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In September 2011, a panel of economic experts, comprising five of the world's most distinguished economists, convened at Georgetown University to interview the authors of the eighteen research chapters presented in RethinkHIV. The members of the Georgetown University Expert Panel were:
Professor Ernest Aryeetey, Vice Chancellor, University of Ghana;
Professor Paul Collier, Director, Centre for the Study of African Economies, Oxford University;
Professor Edward Prescott, Arizona State University (Nobel laureate);
Professor Thomas Schelling, University of Maryland (Nobel laureate);
Professor Vernon L. Smith, Chapman University (Nobel laureate).
During the roundtable meeting, the panel appraised the research and engaged with the eighteen sets of authors. This built on the panel's experience over the course of 2011 of examining and reviewing draft versions of the research papers.
The panel was tasked with answering the question:
If we successfully raised an additional $10 billion over the next five years to combat HIV/AIDS in sub-Saharan Africa, how could it best be spent?
In ordering the proposals, the panel was guided predominantly by consideration of economic costs and benefits. The panel agreed that the cost-benefit approach was an indispensable organizing method. In setting priorities, the panel took account of the strengths and weaknesses of the specific cost‐benefit appraisals under review, and gave weight both to the institutional preconditions for success and to the demands of ethical or humanitarian urgency.
ABSTRACT: This paper reviews the role of micro nonconvexities in the study of business cycles. One important nonconvexity arises because an individual can work only one workweek in a given week. The implication of this nonconvexity is that the aggregate intertemporal elasticity of labor supply is large and the principal margin of adjustment is in the number employed – not in the hours per person employed – as observed. The paper also reviews a business cycle model with an occasionally binding capacity constraint. This model better mimics business cycle fluctuations than the standard real business cycle model. Aggregation in the presence of micro nonconvexities is key in the model.
The tool now used to study business cycles is the discipline of quantitative dynamic general equilibrium. In this discipline, given the question or issue at hand, an explicit model economy is written down and the answer to the question determined for that model economy. Theory, the question, and the available statistics dictate the choice of model economy used in the application. The pioneers in applying the discipline of quantitative general equilibrium are Herbert E. Scarf's students Shoven and Whalley (1972). They applied these tools to problems in public finance. Their models are rich in sector detail, but not truly dynamic. Subsequently Auerbach and Kotlikoff (1987), Jorgenson and Yun (1990), and others have made these public finance models dynamic.
A convenient feature of these early structures is a parametric set of excess demand functions that can be easily calibrated using input–output tables and the equilibrium computed using Scarf's algorithm or other solution methods.
In this chapter we study an economy in which there are two technologies for making payments. The first is currency; the second, bank drafts drawn on interest-bearing demand deposits. The interest-bearing asset does not dominate the noninterest-bearing currency because there is a fixed recordkeeping cost incurred whenever a bank draft is used as the means of payment. The steady-state equilibrium is characterized. It is found that the value of the good or (more precisely) package of goods purchased at a given location determines which means of payment is used. Bank drafts are used for large purchases and currency for small purchases.
In the environment studied, the highly centralized Arrow–Debreu competitive equilibrium is impractical, because the number of date-, event-, and location-contingent commodities is so large that the resources required for information collection and processing would be prohibitive. In this sense we follow Brunner and Meltzer (1971) and consider as the chief role of money economizing on costly information collection and processing.
The approach is close in spirit to that of Townsend (1980), who views the payment system as a communication system. It differs in that no effort is made to find the best arrangement. The arrangement studied, however, is sufficiently explicit that one can calibrate the model and then examine the costs and benefits associated with modifying the scheme – say, by imposing reserve requirements or interest-rate ceilings. Upper bounds for the gains that can be realized from alternative systems can be computed.
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