BOSI Stefano

We consider an overlapping generations economy with altruism towards parents and a long-lived asset that delivers no dividends (pure bubble asset). We explore the role of ascendant altruism on the dynamics properties of equilibrium and rational bubbles in the cases of exogenous and endogenous growths.

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Sustainable development is an attractive topic for economists. In the literature on economic growth and sustainable development, two basic approaches are used in most discussions. The first is to recognize the importance of natural resources as well as the strategies for using these resources for economic development in the context of their depletion. The second is the issue of intergenerational equity in which the needs of present generations can be met without compromising the ability to meet the needs of future generations. My thesis aims to investigate theoretical models of natural resources, economic growth, development, and equity. Chapter 1 examines a two-sector economy with externalities. We study a theoretical model that investigates the relationship between the optimal dynamics of economic growth using renewable resources and environmental quality. In this model, the industrial sector uses intermediate inputs to produce a final consumption good, and another sector, called the exploitation sector, engages in the exploitation of a renewable resource. This resource can be sold directly at an exogenously determined market price, generating an additional source of revenue. We also take into account the negative externalities of the polluting industrial sector on the regeneration capacity of the renewable resource sector. Without the usual convexity or super-modularity, we prove that the economy evolves to increase the net stock gain sometime in the future. This property ensures that in the long run. The economy is very close to a steady state. We also establish the conditions that ensure that the economy converges in the long run. For sustainable development, one of the most difficult problems related to the criteria of the social welfare function is the reconciliation between equality and efficiency. The Axiom of Anonymity states that social order is invariant to information about individual orders. The Pareto axiom dictates that if at least one generation increases its utility, social welfare must improve. However, no SWF satisfies both the anonymity and Pareto axioms. To overcome this difficulty, some authors propose several approaches to mitigate these axioms. Consequently, many criteria have been introduced, such as: dominance, weak dominance, weak pareto, monotonicity, etc. In the second chapter of my thesis, we revisited some properties of a SWF in the literature, taking into account the continuity of this SWF under different topologies. Moreover, we propose the notions of weak and strong non-dictatorship of the present and future in the spirit of Chichilniski, and provide a detailed description of the parameters characterizing the two non-dictatorships. In chapter 3, we study an inter-temporal optimization problem using a criterion that is a combination of the Ramsey and Rawls criteria. A detailed description of the behavior of the economy over time is provided.[...] The last chapter develops a theoretical model to access the determinants of the efficiency of the Special Economic Zone and the conditions for its implementation. The results of this study show that there is a threshold such that for all initial economies of a country above this level, it will be optimal to invest in new technologies. Moreover, several factors including the price of technology capital, the wage of highly skilled labor, the initial income of the economy, and total factor productivity in the SEZ sector endogenously determine this threshold.

We show that both real indeterminacy and asset price bubble may appear in an infinite-horizon exchange economy with infinitely lived agents and an imperfect financial market. We clarify how the asset structure and heterogeneity (in terms of preferences and endowments) affect the existence and the dynamics of asset price bubbles as well as the equilibrium indeterminacy. Moreover, this paper bridges the literature on bubbles in models with infinitely lived agents and that in overlapping generations models (Tirole, 1985).

