Showing papers in "Economist-netherlands in 1974"
TL;DR: In this article, the authors examined the demand for money (broadly defined) in the Netherlands and found an income elasticity of 0.85, a price elasticity close to 1 and a negative correlation between the demand function and the cyclical indicator.
Abstract: This study examines the demand for money (broadly defined) in the Netherlands. The basic model assumes the long run demand for money to depend upon expected real income and prices, the rate of interest and a cyclical indicator. The actual money balances approach equilibrium with an exponentially distributed lag. The model is estimated with seasonally adjusted quarterly data covering the period 1952: I-1971:IV. We found an income elasticity of 0.85 and an interest elasticity of −0.20, a price elasticity close to 1 and a negative correlation between the demand for money and the cyclical indicator. We also found some statistical evidence for the hypothesis that the demand function is stable over time.
22 citations
TL;DR: In this article, the relationship between short-term capital flows and monetary policy was examined in the light of a new theoretical approach of the forward exchange market, and it was shown that monetary policy, central banks' intervention on the foreign exchange market and direct controls on capital movements can still have some efficiency in the struggle against inflation, either of the domestic or the imported type.
Abstract: This paper re-examines the relationships between short term capital flows and monetary policy, in the light of a new theoretical approach of the forward exchange market. They contend that the traditional forward exchange market theory is a misleading one as it fails to give all the importance it deserves to the distinction between covered and uncovered exchange transactions and to the actual role of the ‘arbitrageurs.’ As a consequence of this analysis, they demonstrate that the problem of monetary management in an open economy must be dealt with in a way different from what has been usual, and they conclude that monetary policy, central banks' intervention on the foreign exchange market and direct controls on capital movements can still have some efficiency in the struggle against inflation, either of the ‘domestic’ or the ‘imported’ type.
13 citations
TL;DR: In this paper, a determinate and operational framework for the analysis of the oligopolistic firm's and industry's price-output equilibrium is proposed, which incorporates the multiobjective nature of the firm's decisionmaking, and draws upon nonlinear programming and parametric programming theory.
Abstract: This paper propounds a determinate and operational framework for the analysis of the oligopolistic firm's and industry's price-output equilibrium. It emphasizes the implicit collusion and restrained rivalry in the realistic market structure revealed by empirical investigators, and thereby takes a different route from the traditional Cournot-Stackelberg and game-theoretic approaches. It incorporates the multiobjective nature of the firm's decisionmaking, and draws upon nonlinear programming and parametric programming theory to offer a flexible framework to accommodate a wide variety of behavior patterns in such industries. Several simple examples employing fictional data are used to illustrate the models.
12 citations
TL;DR: In this paper, the behavior of the banking system is described by a required reserves identity and by the demand for excess reserves, borrowed reserves and net foreign assets, and the main instruments of monetary policy under the direct control of the central bank are explicitly included.
Abstract: This econometric model is on an annual basis and has been estimated for the period 1953–1969 using the two-stages least-squares method. All behavioral equations are based on a partial adjustment mechanism. The behavior of the public is expressed by the demand for currency, demand deposits and time-and-savings deposits. The behavior of the banking system is described by a required reserves identity and by the demand for excess reserves, borrowed reserves and net foreign assets. The main instruments of monetary policy under the direct control of the central bank are explicitly included in the analysis. Some impact multipliers and elasticities are shown.
12 citations
TL;DR: In this article, a statistical study of Swedish imports of selected consumers goods after the establishment of EFTA indicates that these assumptions hold true for non-selling intensive commodities, but not for selling intensive commodities.
Abstract: We may assume the more a firm has traded previously with a particular party, or a particular country, the lower the costs of market information will be. When a firm starts to trade with a new country, we may further assume that the greater the cultural distance is between this country and its own country, the larger the information costs will be. A statistical study of the Swedish imports of selected consumers goods after the establishment of EFTA indicates that these assumptions hold true for non-selling intensive commodities, but not for selling intensive commodities.
