Narrow Results

As countries grapple with the aftermath of climate-related disasters, the disruptions they inflict on domestic consumption ripple through the fabric of income and price level shocks. The income shock emanates from the adverse effects of such disasters on economic agents, leading to both wage and asset income losses. On the other hand, the destruction of productive capacity and the disruption of supply chains by climatic disasters generate a price level shock. To delve deeper into these channels, this paper builds a novel climate economy model using nonlinear model predictive control. Moreover, using time-series analysis for Bangladesh, the study uncovers compelling evidence of the existence of income and price channels through which climatic disasters impact consumption where the price effect has appeared stronger than the income effect. The findings suggest that policymakers should simultaneously prioritize income-generating and price-supporting initiatives after climate-related disasters to achieve a rapid and sustainable consumption recovery to match or surpass the predisaster level.

This paper estimates how land expropriation affects household consumption and savings rate using a nationally representative household data from China. We argue that land expropriation is likely to be random across households within the same village. We find that land expropriation has positive and statistically significant effects on per capita household consumption and savings rate. The effects on consumption of durable goods and on savings rate, however, weaken and become insignificant over time.

We empirically investigate distributions of individual consumption expenditure for four commodity categories conditional on fixed income levels. The data stems from the Family Expenditure Survey carried out annually in the United Kingdom. We use graphical techniques to test for normality and lognormality of these distributions. While prevailing economic theory does not predict any structure for these distributions, we find that in at least three commodity categories individual consumption expenditure conditional on a fixed income level is lognormally distributed.

The article presents a dynamic model of exchange, production, and consumption. In a dynamic world, complicated predictions often have to be made. Thus, in this article, the classical exchange model is expanded with a dynamic model specifying the intermediate states toward a static equilibrium, which may or may not be reached. A price mechanism was necessary to develop in order to describe these changes over time. The model is illustrated with two examples of the emergence of division of labor. The robustness of the dynamic model is tested with sensitivity analysis.

The article formulates a dynamic mathematical model where arbitrarily many players produce, consume, exchange, loan, and deposit arbitrarily many goods over time to maximize utility. Consuming goods constitutes a benefit, and producing, exporting, and loaning away goods constitute a cost. Utilities are benefits minus costs, which depend on the exchange ratios and bargaining functions. Three-way exchange occurs when one player acquires, through exchange, one good from another player with the sole purpose of using this good to exchange against the desired good from a third player. Such a triple handshake is not merely a set of double handshakes since the player assigns no interest to the first good in his benefit function. Cognitive and organization costs increase dramatically for higher order exchanges. An exchange theory accounting for media of exchange follows from simple generalization of two-way exchange. The examples of r-way exchange are the triangle trade between Africa, the USA, and England in the 17th and 18th centuries, the hypothetical hypercycle involving RNAs as players and enzymes as goods, and reaction–diffusion processes. The emergence of exchange, and the role of trading agents are discussed. We simulate an example where two-way exchange gives zero production and zero utility, while three-way exchange causes considerable production and positive utility. Maximum utility for each player is reached when exchanges of the same order as the number of players in society are allowed. The article merges micro theory and macro theory within the social, natural, and physical sciences.

The recent Malaysian attempt to introduce the Goods and Services Tax (GST) was thwarted by public concerns about: (i) its impact on the price level; (ii) its regressivity; (iii) the possibility of the rate increases once the tax is in place; and finally, the disincentive large revenues from the GST would be in addressing the underlying causes of wasteful public expenditures and leakages. The experiences of countries that have implemented a similar tax are surveyed to assess these concerns. It is concluded that within the Malaysian context, all the concerns are well-founded and measures are therefore suggested to ameliorate them.

Disaster research has been concerned with the role of adverse environmental conditions vis-à-vis adverse social conditions in determining food access during catastrophes. This paper investigates the issue, and presents household-data from flood-devastated Bangladesh to argue that, while hunger is clearly associated with exposure to disaster conditions, prior deficits in resources (given the education, occupation and ownership of productive assets of household-members) are more significant in determining the risk of consumption failure during catastrophes. The paper finds that, the risk-generating factors are often interrelated, but, their relative contributions vary across households having varying locations of natural hazards and in consumption distribution.

Global debt will keep growth subdued over the next decade. Falling work force will move labor intensive manufacturing out of China and into South Asia. Investment, not consumption, will be the main driver of growth, which primarily will take place in Asia and probably also Africa. New institutional frameworks such as AIIB emerge, but they will operate inside the existing global order. Falling albeit still tangible Chinese saving combined with fading interest for US treasury bonds will pose an awkward dilemma for US monetary policy. Under such circumstances current savings–investment balances will continue to rule the global economy.

The objective of this paper is to investigate the impacts of urbanization on influencing the rural–urban consumption disparity in China, a research gap which has not been bridged so far. Adopting a provincial dataset from 1997 to 2014, a generalized method of moments (GMM) estimator is employed to reveal the impact of urbanization on the ratio of per capita consumption expenditure of the urban households to the rural households, along with other socioeconomic variables. Empirical results show salient relationship between increasing urbanization ratio and declining rural–urban inequality. Significant impact of education costs on increasing the rural–urban inequality is also observed. Other factors that increase the disparity include foreign investment and gross regional product (GRP) indices. Industrial structure, costs of housing and health care are insignificant factors. The results of this study help in understanding China’s new urbanization development strategy in a better way.