In the first two chapters, we study the optimal contract problem in the presence of risk and ambiguity in the context of an optimal control problem. Ambiguity is modeled according to Klibanoff et al. (2005). Our approach generalizes the analyses performed so far by considering the insurance contract as a pair of a premium and an indemnity function to be solved simultaneously. We prove the existence of an optimal contract in the most general case where all agents can be simultaneously averse to ambiguity and risk, which includes all the cases previously considered. We characterize not only the risk sharing but also the ambiguity sharing rule between the contracting parties. In the case of unilateral ambiguity aversion, we show that a direct franchise policy cannot be an optimal insurance contract. Instead, under the assumption that conditional densities can be ranked according to the monotonic likelihood ratio, a contract with vanishing deductibles is optimal, a result that is consistent with Gollier (2014). In particular, the implemented methodology complements Raviv's (1979) analysis for the pure risk case with a risk-neutral insurer, showing that an upper limit coverage cannot be an optimum. This result is robust to ambiguity neutrality.In the third chapter, I examined the impact of risk and ambiguity on optimal investment in human and physical capital using the two-period Ben-Porath (1967) model. Uncertainty (both in the sense of risk and ambiguity) is introduced to human capital accumulation in two ways. When uncertainty is about the rate of depreciation of human capital (uncertain obsolescence of skills), I found that the optimal investment in human capital always increases regardless of whether physical capital is present. This response to uncertainty in a household represents typical self-insurance behavior. In contrast, when the uncertainty is about the efficiency of human capital accumulation, the optimal investment in human capital decreases among households with constant relative risk aversion less than one. This response to uncertainty is typical of a household that views investment as an asset with a risky return instead of insurance.The final chapter (relatively independent of the previous chapters) examines an important issue in growth theory: the role of renewable resources and externalities in the economy. The introduction of a regenerative function (of a natural resource) that is non-concave with respect to one of the arguments makes the problem non-convex. As a consequence, we can no longer use traditional dynamic programming techniques. By attacking this problem, we propose a new method to study a two-sector economy in the presence of externalities. In this case, we introduce the concept of "net stock gain", which is a notion similar to the "net investment gain" introduced by Kamihigashi et al. (2007). In the absence of the usual convex or supermodular properties, we prove that the economy evolves to increase the net stock gain and establish the conditions ensuring the convergence of the economy in the long run. This approach can be applied to similar problems posed above, or be extended to the analysis of multi-sector economies in general.

The recent COVID-19 crisis has revealed the urgent need to study the impact of an infectious disease on market economies and provide adequate policy recommendations. In this regard, we consider here the SIS hypothesis in dynamic general equilibrium models with and without capital accumulation, and we compute the efficient lockdown of altruistic agents. We find that the zero lockdown is efficient if agents are selfish, while a positive lockdown is recommended beyond a critical level of altruism. Moreover, the lockdown intensity increases in the degree of altruism. Our robust analytical results are illustrated by numerical simulations, which show, in particular, that the optimal lockdown never trespasses 60% and that eradication is not always optimal.

Biologists point out that biodiversity loss contributes to promote the transmission of diseases. In epidemiology, this phenomenon is known as dilution effect. Our paper aims to introduce this effect in an economic model where the spread of an infectious disease is considered. More precisely, we embed a SIS model into a Ramsey model (1928) where a pollution externality coming from production affects the evolution of biodiversity. Biodiversity is assimilated to a renewable resource and affects the infectivity of the disease (dilution effect). A green tax is levied on production at the firm level to finance depollution according to a balanced budget rule. In the long run, a disease-free and an endemic regime are possible. We focus only on the second case and we find that the magnitude of the dilution effect determines the number of steady states. When the dilution effect remains low, there are two cases depending on the environmental impact of production: (1) a low impact implies two steady states with high and low biodiversity respectively. (2) a large impact rules out any steady state. Conversely, when the dilution effect becomes high, a (unique) steady state always exists: a strong dilution effect works as a buffer and prevents the human pressure from being lethal for biodiversity in the long run. Moreover, under a low dilution effect, a higher green tax rate always impairs biodiversity at the low steady state, while this green paradox is over under a high dilution effect. In the short run, we show that a limit cycle can arise around the high biodiversity steady state when the dilution effect is low. Surprisingly, the limit cycle is preserved under a high dilution effect. In other words, even if a strong dilution effect preserves the biodiversity in the long run and prevents the economy from the green paradox, it does not shelter the economy from the occurrence of biodiversity fluctuations.

We consider a growth model à la Lucas (1988), where human capital has an additional positive effect on social welfare through the quality of individual health and education. Considering a simple example with isoe-lastic technology and preferences, we show that, differently from Lucas' contribution, the BGP is optimal only in the specific case in which consumption and human capital have equal weight in total utility. In general, the BGP fails to be optimal. Indeed, when the weight of consumption exceeds that of human capital, the household chooses to spend all her time working from a critical date on. As a result, if individuals do not appreciate enough human capital, then they fix a ceiling level of human capital. On the contrary, the working time decreases to zero when the weight of human capital exceeds that of consumption. On methodologi-cal ground, very interestingly, we obtain a strictly positive transversality condition. Furthermore, we compute the explicit optimal trajectories for human capital, labor supply and consumption demand.

