In terms of the log self-reliance rate, that's a decrease of about 0.12 since 2007.
Maximizing with respect to the self-reliance rate μ, μ = 1 + r s ϵ 2 γ − 1 (9).
Thus, an increase in the log of the standard deviation s ϵ of about 0.14 would justify a reduction in the log self-reliance rate of 0.12.
Regardless of whether it was optimal to reduce the log self-reliance rate by 0.12, it happened and that reduction is expected to significantly depress the labor market.
Points to the northwest on the frontier shown in Figure 1 correspond to more social insurance that is, low values for the self-reliance rate μ and points to the southeast correspond to less social insurance.
Assuming for the moment that the optimal self-reliance rate μ was also about 0.56 (the average of late 2007 and late 2009), then the comparative static elasticities in equation (6) are about −0.88 and −0.44, respectively.
The same self-reliance rate reduction could also be justified by a 0.28 increase in the log of the coefficient of absolute risk aversion, or some combination of added variance and added risk aversion.
Holding the effort-disutility parameter constant, the comparative statics for their model's optimal self-reliance rate are (my notation): d ln μ = − 1 − μ 2 d ln s ϵ − 1 − μ d ln r (6).
7Both safety and efficiency measures vary between zero and 1. Safety is (1 + s ϵ )−1 and efficiency is 1 when the self-reliance rate is 1 (no sharing of the imperfect information risks).
Thus having successfully completed its first phase, the project is in its second phase now, with the goal of achieving an electricity self-reliance rate of 20percentthethe minimum figure the city needs in order to prevent a power crisis and perform its basic functions.
In the last month, as insurance rating agencies cut Reliance's rating to very low levels, Reliance has had to sell some subsidiaries whose products, like insurance for corporate directors and officers, can be sold only by companies with relatively high ratings.
