E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal EconomyReturn

The purpose of this model is to measure the impact of localization of new (mostly industrial) enterprises in strategic industrial zone in regional economy. Model deals with multiplication effect of regional consumption expenditures, which is (among others) strongly affecting development of regional economy. For modeling the regional consumption demand or regional consumption expenditures there was used mainly microeconomic approach based on utility and profit maximization. The model is based on several simplifying assumptions for better use in real applications (mainly because of lack of relevant regional data). This model was used in practice for ex-ante evaluation of impact of strategic industrial zone in Cheb but it could be applied widely (after some modifications) for anticipation of regional impacts of demand shocks, regional migration, investments etc.

This paper reviews important approaches to discounting in economic modelling. It summarizes historical approaches and discusses why exponential discounting has been adopted as a widely accepted benchmark. The article then presents hyperbolic discounting as an alternative, while stresses different interpretation of discounting in positive and normative economics. In positive economics, the paper uses recent evidence to show that some observed regularities implied by exponential discounting are counterfactual and we illustrate different implications of the two approaches to discounting using numerical simulations of a stylized model of investment-consump- tion behaviour. It also concerns with applications of discounting in normative models of environmental economics. Many authors claim that exponential discounting, when used for long-term project evaluation, leads to an unfair treatment with generations living in a far future. We construct a model of optimal non-renewable resource exploitation to illustrate different normative implications of exponential and hyperbolic discounting.