Showing papers in "Research Papers in Economics in 1979"

The Family as an Incomplete Annuities Market

Abstract: A new empirical study of the relation between money, nominal income, prices, and real output in postwar quarterly U.S. data rejects virtually all of the conclusions reached by Families provide individuals with risk sharing opportunities which may not otherwise be available. Within the family there is a degree of trust and a level of information which alleviates three key problems in the provision of insurance by markets open to the general public, namely, moral hazard, adverse selection, and deception. The informational advantages of pooling risk within families must be set against the inability of families to provide complete insurance because of the small size of the risk pooling group. This paper demonstrates how families can provide insurance against uncertain dates of death. Death risk sharing family arrangements effectively constitute an incomplete annuities market. Our analysis indicates that these arrangements even in small families can substitute by more than70% for complete annuities. Given the adverse selection problem and transactions costs in public annuity markets, risk pooling in families may well be preferred to purchasing market annuities. In the absence of organized public markets in annuities, these risk sharing arrangements provide powerful economic incentives for marriage and family formation. The paper suggests that inter-family transfers need have nothing to do with altruistic feelings; rather, they may simply reflect risk sharing behavior of completely selfish family members.(This abstract was borrowed from another version of this item.)(This abstract was borrowed from another version of this item.)(This abstract was borrowed from another version of this item.)(This abstract was borrowed from another version of this item.)(This abstract was borrowed from another version of this item.)(This abstract was borrowed from another version of thi(This abstract was borrowed from another version of this item.)

The Analytics of Uncertainty and Information- An Expository Survey

Abstract: Among the very large number of people who provided comments and suggestions, we would like to thank most especially Fritz Machlup, RobertA. Jones, Mark Perlman, and RichardJ Zeckhauser. Hirshleifer's work on this paper was supported in part by National Science Foundation grant No. SOC75-15697 and by a grant from the Foundation for Research in Economics and Education. Riley's work was supported in part by National Science Foundation grant No. SOC79-{7573.

The commutation matrix: Some properties and applications

Abstract: The commutation matrix $K$ is defined as a square matrix containing only zeroes and ones. Its main properties are that it transforms vecA into vecA', and that it reverses the order of a Kronecker product. An analytic expression for $K$ is given and many further properties are derived. Subsequently, these properties are applied to some problems connected with the normal distribution. The expectation is derived of $\varepsilon' A\varepsilon\cdot\varepsilon' B\varepsilon\cdot\varepsilon'C\varepsilon$, where $\varepsilon \sim N(0, V)$, and $A, B, C$ are symmetric. Further, the expectation and covariance matrix of $x \otimes y$ are found, where $x$ and $y$ are normally distributed dependent variables. Finally, the variance matrix of the (noncentral) Wishart distribution is derived.

Time Preference and International Lending and Borrowing in an Overlapping-Generations Model

Abstract: Two economies, represented by Diamond-type overlapping-generations models and differing only in their pure rates of time preference, are joined together. Capital formation, balance-of-payments behavior, and welfare are compared under autarky and openness. With a positive natural rate of growth, the low-time-preference country runs a current account surplus in the steady state but not necessarily outside it. If preexisting capital is not shiftable between countries, integration in the world economy makes the high-time-preference country worse off in the short run. The ranking of stationary utility levels under autarky and openness is ambiguous.

Theory and management of tropical multispecies stocks: a review, with emphasis on the Southeast Asian demersal fisheries

Abstract: No part of this publication may be reproduced in any fonn without written pennission from the author and the publisher. Preface The present review-is mainly an attempt at critically reviewing the demersal fisheries of Southeast Asia and the models used for managing them. As most people working in the region will agree, much is wrong with these fisheries: many are overcapitalized; they are always extremely difficult to monitor; and they are beset with problems related to effective enforcement of any selected management scheme. Possibly because of what appear to be intractable practical problems, the theory behind the stock·assess-ment models and the rules of thumb derived therefrom used in the region have been notably neglected, the result being that models which now appear unrealistic have been used for years. The present paper may thus be seen as an attempt to question these rules and models and I hope to set the stage for a fresh look at the problems and their possible solutio~. I realize, however, that this will appear quite presumptuous; after all, haven't our models very well explained the collapse of the sardine, herring and ancho-veta stocks? The first version of the present paper was written while I was a consultant at ICLARM's Manila head· quarters, from 15 June to 20 August 1978. Several iii important papers on the fisheries of the region had not been available to me at that time (especially SCS 1978 a and b, Lawson 1978, and Pope 1979). I have attempted, when preparing the final draft, to incorporate appropriate references to these papers. I have made no attempt, however, to process the raw data given in these papers, which in all cases differ only in details from the data used here. In the case of SCS (1978 a and b), the use of the new set of effort data on the Gulf of Thailand fishery would have forced me to recalculate most of my tables, but would not have changed the conclusions reached here. It is these conclusions which matter most. They differ greatly from those of other authors dealing with this, or similar sets of data. As far as my conclusions are concerned, I suggest, along with Warren S. McCulloch: "Don't bite my fmger-Iook where it is pointing." Pauly, Daniel. 1979. Theory. and management of tropical multispecies stocks: A review, with emphasis on the Southeast Asian demersal fisheries. ICLARM Studies This paper consists …

