https://macropaperwarehouse.com/authors/lukasz-rachel/Lukasz RachelHugo -- gohugo.ioen-usThu, 01 Jan 2026 00:00:00 +0000https://macropaperwarehouse.com/papers/a-theory-of-price-caps-on-non-renewable-resources/Thu, 01 Jan 2026 00:00:00 +0000https://macropaperwarehouse.com/papers/a-theory-of-price-caps-on-non-renewable-resources/<p>This paper asks what the optimal response of an exhaustible-resource producer is to sanctions in the form of a price cap, and how a sanctioning coalition should set the cap. The motivation is the $60-per-barrel cap on seaborne Russian crude imposed by the G7, EU and Australia in December 2022 (with $100/barrel for high-value and $45/barrel for low-value refined products), whose stated aim was to cut Russian revenue without triggering a global supply shock. The authors (two of whom were involved in designing the policy) argue that static models, frictionless Hotelling models, and truncated-supply-curve intuitions are all inadequate, and build a dynamic structural model.</p>https://macropaperwarehouse.com/papers/an-analytical-model-of-behavior-and-policy-in-an-epidemic/Thu, 01 Jan 2026 00:00:00 +0000https://macropaperwarehouse.com/papers/an-analytical-model-of-behavior-and-policy-in-an-epidemic/<p>This paper builds a tractable, fully analytical version of the workhorse macro-epidemiology (&ldquo;econ-epi&rdquo;) model and uses it to characterize how susceptible individuals behave during a deadly epidemic, how a social planner would have them behave, and the externality that separates the two. The motivation is that prior macro-SIR results came almost entirely from numerical simulation; a closed-form treatment can expose general insights those simulations missed and provide a transparent benchmark for any future epidemic. The model appends the standard Kermack-McKendrick SIR system (susceptible S, infected I, recovered R, deceased D, with transmission rate β, recovery rate γr, death rate γd, and γ := γr + γd) with forward-looking agents who choose an activity level λ ∈ [0,1] that scales transmission via β = βa·λ + βo. The single key modeling departure is LINEAR (rather than convex) costs of mitigation, microfounded by indivisible activity choices in the spirit of Rogerson (1988); this makes the optimal control bang-bang or singular and yields closed-form solutions. Three constants organize the analysis: the herd immunity threshold S̄ := γ/β, the basic reproduction number R0 := 1/S̄, and the infection fatality rate IFR := γd/γ. A central composite statistic is the cost-benefit ratio of mitigation κ := (uW − uL)/(βa·IFR·VSL), where VSL := uW/ρ is the value of statistical life in utility terms.</p>