6 citations
TL;DR: In this article, the authors assume that the policy-maker does not know his preference function but constructs its relevant parts in a communication process with his adviser, and under some further assumptions, any such vector may be attained in principle.
Abstract: In an input-output framework, income distribution among classes depends on final demand. Traditionally, it has been assumed that the policy-maker selects a distribution vector maximizing his preference function, and it has been attempted to determine this function by an interview. Here, we assume that the policy-maker does not know his preference function but constructs its relevant parts in a communication process with his adviser. This process converges to a (classwise) Pareto-optimal distribution vector and under some further assumptions, any such vector may be attained in principle. Colombian data are used for illustration.
6 citations
TL;DR: In this article, a hedonic, or constant-quality, price index for the Dutch car market over the period 1950-72 was constructed by linking a series of year-to-year indices, and it was found that relative car prices have been reduced by about half over the twenty-two year period.
Abstract: A hedonic, or constant-quality, price index is constructed for the Dutch car market over the period 1950–72. Quality changes are evaluated by relating car prices to various characteristics in two cross-section analyses, and both the choice of variables - horsepower and weight - and the form of the relation confirm Griliches' analysis of American data. A price index is then constructed by linking a series of year-to-year indices, and it is found that relative car prices have been reduced by about half over the twenty-two year period. Both in the cross-section study and in the price index the analysis is confined to a limited number of car models with major shares of the market.
5 citations
TL;DR: In this article, Hicks explores Neo-Austrian capital theory and discusses the path of balanced growth with reduced form equations, and the paths of non-balanced growth with a three-stage dynamic model.
Abstract: InCapital and Time Hicks explores Neo-Austrian capital theory. It is shown here that this approach is a special case of the more general method of treating fixed capital as introduced by Von Neumann. In the Neo-Austrian model the path of balanced growth is analysed with reduced form equations. The second part of this article discusses paths of non-balanced growth. If the steady state is disturbed by the introduction of a superior technique Hicks needs a three-stage dynamic model for a full description of subsequent developments. Special attention is given to the Full Employment path.
3 citations
TL;DR: In this paper, the interdependence of twenty-one variables relating to the issue of the over-all public debt (central and local authorities) is tested against the development of the trade cycle, the over all budget, interest rates and the capital market.
Abstract: Over the period 1953-1971 the interdependence of twenty-one variables relating to the issue of the over-all public debt (central and local authorities) is tested against the development of the trade cycle, the over-all budget, interest rates and the capital market. Debt management was constrained by pro-cyclically large budget deficits and a tight capital market in periods of excess demand. In times of slack in the economy and an easy capital market, deficits were relatively small. Efforts to use debt management more activily as an instrument of monetary policy would appear to depend largely on a less pro-cyclical budgetary development.
3 citations
TL;DR: The concluding installment of a series which surveys a number of fundamental production tenets is presented in this paper, which examines and compares the properties of several production models which result from alternative pairings of the progress and substitutability assumptions discussed in part 1.
Abstract: This paper is the concluding installment of a series which surveys a number of fundamental production tenets. This examines and hence compares the properties of several production models which result from alternative pairings of the progress and substitutability assumptions discussed in part 1. Part I appeared in a recent issue ofDe Economist.
3 citations
TL;DR: Exchange-rate union in the EEC would involve member countries surrendering a key instrument of economic policy, which is unlikely to find acceptance in the foreseeable future, because of the inadequacy on the one hand of substitute instruments (control of wages and prices; mobility of factors of production; regional policy) and on the other hand of compensating benefits as mentioned in this paper.
Abstract: Exchange-rate union in the EEC would involve member countries surrendering a key instrument of economic policy. This is unlikely to find acceptance in the foreseeable future, because of the inadequacy on the one hand of substitute instruments (control of wages and prices; mobility of factors of production; regional policy) and on the other hand of compensating benefits (elimination of intra-European exchange risk and currency speculation; reduced costs of money-changing; greater immunity to US monetary conditions). The world currency situation points the way to a looser form of monetary association, a European currency bloc not committed to exchange-rate unification internally.
