We examine how labor immigration affects public pensions under centralized wage setting. We show that immigration improves the sustainability of pay-as-you-go pensions if and only if total employment declines. This occurs if the labor demand elasticity exceeds the unemployment rate.

We examine how labor immigration affects public pensions under centralized wage setting. We show that immigration improves the sustainability of pay-as-you-go pensions if and only if total employment declines. This occurs if the labor demand elasticity exceeds the unemployment rate.

In order to evaluate the allocational effectiveness of regional policy when harmonizing regional economic conditions firms? preferences play a pivot role. If harmonization hinders risk diversification of the firm, then instead of regional diversification of capital agglomeration of capital...

The present paper makes a contribution to fill in a gap left open by dynamic theory and evolutionary economics as well. While the "closed loop" dynamic theory has explanation power in analyzing evolving economic systems at the price of neglecting the possible occurrence of non anticipated...

This paper analyses a RBC model in continuous time featuring deterministic incremental development of technology and stochastic fundamental inventions arriving according to a Poisson process. Other than in standard RBC models, shocks are uncorrelated, irregular and rather seldom. In two special...

The present paper is concerned with the optimal control of stochastic differential equations, where uncertainty stems from one or more independent Poisson processes. Optimal behavior in such a setup (e.g., optimal consumption) is usually determined by employing the Hamilton-Jacobi-Bellman...

Rare and randomly occurring events are important features of the economic world. In continuous time they can easily be modeled by Poisson processes. Analyzing optimal behavior in such a setup requires the appropriate version of the change of variables formula and the Hamilton-Jacobi-Bellman...

Due to globalization competitive firms face increasing economic opportunities for locating their activities in countries, regions and cities that provide the best business environment for their specific needs. In our study we focus on the impact of economic risk and risk preferences upon...

This paper considers a model of spatial allocation of investment capital under uncertainty. We demonstrate that the spatial concentration of economic activity depends upon properties of risk preferences deeper than risk aversion. The degree of so-called relative prudence unambiguously decides...

Capital accumulation and creative destruction is modeled together with risk-averse households. The novel aspect - risk-averse households - allows to use well-known models not only for analyzing long-run growth as in the literature but also short-run fluctuations. The model remains analytically...