CHAINED CREDIT CONTRACTS AND FINANCIAL ACCELERATORS

Sufficiently high net worth of financial intermediaries (FIs) is considered a necessary condition for financial and macroeconomic stability. In this paper, we explore why the net worth of FIs is important as compared to that of nonfinancial firms using a dynamic general equilibrium model, in which both FIs and nonfinancial firms rely on costly external debt. We find that an exogenous disruption of the FIs' net worth has a greater aggregate impact than does the same‐sized disruption of the nonfinancial firms' net worth. The key reason is that the net worth of the FIs in the United States is small. (JEL E22, E44, G21)     

Introduction to the Special Issues on Societal Metabolism: Blending New Insights from Complex System Thinking with Old Insights from Biophysical Analyses of the Economic Process

Population and Environment -     

Multiple-Scale Integrated Assessments of Societal Metabolism: Integrating Biophysical and Economic Representations Across Scales

The crucial challenge for integrated analyses of socioeconomic systems is keeping coherence in their multidimensional representation. Our approach describes the hierarchical structure of socioeconomic systems using the profile of allocation of human activity over a set of compartments defined at different hierarchical levels (e.g., whole countries, economic sectors, individual households). Compartments are characterized in terms of intensive variables (intensity of both exosomatic energy flows and added value flows per unit of human activity) and the extensive variable Total Human Activity population. In this way, relations of congruence across hierarchical levels can be used to link non-equivalent analyses. That is, changes in demographic variables, economic variables, technical coefficients, indices of environmental loading, institutional settings, and social aspirations are no longer independent of each-other even if described within different scientific disciplines.     

Societal Metabolism and Multiple-Scale Integrated Assessment: Empirical Validation and Examples of Application

This paper presents empirical data to validate two points. (1) An integrated analysis of societal metabolism bridges an economic view of changes in socioeconomic systems with a biophysical representation of them. To obtain this check, it compares a biophysical indicator of development BEP with 24 traditional indicators of material economic development. The comparison covers a sample of 107 countries of the world, comprising more than 90% of the total world population (year 1993). (2) The concept of societal metabolism is useful to make biophysical analysts aware of constraints implied by economic viability and to make economic analysts aware of constraints implied by biophysical viability. To prove this point three practical examples of misunderstanding in the field of sustainability analysis are discussed.     

WHAT'S BEHIND THE FIGURES? QUANTIFYING THE CROSS‐COUNTRY EXPORTER PRODUCTIVITY GAP

We present a simple framework that allows us to examine the cross‐country exporter productivity gap without accessing confidential firm‐level data. This gap depends on the three readily available statistics: the productivity gap between two countries; the export participation rates; and export premia. This gap holds irrespective of the distribution underlying firm productivity and irrespective of the presence of fixed costs. Under specific conditions, allocative efficiency may affect the exporter productivity gap. The empirical analysis globally validates this exercise. (JEL F1, D24)