The Optimum Quantity of Money

Abstract: This series of programs solve a Bewley model with production(This abstract was borrowed from another version of this item.)

The Structure of World Energy Demand

Abstract: This book discusses the characteristics of the demand for energy—its response over time to changes in prices and in levels of economic activity and the role that energy plays as a consumption good and as a factor in industrial production. The book is particularly concerned with differences in the structure of energy demand across countries and the relationship of energy demand and energy prices to macroeconomic growth in the industrialized countries. The results reported in this econometric study may help to resolve issues that are important to the design of both energy and economic policy—issues such as the extent to which energy demand in the long run is responsive to price changes, the possibilities for interfuel substitution, the substitutability of energy with other factors (such as manpower) of industrial production, the impact of energy prices on macroeconomic output, and the ways in which energy demand differs in industrialized and underdeveloped countries.

Growth and Income Distribution

Abstract: This 1974 collection of six essays in economic theory represents a major contribution to the field. The first contains the formulation of the Ricardian system, whilst the next two contain, respectively, the author's synthetic treatment of the complex problems of fluctuations and economic growth, and his well-known theorem that in the long run the rate of profit and income distribution are independent of the propensities to save of the working class. The essays that follow provide the missing links: a coherent picture of the macroeconomic theories that have originated in Cambridge and a discussion of their deep foundations in classical economic analysis. Finally, the author evaluates some economic controversies and draws his conclusions on the basic forces determining rate of profit in the process of economic growth. Although the arguments are highly theoretical, they require no knowledge of mathematics beyond elementary calculus and algebra.

Auctions and Bidding Models: A Survey,

Abstract: : Auctions and bidding models are attracting an ever increasing amount of attention. The Stark and Rothkopf bibliography includes approximately 500 works on the subject; additional works have appeared since the bibliography was compiled. This paper presents a general framework for classifying and describing various auctions and bidding models, and surveys the major results of the literature in terms of this framework. (Author)

Analysis of Economic Time Series

Abstract: Analysis of Economic Time Series: A Synthesis integrates several topics in economic time-series analysis, including the formulation and estimation of distributed-lag models of dynamic economic behavior; the application of spectral analysis in the study of the behavior of economic time series; and unobserved-components models for economic time series and the closely related problem of seasonal adjustment. Comprised of 14 chapters, this volume begins with a historical background on the use of unobserved components in the analysis of economic time series, followed by an Introduction to the theory of stationary time series. Subsequent chapters focus on the spectral representation and its estimation; formulation of distributed-lag models; elements of the theory of prediction and extraction; and formulation of unobserved-components models and canonical forms. Seasonal adjustment techniques and multivariate mixed moving-average autoregressive time-series models are also considered. Finally, a time-series model of the U.S. cattle industry is presented. This monograph will be of value to mathematicians, economists, and those interested in economic theory, econometrics, and mathematical economics.

Money in International Exchange: The Convertible Currency System

Abstract: Focusing on monetization of international trade per se, the text analyses common financial practices of merchants and manufacturers, commerical banks and central banks.

International adjustment with wage rigidity

Abstract: Two of the puzzling macroeconomic phenomena of the 1970s have been the persistent stagnation in Europe, and the disagreement between the U.S. and Europe on the feasibility of recovery by demand expansion. This paper develops the hypothesis that the source of both the stagnation and the policy differences is money-wage stickiness in the U.S. and real-wage stickiness in Europe and Japan. A real wage which is sticky above its equilibrium level in Europe and Japan would account for stagnation and infeasibility of recovery by demand expansion. The theoretical models are developed in both the one-commodity and two-commodity-bundle cases. The empirical results confirm that in the U.S. the nominal wage adjusts slowly toward equilibrium, while in Germany, Italy, Japan, and the U.K. the real wage adjusts slowly.

