plausibly parameterized version of the model predicts that the interaction of consumer durables and endogenous borrowing constraints induces durables accumulation early in life and higher consumption of nondurables and accumulation of financial assets later in the life cycle, of an order of magnitude consistent with observed data.

Harnessing Windfall Revenues: Optimal Policies for Resource-Rich Developing Economies†

Abstract: A windfall of natural resource revenue (or foreign aid) faces government with choices of how to manage public debt, investment, and the distribution of funds for consumption, particularly if the windfall is both anticipated and temporary. We show that the permanent income hypothesis prescription of an ever-lasting increase in consumption financed by borrowing ahead of the windfall and then accumulating a Sovereign Wealth Fund (SWF) is not optimal for capital-scarce developing economies. Such countries should accumulate public and private capital to accelerate their development and, only if the windfall is large relative to initial foreign debt, is it optimal to build a SWF. The optimal time profile of consumption is biased towards the near future, as compared to the permanent income hypothesis. Outcomes depend on instruments available to government. We study cases where the government can make lump-sum transfers to consumers; where such transfers are impossible so optimal policy involves cutting distortionary taxation in order to raise investment and wages; and where Ricardian consumers can borrow against future revenues, in which case the policy response to possible over-consumption is a high level of investment in infrastructure.

The Case for a Progressive Tax: From Basic Research to Policy Recommendations

Abstract: The fair distribution of the tax burden has long been a central issue in policyhe fair distribution of the tax burden has long been a central issue in policymaking. A large academic literature has developed models of optimal tax making. A large academic literature has developed models of optimal tax theory to cast light on the problem of optimal tax progressivity. In this theory to cast light on the problem of optimal tax progressivity. In this paper, we explore the path from basic research results in optimal tax theory to paper, we explore the path from basic research results in optimal tax theory to formulating policy recommendations. formulating policy recommendations. Models in optimal tax theory typically posit that the tax system should maximize a Models in optimal tax theory typically posit that the tax system should maximize a social welfare function subject to a government budget constraint, taking into account social welfare function subject to a government budget constraint, taking into account that individuals respond to taxes and transfers. Social welfare is larger when resources that individuals respond to taxes and transfers. Social welfare is larger when resources are more equally distributed, but redistributive taxes and transfers can negatively are more equally distributed, but redistributive taxes and transfers can negatively affect incentives to work, save, and earn income in the fi rst place. This creates the clasaffect incentives to work, save, and earn income in the fi rst place. This creates the classical trade-off between equity and effi ciency which is at the core of the optimal income sical trade-off between equity and effi ciency which is at the core of the optimal income tax problem. In general, optimal tax analyses maximize social welfare as a function of tax problem. In general, optimal tax analyses maximize social welfare as a function of individual utilities—the sum of utilities in the utilitarian case. The marginal weight for individual utilities—the sum of utilities in the utilitarian case. The marginal weight for a given person in the social welfare function measures the value of an additional dollar a given person in the social welfare function measures the value of an additional dollar of consumption expressed in terms of public funds. Such welfare weights depend on of consumption expressed in terms of public funds. Such welfare weights depend on the level of redistribution and are decreasing with income whenever society values the level of redistribution and are decreasing with income whenever society values more equality of income. Therefore, optimal income tax theory is fi rst a normative more equality of income. Therefore, optimal income tax theory is fi rst a normative theory that shows how a social welfare objective combines with constraints arising from theory that shows how a social welfare objective combines with constraints arising from limits on resources and behavioral responses to taxation in order to derive specifi c limits on resources and behavioral responses to taxation in order to derive specifi c

Economic and geographic drivers of wildlife consumption in rural Africa.

Abstract: The harvest of wildlife for human consumption is valued at several billion dollars annually and provides an essential source of meat for hundreds of millions of rural people living in poverty. This harvest is also considered among the greatest threats to biodiversity throughout Africa, Asia, and Latin America. Economic development is often proposed as an essential first step to win–win solutions for poverty alleviation and biodiversity conservation by breaking rural reliance on wildlife. However, increases in wealth may accelerate consumption and extend the scale and efficiency of wildlife harvest. Our ability to assess the likelihood of these two contrasting outcomes and to design approaches that simultaneously consider poverty and biodiversity loss is impeded by a weak understanding of the direction and shape of their interaction. Here, we present results of economic and wildlife use surveys conducted in 2,000 households from 96 settlements in Ghana, Cameroon, Tanzania, and Madagascar. We examine the individual and interactive roles of wealth, relative food prices, market access, and opportunity costs of time spent hunting on household rates of wildlife consumption. Despite great differences in biogeographic, social, and economic aspects of our study sites, we found a consistent relationship between wealth and wildlife consumption. Wealthier households consume more bushmeat in settlements nearer urban areas, but the opposite pattern is observed in more isolated settlements. Wildlife hunting and consumption increase when alternative livelihoods collapse, but this safety net is an option only for those people living near harvestable wildlife.

Methodological challenges in using practice theory in consumption research. Examples from a study on handling nutritional contestations of food consumption

Abstract: In this article, we discuss the challenges of analytical translations between practice theory and empirical research methods in consumption research. We argue that a social constructivist interpretation of practice theory can be particularly useful in enabling consumption researchers to carry out empirical studies that are different from mainstream approaches to consumer culture. Such mainstream approaches typically privilege either individual consumer choices or cultural structures outside of the reach of consumers. We highlight two analytical affordances from social constructivist practice theory. The first is to enable consumption researchers to analyse ways of consuming and how these are entangled in webs of social reproductions and changes. The second is to allow consumption researchers to understand ways of consuming as continuous relational accomplishments in intersectings of multiple practices in everyday life. We discuss the methodological implications for data-production and data-analysis from t...