TL;DR: In this article, a method for estimating the parameters of a utility function from the estimated values of the parameter of the demand functions derived from them is presented, based on principal component analysis (PCA).
Abstract: The paper begins with a discussion of the possibility of estimating the parameters of a utility function from the estimated values of the parameters of the demand functions derived from them. The cases of the Klein-Rubin and Quadratic utility functions are analysed in detail. Next, from the assumptions of utility optimization, a method is derived for estimating the parameters of linear and logarithmic utility functions. This method is based on Principal Component Analysis. The method is applied to a sample of 9 countries in all levels of development. It is verified that the results obtained agree with accepted notions about the rankings of goods and services according to preferences.
TL;DR: In this article, a model of portfolio behavior is developed, based on the assumption that the distribution of a portfolio over different countries is determined by the general level of returns and costs of investments in those countries.
Abstract: A model of portfolio behaviour is developed, based on the assumption that the distribution of a portfolio over different countries is determined by the general level of returns and costs of investments in those countries. From the model an isocapital exports line is derived. With the help of this line it is shown under which circumstances ‘perverse’ capital movements will occur. The model implies that only temporary compensating operations on the domestic money and capital markets may be sufficient to make a domestic monetary policy effective.
TL;DR: The need for reserves under various degrees of exchange rate flexibility is discussed in this paper, where it is argued that there is a strong case for the retention of some reserves by the monetary authorities.
Abstract: The need for reserves under various degrees of exchange rate flexibility is discussed. In line with current thinking it is held that the need for reserves is generally smaller under conditions of limited exchange rate flexibility than under stable exchange rates. Contrary to the widespread belief that there is no need for holding reserves under freely floating exchange rates, it is argued that as long as there is a distinct possibility that freely floating rates will involve adjustment costs there is a strong case for the retention of some reserves by the monetary authorities.
TL;DR: Kalecki as discussed by the authors introduced the degree of monopoly into the macrodynamic model and proposed a theory of distribution that was independent of the neo-classical tradition, even if it lacked a comprehensively formulated theory of market behaviour and was in some respects deficient in dealing with the question of investment decisions.
Abstract: Kalecki scored a breakthrough by introducing the ‘degree of monopoly’ into his macrodynamic model. He offered a theory of distribution that was independent of the neo-classical tradition. He introduced a promising alternative theory of distribution, even if it lacked a comprehensively formulated theory of market behaviour and was in some respects deficient in dealing with the question of investment decisions. To build a realistic theory of distribution, Kalecki offered an explanation of how prices in fact are formed by mark-ups on prime costs. This use of mark-ups to cover overheads is very important. Though it entails monopoly power it is not synonymous with it.
TL;DR: This paper showed that an aggregate supply of output which is perfectly elastic at some price level cannot be derived from the interaction of the demand for and supply of labor in a competitive market even when the labor supply conditions are Keynesian in nature -e.g., rigid money wage rates.
Abstract: When they are treating the case of an economy operating at less than full employment macro theorists commonly assume that the aggregate supply function for output is perfectly elastic with respect to the price level. In this paper we demonstrate that an aggregate supply of output which is perfectly elastic at some price level cannot be derived from the interaction of the demand for and supply of labor in a competitive market even when the labor supply conditions are Keynesian in nature - e.g., rigid money wage rates.
TL;DR: In this article, the core of the Walras vision is restated as simply and as succinctly as possible, and the authors observe the centennial by restating the core.
Abstract: The purpose of the article is to observe the Walras centennial by restating as simply and as succinctly as possible the core of the Walras vision: considerm outputs,n inputs, and s households. Industry demands inputs and supplies outputs; households demand outputs and supply inputs. Define equilibrium demand, supply, and relative price in all resulting, purely competitive, markets as a system of equations sufficiently complete to determine the value of the variables. In restating the core, the article offers nothing original beyond simplicity and succinctness.