Predictive medicine is renewing therapeutic practices. It is being deployed, in particular, thanks to the massive acquisition of biological, behavioral and sociological data, making it possible to establish predictions on the basis of genetic and environmental information. These predictive approaches for health are also at the heart of current research in animals and plants, with the common objective of promoting resistance to pathogens and environmental stresses while reducing the use of antibiotics, phytopharmaceuticals, fertilizers and water, in order to promote the ecological transition in agriculture. In a scientific and socio-economic context where health research is still largely conducted in silos, there is an emerging desire to break down the barriers between different themes. The One Health initiative, which aims to combine research in human health and animal health, in relation to the environment, is emblematic of this approach. The objectives of the seminar were to exchange information between biologists, lawyers, ethicists and economists on the approaches and new knowledge that contribute to the development of strategies for prediction, diagnosis, prevention and decision-making. The ambition of the seminar was to integrate into the discussion the issues and research in animal and plant health, in a shared perspective of global health. The seminar was organized within the framework of the PREDICT strategic research initiative, supported by the Life Sciences Department and the Maison des Sciences de l'Homme Paris-Saclay. PREDICT is part of a long-term prospective vision on predictive approaches for health and offers an original space for reflection on ethics, law and economics between the communities of breeding, plant production and medicine.

Pollution, carrying capacity and the Allee effect.

In this article, we embed a model of disease spread into a Ramsey model. A stock of pollution, viewed as a productive externality, affects both the disease transmission and the consumption demand. An eco-friendly government levies a proportional Pigouvian tax on production to depollute. We show the coexistence of two steady states in the long run: a disease-free and an endemic steady state. At the endemic steady state, a higher green-tax rate always reduces the pollution level. In the short run, we show the existence of limit cycles (through a Hopf bifurcation) as well as more complex dynamics of codimension two (a Gavrilov-Guckenheimer bifurcation). We complete the study with a numerical illustration of these bifurcations and a new facet of the Green Paradox: a higher tax rate can allow more scope for cycles by lowering the critical aversion to pollution and, thus, contribute to destabilization of the economy and promotion of the intergenerational inequalities.

We build a dynamic general equilibrium model with heterogeneous producers and financial frictions (collateral constraints and incompleteness). First, we provide a characterization to check whether a sequence is an equilibrium or not. Second, we study the effects of financial imperfections on output and land prices. Third, we develop a theory of valuation of land by introducing the notion of endogenous land dividends (or yields) and different concepts of land-price bubbles. Some examples of bubbles are provided in economies with and without short-sales.

Recent empirical contributions highlight the negative impact of pollution on labor supply. This relationship is explained by two mechanisms: first, pollution modifies agents’ work–leisure trade‐off as it deteriorates their working conditions (incentive effect). and second, a polluted environment is likely to generate more frequent epidemic outbreaks and to affect agents’ immune systems (health effect).

We consider an overlapping generations model a la Diamond (1965) with two additional ingredients: altruism and an asset (or land) bringing non-stationary positive dividends (or fruits). We study the global dynamics of capital stocks and asset values as well as the interplay between them. Asset price bubbles are also investigated. (C) 2018 Elsevier B.V. All rights reserved.

In this paper, we aim to model the impact of human activities on the wildlife habitat in a general equilibrium framework by embedding the Levins model (1969) of metapopulation dynamics into a Ramsey model (1928) with a pollution externality. In the long run, as in Levins (1969), two steady states coexist: a zero one with mass extinction and another one with positive wildlife when the migration rate of the metapopulation exceeds the rate of extinction. A green tax always increases the wildlife and lowers the consumption demand. It is welfare improving if and only if agents overweight the wildlife. In the short run, we show that a sufficiently negative effect of wildlife habitat on consumption demand can lead to the emergence of a limit cycle near the positive steady state through a Hopf bifurcation. We show also that the negative pollution effect on wildlife habitat works as a destabilizing force in the economy by promoting limit cycles.

We consider a multi-sector infinite-horizon general equilibrium model. The issues of equilibrium existence, efficiency, and bubble emergence are addressed. We show how different assets give rise to different rational bubbles. We also point out that efficient bubbly equilibria may exist.

