In contrast to the literature, we argue that the urbanization-GDP growth relationship as characterized by their elasticity evolve in three stages. When the level of per capita income increases, the elasticity should be first low and then very high and then low again. Utilizing a panel data set of 38 country and 50 years covering 1975 to 2004 panel data set, we support this theory. We further find that China’s urbanization process has followed this pattern and is now in the second stage, although at each stage, China’s urbanization ratio is below comparable economies. By implication, China’s urbanization is poised to take off now. 1

Kleindorfer and participants of the 2006 INFORMS Annual Meeting for helpful comments. Any remaining errors are our own.

In this paper, we model self-assessed health, and quantify its uncertainty through a stochastic approach based on the framework from Lee and Carter (1992). We combine explanatory and extrapolative approaches by including macroeconomic factors (GDP and unemployment rate), and life-style related factors (alcohol and tobacco consumption) into the stochastic model for health dynamics. This leads to a significant improvement in the model fit, where a large part of the time trend in health can be attributed to the trends in the observed variables. These observed variables affect separate age groups differently. The backtesting analysis suggests that this approach is successful in terms of forecasting, especially when combining the latent variable and macroeconomic fluctuations. As one of the applications, this paper estimates and predicts life expectancy (LE) and healthy life expectancy (HLE), and quantifies (healthy) longevity risk. Keywords: Health stochastic process, Lee-Carter model, Lee-Carter model with observed variables, Health forecast 1

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, advance purchase discounts, versioning of information goods, and damaged goods. We derive necessary and sufficient conditions for price discrimination to be profitable that generalize existing results in the literature. Specifically, we show that when a continuum of product qualities are feasible, price

This paper studies the social desirability of agglomeration and the efficiency arguments for regional policy in a simple, analytically solvable ‘new economic geography ’ model with two trade integrating regions. The location pattern emerging as market equilibrium is Ω-shaped, featuring dispersion of firms both at high and low trade costs and stable equilibria with partial agglomeration of firms in addition to core periphery equilibria for intermediate levels of trade costs. Our central finding is that the market equilibrium is characterised by over-agglomeration for high trade costs and under-agglomeration for low trade costs. For an intermediate level of trade costs, the market equilibrium yields the socially optimal degree of agglomeration. An important implication of this result is that, on efficiency grounds, regional policy should foster the dispersion of firms for a range of high trade costs only, but agglomeration for a range of low trade costs. Hence, regional policies, such as those pursued by the European Union (which are aimed at fostering dispersion in general), is counterproductive when trade integration is deep enough

Sweden has a long tradition in constructing historical national accounts. Recently, the fifth reconstruction was completed after a long period of time1 which means that there are comprehensive accounts for the 19th and 20th centuries. Thereby, well founded analyses of long-term patterns of change and transformation can be carried out. In this paper such an analysis is made. First, a short overview is provided of earlier efforts to construct historical national accounts and comparisons are made between the new series and some previous ones. After that, effects of the deflation techniques, i.e. double deflation, are analysed. The new deflators are compared with those resulting from single deflation, i.e. output deflators. A periodisation of the Swedish economic change is then analysed using modern time series analysis. Previous work on Swedish historical national accounts The first construction of Swedish historical national product series was initiated by Gösta Bagge, professor of economics in Stockholm, and published in the 1930s. The work on national income was performed by a team headed by Erik Lindahl, also professor of economics. Lindahl elaborated the theoretical framework and wrote the theoretical parts of the volumes, where the outcome of the project was published. The empirical work was, to a large extent, performed by Einar Dahlgren, a very diligent statistician. Karin Kock, later professor

Economic theory assumes rational agents should only care about real values or changes. However, different types of empirical studies document now the prevalence of money illusion understood as the tendency of people to not correctly take into account the variation of prices. In this study, we investigate individual sensitivity to money illusion using a buy and sell experimental game to control inflationary and deflationary shocks as well as individual information on prices. We observe and measure two distinct manifestations of money illusion based on sell/buy decisions and perception of gains or losses. Decisions and perceptions are more often biased than consistent with an absence of money illusion. Moreover, both types of money illusion are more frequent in inflationary than deflationary shocks.

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