Towards A Reconstruction of Keynesian Economics: Expectations and Constrained Equilibria

Abstract: A two-period model of temporary equilibrium with rationing is presented, paying particular attention to agents' expectations of future constraints it is shown that with arbitrary constraint expectations many different types of current equilibria may be consistent with the same set of (current and expected future) wages and prices, and that constraint expectations tend to be self-fulfilling (eg, a higher expectation of Keynesian unemployment tomorrow increases the probability that it will prevail today) In addition, rational constraint expectations (ie, perfect foresight of future constraint levels) are shown to enhance rather than reduce the effectiveness of government policy

Coherency Conditions In Simultaneous Linear Equation Models With Endogenous Switching Regimes

Abstract: In modeling disequilibrium macroeconomic systems which one would want to subject to econometric estimation one typically faces the problem of whether the structural model can determine a unique equilibrium. The problem inherits a special form because the regimes in which the equilibria can lie are each linear. By placing restrictions on the parameters that insure the uniqueness of such a solution for each value of the exogenous and random variables, we can improve the estimation procedure. This paper provides necessary and sufficient conditions for uniqueness -- or "coherency." These conditions are applied to a variety of models that have been prominent in the literature on econometrics with 'switching regimes' such as those of self-selectivity (Maddala), simultaneous equation tobit and probit (Amemiya, Schmidt) and multi-market macroeconomic disequilibrium (Gourieroux, Laffont and Nonfort).

The Structure of Production, Technological Change and the Rate of Growth of Total Factor Productivity in the Bell System

Abstract: The objectives of this preliminary study are threefold. The first is to analyze empirically the production structure of the Bell System at the aggregate level. Particular attention is focused on the pattern of substitution among the factor inputs and the degree to which the aggregate production function is characterized by economies of scale. In this connection, we explore the role of research and development in the Bell System as an input in the production process, and its interaction with the traditional inputs. Second, we examine the impact of external technological chance on the production structure of the Bell System. The issues here include not only the rate of such technical change, but also the extent to which it alters the optimal level and mix of inputs, that is, the factor bias of external technical change. The third objective is to explore the inter relationship between scale economies internal to the Bell System and external technical change in determining the rate of growth of total factor productivity (TFP) . Specifically, we propose and illustrate a methodology for composing the observed growth of TFP into a part related to scale economies and a part included by technical change. We address these issues by first estimate in a an aggregate translog cost function for the Bell System, using annual data for the period 1947-1976. The implied estimate of the scale economies is then used to explore the sources of the growth of TFP.

Monetary Policy Under Exchange Rate Flexibility

Abstract: The continuing depreciation of the dollar stands out as one of the big policy issues. It has started to impinge on U.S. monetary policy; it influences the chances for international commercial diplomacy, and it is enhancing the move toward European monetary integration. Above all it leaves most observers with a puzzle as to the causes of the ongoing depreciation. This paper will, of course, not resolve the puzzle. ft rather attempts to layout the basic analytical framework that has been developed for the analysis of exchange-rate questions and to relate it to the question of monetary policy. Part I concentrates on the development of the relevant theoretical framework. The main points to be made here are: (i) exchange rates are primarily deter-mined in asset markets with expectations playing a dominant role; (ii) the sharpest formulation of exchange-rate theory is the "monetary approach, "Chicago's quantity theory of the open economy; (iii) purchasing power parity is a precarious reed on which to hang short-term exchange-rate theory; (iv) the current account has just made it back as a determinant of exchange rates

Introduction to Quantitative Genetics in Forestry

Abstract: Presents information forest geneticists need about applied mathematics, statistics, population biology, and genetics in order to design breeding programs. College-level training in mathematics, statistics, and genetics is required to understand most of the book.

On Repeated Games with Incomplete Information Played with Non-Bayesian Players

Abstract: Unlike in the traditional theory of games of incomplete information, the players here arenot Bayesian, i.e. a player does not necessarily have any prior probability distribution as to what game is being played. The game is infinitely repeated. A player may be absolutely uninformed, i.e. he may know only how many strategies he has. However, after each play the player is informed about his payoff and, moreover, he has perfect recall. A strategy is described, that with probability unity guarantees (in the sense of the liminf of the average payoff) in any game, whatever the player could guarantee if he had complete knowledge of the game.

Aspects of Development and Underdevelopment

Abstract: Joan Robinson shows how the economic mechanisms that produce wealth in the midst of growing misery can be understood. For this purpose she uses the classical theory of accumulation and the modern theory of international trade and finance. Her simple but penetrating analysis illuminates the problems of poverty, accumulation, industrialization and trade, while exposing misleading conceptions of the Third World. Throughout the book, general principles are demonstrated with particular examples, making those principles both clearer and more relevant. The book's conclusion is that the economic problems of the Third World remain rooted in deep-seated political conflicts of national and international interests.