We study optimal monetary and fiscal policies in a New Keynesian model with heterogeneous agents, incomplete markets, nominal rigidities. Our approach uses small‐noise expansions Fréchet derivatives to approximate equilibria quickly efficiently. Responses of aggregate shocks differ qualitatively from what they would be corresponding representative agent economy are an order magnitude larger. A motive provide insurance that arises heterogeneity markets outweighs price stabilization motives.

▪ Abstract For years economists have urged policy makers to use market-based approaches such as cap-and-trade programs or emission taxes control pollution. The sulfur dioxide (SO 2 ) allowance market created by Title IV of the 1990 U.S. Clean Air Act Amendments represents first real test wisdom economists’ advice. Subsequent urban and regional applications nitrogen oxides (NO x trading took shape in 1990s United States, culminating a second large experiment emissions eastern States that...

<i>For 20 years acid rain in the Adirondack Park has been a central issue debate about clean air regulation. Based on contingent valuation survey of New York residents, our study quantifies total economic value expected ecological improvements park from forthcoming policies. Our preferred estimates mean household willingness to pay range $48 $107 annually, which imply statewide benefits ranging $336 million $749 annually. Alternative assumptions changes yield up $1.1 billion. The instrument...

Abstract A Ramsey planner chooses a distorting tax on labor and manages portfolio of securities in an economy with incomplete markets. We develop method that uses second order approximations policies to obtain formulas for conditional unconditional moments government debt taxes include means variances the invariant distribution as well speeds mean reversion. The asymptotic planner's minimizes measure fiscal risk. analytic expressions approximate apply them data primary deficit, aggregate...

In developing countries, the rapid proliferation of informal firms – low-technology unlicensed micro-enterprises is having significant environmental impacts. Yet management authorities typically ignore such firms. This paper estimates annual net benefits (benefits minus costs) controlling particulate emissions from a collection brick kilns in Ciudad Juárez, Mexico and two city's leading formal industrial polluters. We find that kiln are substantial tens millions dollars exceed those for...

There is a broad consensus on the need for high-quality public health education and research to tackle world's many challenges. Public are delivered by variety of institutions operating very different models, which collectively can be called schools health. Given importance systems, it surprising how little has been done assess role in contributing population In particular, notable there strengths weaknesses models that have evolved over last 100 years. Thus, historical perspective crucial....

This paper develops and parameterizes an overarching analytical framework to estimate the welfare effects of energy efficiency standards applied automobiles electricity-using durables. We also compare with sectoral economywide pricing policies. The model captures a wide range externalities preexisting policies, it allows for possible misperceptions - market failures that cause underinvestment in efficiency. Automobile fuel economy are not part first-best policy reduce gasoline: taxes always...

We develop a perturbational technique to approximate equilibria of wide class discrete-time dynamic stochastic general equilibrium heterogeneous-agent models with complex state spaces, including multi-dimensional distributions endogenous variables. show that approximating policy functions and process governs the distributional any order is equivalent solving small systems linear equations characterize values certain directional derivatives. analytically derive coefficients these they satisfy...

The Clean Air Act establishes New Source Review (NSR) programs that apply to construction or modification of major stationary sources. In 2002 and 2003, EPA revised its rules narrow NSR's coverage renovations. Congress mandated a National Research Council study the revisions' impacts. study, we used an electricity-sector model explore possible effects equipment replacement provision (ERP), principal NSR change directed at power plants. We find that, assuming implementation Interstate Rule...

The use of cap‐and‐trade to regulate air pollution promises achieve environmental goals at lower cost than traditional prescriptive approaches. Cap‐and‐trade has been applied various pollutants including sulphur dioxide, nitrogen oxides and volatile organic compounds in the United States carbon dioxide (CO 2 ) European Union. This corresponds what is likely become most expensive undertaking history – effort reduce heating planet. However, efficacy a policy for CO depends large part on design...

This study estimates the economic value of an increase in ecosystem services attributable to reduced acidification expected from more stringent air pollution policy. By integrating a detailed biogeochemical model that projects future ecological recovery with methods measure preferences for specific improvements, we estimate benefits new policies Southern Appalachian ecosystem. Our results indicate these generate aggregate about $3.7 billion, or $16 per year household region. The provides...