Showing papers by "Robert E. Lucas published in 1984"

Money and Interest in Cash-In-Advance Economy

Abstract: In this paper we analyze an aggregative general equilibrimi model in which the use of money is motivated by a cash-in-advance constraint, applied to purchases of a subset of consumption goods. The system is subject to both real and monetary shocks, which are economy-wide and observed by all. We develop methods for verifying the existence of, characterizing, and explicitly calculating equilibria. A main result of the analysis is that current money growth affects the current real allocation only insofar as it affects expectations about future money growth, i.e., only through its value as a signal.(This abstract was borrowed from another version of this item.)

Motivations to remit.

Abstract: Despite the important role played by migrants remittances no systematic theory of remittance behavior exists and surprisingly little statistical evidence on determinants of remittances has appeared. This paper presents several hypotheses with rrespect to motivations to remit. These range from pure altruism to remittance in the migrants self-interest. However a far richer array of predictions emerges from a model of tempered altruism or enlightened self-interest in which remittances are 1 element in a self-enforcing intertemporal implicit contract between migrant and home. In outlining these hypotheses testable implications are emphasized. These are explored in relation to data from Botswana. In that context the pure altruism model is rejected. Evidence consistent with certain predictions of an enlightened self-interest model is discussed. The paper closes with some thoughts on dualistic theories o development when mutually beneficial understandings between urban migrants and rural homes prevail. (authors)

An Empirical Test of the Infant Industry Argument: Comment

Abstract: Anne Krueger and Baran Tuncer (1982) present some interesting results on rates of effective protection and of productivity growth for various sectors of the Turkish economy. From these measures, the authors "develop an empirical test for the validity of the infant industry argument" (p. 1149). Being perhaps the first attempt to test directly the commonly cited infant industry grounds for protection, the paper by Krueger and Tuncer is especially valuable. Clearly, the approach is readily applicable in other contexts for further testing but, before so doing, it seems worth pursuing certain implications of that test a little more precisely. The test proposed by Krueger-Tuncer for the validity of the infant industry argument is founded on the premise that "a necessary (but not sufficient) condition is that costs in (temporarily) assisted or protected industries should have fallen over time more rapidly than costs in nonprotected or less-protected industries" (p. 1144). "The test is simple and straightforward: input per unit of output must fall more rapidly in more protected industries if there is to be any rationale for infant industry protection. In the Turkish case, there was no such tendency over the period covered" (p. 1149). But is this a sufficient test of the necessary conditions? The case for infant industry assistance is derived either from an externality associated with learning-by-others-doing or learningby-own-doing combined with a capital market failure. For the instance of within industry learning, this is commonly modelled by inserting the integral of past output as an argument in the production function, which may be written for industry i at time t: