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Tho Khiem Nguyen (LUISS) & Natasha Rovo (LUISS)

26 April 2017 at 2:30 PM - 4:30 PM

Room 307b, Campus on Viale Romania, 32

Speaker: Tho Khiem Nguyen & Natasha Rovo, LUISS

Speaker: Tho Khiem Nguyen (LUISS)

Title: Maximization using backward induction for an environmental economic problem

 Abstract: In a simple dynamic model of environmental externalities, the optimization methods of optimal control and Markov feedback dynamic programming are presented and compared numerically. In an one country model, it is first verified that identical solutions are obtained with either methods. However, different solutions are obtained in the multi-country models where Nash equilibria are sought for by means of one or the other method. These two solutions do also differ from the Pareto efficient one, which is identical under either methods. We conclude with comparing the various solution concepts involved.

Speaker: Natasha Rovo (LUISS)

Title: Market Structure and Secular Stagnation
Abstract: In this paper, I address the question on whether the market structure affects the equilibrium level of the real interest rate, defined as the rate consistent with full employment and stable inflation in the long term. I provide an empirical and a theoretical analysis on the link between the markup, as a proxy for the market structure, and the equilibrium interest rate. I uncover some evidence that higher markups are associated with lower real rates and that more market friendly economies display higher interest rates. I propose an OLG model with monopolistic competition to interpret these findings. I focus on the effects on the equilibrium of a change in market structure, both in an exogenous and endogenous markup framework. I show that an increase in the markup puts a downward pressure on the equilibrium interest rate and the economy enters Secular Stagnation. The key transmission channel works through the market for capital.