This paper considers rational land and housing bubbles in an infinite-horizon general equilibrium model. Their demands rest on two different grounds: the land is an input to produce while the house may be consumed. Our work differs from the existing literature in two respects. First, dividends on both these long-lived assets are endogenous and their sequences are computed. Second, we introduce and study different concepts of bubbles, including individual and strong bubbles.

The goal of this paper is to determine the exchange rates consistent with an equilibrium in the international assets and goods markets. We present a wealth model of a two-country economy where financial assets and goods are traded. We consider the case where the agents are risk neutral, a very common assumption in finance in order to have explicit solutions for prices, and, in particular, in international finance for exchange rates using the non-null Pareto optima. We show that the Pareto optima in the international assets and goods markets are found to coincide with the net trade allocations. More notably, under a no-arbitrage condition in the assets markets, we can define an exchange rates system for which PPP holds. We provide conditions to have a non-null Pareto optimum to compute the exchange rates. We give an example with a non-null Pareto optimum associated with the determination of the exchange rate. © 2017 Elsevier B.V.

In this paper, we study the relationship between the Laffer curve and the green paradox in the context of a Ramsey model with endogenous labor supply in which pollution increases consumer demand (through a compensation effect). We find that—in the long run—the conditions under which a Laffer curve and a green paradox emerge are mutually exclusive. Indeed, the Laffer curve exists under a weak compensation effect, while the green paradox requires a strong effect. Also, we find that, in the short run, limit cycles may arise in the presence of a Laffer curve, while they never occur under a green paradox.

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We consider a multi-sector infinite-horizon general equilibrium model. Asset supply is endogenous. The issues of equilibrium existence, efficiency, and bubble emergence are addressed. We show how different assets give rise to very different rational bubbles. We also point out that efficient bubbly equilibria may exist.

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Since Heal (Explorations in natural resource economics. The Johns Hopkins University Press for Resources for the Future, Baltimore, 1982), there is a theoretical consensus about the occurrence of limit cycles (through a Hopf bifurcation) under a positive effect of pollution on consumption demand (compensation effect) and about the impossibility under a negative effect (distaste effect). However, recent empirical evidence advocates for the relevance of distaste effects. Our paper challenges the conventional view on the theoretical ground and reconciles theory and evidence. The environmental Kuznets curve (EKC) (pollution first increases in the capital level then decreases) plays the main role. Indeed, the standard case à la Heal (limit cycles only under a compensation effect) only works along the upward-sloping branch of the curve while the opposite (limit cycles only under a distaste effect) holds along the downward-sloping branch. Welfare effects of taxation also change according to the slope of the EKC.

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This paper considers rational land and housing bubbles in an infinite-horizon general equilibrium model. Their demands rest on two different grounds: the land is an input to produce while the house may be consumed. Our work differs from the existing literature in two respects. First, dividends on both these long-lived assets are endogenous and their sequences are computed. Second, we introduce and study different concepts of bubbles, including individual and strong bubbles.

We investigate the effects of collateral and monetary policy on economic growth within a Ramsey equilibrium model where agents have different discount factors. Introducing liquidity constraints in segmented markets where (poor) impatient agents without collateral have limited access to credit, we study their implications in terms of welfare and business cycles (based on deterministic cycles through bifurcations and self-fulfilling prophecies). We find that an accommodative monetary policy may be growth-enhancing and welfare-improving (through the inequality reduction) while making unpleasant fluctuations more likely. Conversely, a regulation reinforcing the role of collateral and tempering the financial market imperfections may stimulate the economic growth while pursuing the goal of stabilization. © 2016 Elsevier Inc.

In this paper, we consider a two-period consumption model with many financial assets. In the spirit of Hart, consumers purchase financial assets in period 0 and consume in period 1. We differ from Hart by considering that each agent is a country. We provide conditions for the existence of an equilibrium in both international financial assets and goods markets. First, we introduce a weaker notion of Uncovered Interest (rate) Parity (UIP) called Weak Uncovered Interest (rate) Parity (WUIP), and we show its equivalence to the no-arbitrage condition in the international financial markets. Second, we introduce the concept of common no arbitrage and we show its equivalence to UIP. These results bridge concepts of no arbitrage in general equilibrium theory and financial microeconomics and of interest parity in international financial macroeconomics. In a multi-country model with many currencies and only one good, we introduce a country-specific conversion rate which transforms the returns on assets valued in local currency into units of physical good. We the define also the exchange rates between currencies of different countries. The UIP condition is required for the existence of an equilibrium in both international financial assets and goods markets and for the existence of the Law of One Price.