Since 2010, China’s miraculous growth has come to a halt and has shown steady deceleration. To re-accelerate economic growth, stimulating domestic consumption is a crucial way with fighting poverty as the key step. This paper attempts to explore the impact of poverty on resident consumption in China over the last four decades. Based on provincial data, we first simulate income distribution at the individual level and provide moderate poverty profiles at the provincial level. The empirical analyses are then conducted to gauge the poverty impacts using the estimated poverty index. Results show that (1) moderate poverty has decreased sharply in China, with the best achievement in Beijing, Shanghai and Guangdong; (2) moderate poverty exerts a significantly negative impact on resident consumption; and (3) when poverty increases, resident consumption on household equipment decreases the most, while resident consumption on food, transportation, and telecommunication decreases the least.

In complete financial markets, given a particular market variable, which could be finite dimensional (e.g., a price vector of a collection of stocks) or infinite dimensional (e.g., a price trajectory of some security over some period of time), the unique optimal strategy of consumption and investment in European claims contingent on that variable is obtained from two kinds of preference structure. Several examples are given to illustrate the optimality of the strategy. Results obtained in this paper are an extension of Jankunas [4].

Empowering nutrition via biotechnology

Feeding Asia’s children

Is soy consumption linked to breast cancer?

Preventative mastectomy on the rise.

We study an optimal consumption and investment problem in a possibly incomplete market with general, not necessarily convex, stochastic constraints. We provide explicit solutions for investors with exponential, logarithmic as well as power utility and show that they are unique if the constraints are convex. Our approach is based on martingale methods that rely on results on the existence and uniqueness of solutions to BSDEs with drivers of quadratic growth.

Recent years have seen attempts to design and implement environmental accounts for a number of countries, in response to perceived inadequacies in the existing national income accounts. This has led to much discussion of the feasibility and desirability of different approaches. This paper discusses three key issues: what use is envisaged for environmental accounts? What type of development are they intended to promote? And what view of consumption do they incorporate? The paper concludes that there is a strong case for developing environmental accounts in physical units as a tool of analysis, but that the case for developing accounts in money terms, on the other hand, largely with the aim of arriving at a "Green National Income", is quite weak. If the objective is to monitor progress towards sustainable welfare, the development of a set of social and environmental indicators would be preferable.

This paper uses samples of household data from Chinese Family Panel Studies (CFPS) and Eurosystem Household Finance and Consumption Survey (HFCS) to estimate the consumption effects of both housing and financial assets. Our results show that components of household wealth have different impacts on consumption. The estimated housing asset elasticity of consumption is larger than financial asset elasticity of consumption both in China and Euro countries. By analyzing the wealth effect of housing in different age groups, we found that the wealth effect of housing and financial assets on consumption is larger for elderly families than for younger families in the Eurozone, but opposite result is obtained in China.

This paper develops a three-country model that incorporates international relocation of firms and explores the macroeconomic effects of deregulation in the services sector by each country. A novel feature of our model is that the international relocation of firms responds to exchange rate movements caused by deregulation shocks in the services sector. From this analysis, it is found that a deregulation shock in a country always benefits the country in spite of the outflows of firms, while it can be detrimental to other two countries, in terms of relative consumption levels.

The lack of comprehensive empirical narratives about the effects of income and price differentials, as well as possible distributional asymmetries on consumption in G7 countries, compelled this study by using both ARDL and Quantile ARDL models. NARDL results indicate that positive shocks in income have significant and positive effects on consumption in all countries. Moreover, evidence from the Quantile ARDL model indicates that positive and significant impacts were momentary except at the 95th quantile of consumption distributions in Canada. Furthermore, price variations negatively affected consumption in all G7 countries and across all distributions, with evidence of panic buying in Italy, the US and at the 5th quantile in Japan. Meanwhile, there is evidence of asymmetric effects from income and price variations on consumption in all G7 countries, whereas the influence of income variations on consumption is heterogeneous in Canada. Moreover, the asymmetric effects of price differentials were consistent across all the distributions in all the countries. Overall, to ensure consumption optimization and by extension, economic growth, differentiated policies to respond to income and price variations at all times are of the essence.

National and international investors are exposed to risk, stemming from volatile asset prices and inflation uncertainty. However investors can enter futures markets to hedge against these risks. The paper develops a dynamic hedging model, where the evolution of asset price, price level and futures price and hence real wealth is stochastic. For a risk averse investor, optimal dynamic consumption and hedging strategy are derived and discussed.

Various empirical studies have been conducted. However, these studies fail to examine the asymmetric effect of income and price across different quantiles of consumption in the emerging 7 countries. This study extends the existing literature using a novel approach called the quantile ARDL model along with the standard nonlinear ARDL model. Findings based on the nonlinear ARDL model indicate that positive shocks in income positively and significantly affect consumption in the short- and long-run. On the other hand, negative shocks in income do not significantly affect consumption which, therefore, suggests an asymmetric effect of income on consumption. In addition, the quantile ARDL estimates indicate that income positively affects consumption across all quantiles of the consumption except the 95th quantile. Moreover, the quantile ARDL estimates indicate that price variations negatively affect consumption across all emerging 7 countries. These estimates suggest that devising policies without considering the asymmetric effect may lead to unfavorable consequences.