We investigate the effects of collateral and monetary policy on economic growth within a Ramsey equilibrium model where agents have different discount factors. Introducing liquidity constraints in segmented markets where (poor) impatient agents without collateral have limited access to credit, we study their implications in terms of welfare and business cycles (based on deterministic cycles through bifurcations and self-fulfilling prophecies). We find that an accommodative monetary policy may be growth-enhancing and welfare-improving (through the inequality reduction) while making unpleasant fluctuations more likely. Conversely, a regulation reinforcing the role of collateral and tempering the financial market imperfections may stimulate the economic growth while pursuing the goal of stabilization.

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Recent empirical contributions have observed a significant negative impact of pollution on labor supply. These impacts have been largely ignored in the theoretical literature, which has focused on the effects of pollution on consumption demand. In this paper we study the short- and long-run effects of pollution in a Ramsey model where pollution and labor supply are non-separable arguments in households' preferences. We determine sufficient conditions for the existence and uniqueness of a long-term equilibrium and we show how large (negative) effects of pollution on labor supply may promote macroeconomic volatility (deterministic cycles near the steady state) through a flip bifurcation. © IAET.

We investigate the effects of collaterals and monetary policy on growth rate dynamics in a Ramsey economy where agents have heterogeneous discount factors. We focus on the existence of business-cycle fluctuations based on self-fulfilling prophecies and on the occurrence of deterministic cycles through bifurcations. We introduce liquidity constraints in segmented markets where impatient (poor) agents without collaterals have limited access to credit. We find that an expansionary monetary policy may promote economic growth while making endogenous fluctuations more likely. Conversely, a regulation reinforcing the role of collaterals and reducing the financial market imperfections may enhance the economic growth and stabilize the economy.

We study the existence of equilibrium and rational bubbles in a Ramsey model with heterogeneous agents, borrowing constraints and endogenous labor. Applying a Kakutani's fixed-point theorem, we prove the existence of equilibrium in a time-truncated bounded economy. A common argument shows this solution to be an equilibrium for any unbounded economy with the same fundamentals. Taking the limit of a sequence of truncated economies, we eventually obtain the existence of equilibrium in the Ramsey model. In the second part of the paper, we address the issue of rational bubbles and we prove that they never occur in a productive economy à la Ramsey.

We consider a general equilibrium model with heterogeneous agents, borrowing constraints, and exogenous labor supply. First, the existence of intertemporal equilibrium is proved even if the aggregate capitals are not uniformly bounded above and the production functions are not time invariant. Second, (i) we call by physical capital bubble a situation in which the fundamental value of physical capital is lower than its price, (ii) we say that the interest rates are low if the sum of interest rates is finite. We show that physical capital bubble is equivalent to a situation with low interest rates. Last, we prove that with linear technologies, every intertemporal equilibrium is efficient. Moreover, there is a room for both efficiency and bubble.

We study the existence of equilibrium and rational bubbles in a Ramsey model with heterogeneous agents, borrowing constraints and endogenous labor. Applying Kakutani’s fixed-point theorem, we prove the existence of equilibrium in a time-truncated bounded economy. A common argument shows this solution to be an equilibrium for any unbounded economy with the same fundamentals. Taking the limit of a sequence of truncated economies, we eventually obtain the existence of equilibrium in the Ramsey model. In the second part of the paper, we address the issue of rational bubbles and we prove that they never occur in a productive economy à la Ramsey.

We study the existence of equilibrium and rational bubbles in a Ramsey model with heterogeneous agents, borrowing constraints and endogenous labor. Applying a nonstandard fixed-point theorem by Gale and Mas-Colell's (1975), we prove the existence of equilibrium in a time-truncated bounded economy. A common argument shows this solution to be an equilibrium for any unbounded economy with the same fundamentals. Taking the limit of a sequence of truncated economies, we eventually obtain the existence of equilibrium in the Ramsey model. In the second part of the paper, we address the issue of rational bubbles and we prove that they never occur in a productive economy à la Ramsey.

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On the one hand, the adoption of polluting technologies can enhance the factor productivity. on the other hand, pollution lowers the stock of human capital by weakening physical and mental performances, and short-ening the life expectancy at the end. To capture the impact of pollution on economic growth, we compute the optimal policy in an endogenous growth model `a la Lucas (1988) and we study the effects of pollution in the short and the long run.

Since Zhang's paper (1999), a growing number of academic contributions have focused on exploring the channels through which pollution can be the source of endogenous economic cycles. We believe that this line of research is of great importance to the public policy maker because it reconciles his or her short-term imperatives with the long-term imperatives of environmental preservation. For this reason, this thesis proposes to explore new channels through which pollution can induce the appearance of endogenous economic cycles. Chapters 1, 2 and 3 are based on recent empirical results arguing that pollution negatively affects labor productivity and labor supply. In these chapters, we show that such pollution effects can lead to the appearance of business cycles, both deterministic and stochastic, in the vicinity of the stationary state.Chapter 4 focuses on the study of the green tax system existing in most OECD countries. In particular, we show that its regressivity with respect to household income can lead to the appearance of sun-spot equilibria.

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In this paper, we consider an OG model with endogenous fertility and pollution externalities. We assume that pollution lowers the productivity. In the long run, under dominant income (substitution) effects, a raise in the cost of rearing children, increases (decreases) consumption and decreases (increases) pollution. In the short run, under dominant income effects, a sufficiently low pollution elasticity of labor productivity promotes deterministic cycles through a Hopf bifurcation jointly with expectations-driven fluctuations. © 2013 University of Venice.

In this paper, we propose a unified approach to understand the fluctuations of a rational bubble. We focus on an overlapping generations exchange economy where each household makes a portfolio choice between money, held because of a liquidity constraint, and another asset with no fundamental value. We show the existence of equilibria where the second asset takes a positive value as a pure rational bubble. There may exist endogenous cycles and bubble fluctuations driven by the volatility of agents' expectations. An expansionary monetary policy can shelter the economy from these endogenous fluctuations, but this positive effect is counterbalanced by a welfare loss according to the Friedman critique: there is a trade-off between the stability and the stationary welfare target. Eventually, we consider a temporary bubble on real balances as an alternative source of self-fulfilling cycles.

In this thesis, we study the effect of market imperfections on macroeconomic stability in the standard Ramsey and OLG models. To carry out this objective, we use the method of local dynamics analysis introduced by Grandmont, Pintus and De Vilder (1998). The imperfections we use are externalities in consumption, imperfections in the credit market, the presence of a progressive tax on wage income and the existence of transaction costs associated with capital accumulation.

The objective of this thesis is twofold. First, we analyze the interaction between monetary and fiscal policy in a non-Ricardian framework where monetary policy is constrained by the positivity of nominal interest rates. Second, we study the implications of public debt on macroeconomic aggregates.

Based on the endogenous cycle theory, this doctoral thesis studies the issue of macroeconomic instability and endogenous fluctuations in three distinct economies: I) with external effects in consumption in a Ramsey model. II) with externalities in leisure in a nested generations model. and III) with credit market imperfections in a monetary endogenous growth model.

This thesis is devoted to the analysis of the international circulation of capital flows, this last term being understood in a broad sense. Thus, we are interested in: i) the dynamics of financial capital flows, balance of payments and exchange rate in industrialized countries, but also ii) migration flows - that is, human capital flows - from poor regions to developed countries, as well as immigration policies.The first part of this thesis analyzes the dynamics of the current account and the developments affecting the accumulation of external debt. Specifically, we study the situation of industrialized countries with particularly high levels of external debt. Although based on the case of a small and a large open economy in an industrialized world, our approach also allows us to describe some adjustment episodes in emerging countries.In recent years, the flow of human capital from emerging and developing countries to the industrial world has increased significantly. In recent years, the flow of human capital from emerging and developing countries to the industrial world has increased significantly. Indeed, as the IMF has pointed out, the aging of the population in rich countries continues, increasing the pressure for immigration. The importance of the current debate on immigration policy has drawn our attention to the dynamics of human capital flows from poor countries to the industrial world. The second part of this thesis therefore focuses on immigration and the implications for immigration policies in destination countries.