Factor price

About: Factor price is a research topic. Over the lifetime, 2764 publications have been published within this topic receiving 86176 citations.

Scissors or Horizon: Neoclassical Debates about Returns to Scale, Costs, and Long-Run Supply, 1926-1942

Abstract: Modem treatment of long-run (U-shaped) cost curves developed from reactions to Sraffa's criticisms of Marshall. He argued that internal (dis)economies were incompatible with partialequilibrium analysis under perfect competition. Pigou concurred and drew L-shaped cost curves; Viner realized that this made firm size indeterminate and industry output volatile. Using Austin and Joan Robinson's analyses, Stigler justified rising costs/supply, determinacy, and stability by irrational entrepreneurs enduring coordination failure and by factor price changes. We conclude that consistency requires constant costs but firm employment, output, and factor incomes remain theoretically indeterminate. It becomes likely that large firms will undermine perfect competition.

Neglected dimensions in the analysis of economic change

Abstract: The purpose of this paper is essentially exploratory. Its central analytical focus will be upon certain dimensions of the process of economic development which are, as yet, only very imperfectly understood. It is hoped that the formulation presented below will encourage students of disciplines outside of economics to undertake research which may, eventually, make an important contribution to our understanding of what economic growth is all about. A convenient starting point will be to refer to the results of some recent research which has attempted to quantify the contributions of various factors to American economic growth during the past ninety years or so. Conventional economic theory suggests that the output of the economy at any point in time is a function of factor inputs and that, therefore, it ought to be possible to relate changes in output over time to systematic changes in factor inputs. An important segment of economic theory is devoted to exploring these relationships between variations in inputs and the associated variations in outputs – these relationships being summarized in the term ‘production function’. A plausible inference of this approach is that one can explain economic growth as resulting from an acceleration in the economy's rate of capital formation. According to this view the rise in human productivity which is a central aspect of the development process is attributable to a speeding up of the rate at which the economy makes additions to its capital stock, that is to say, that the rise in output per man is essentially a function of a “capital-deepening” process.

Have Absolute Price Levels Converged for Developed Economies? The Evidence since 1870

Abstract: We compare price level and income convergence since 1870 for eleven developed economies using implicit price deflators derived from the GDP data of Maddison (1995, 2001, 2003). We find that “sigma” and “beta” convergence for prices occurs later and to a lesser extent than income. Price levels converge after 1950 while income convergence begins in the 1880s. We find no evidence for stochastic price convergence or for “club” price convergence.

Rational Expectations and Price Rigidity in a Monopolistically Competitive Market

Abstract: This paper analyses monopolistically competitive markets under incomplete information, facing unanticipated disturbances. Firms determine their prices before they have information about other firms' prices, and form their expectations about the average price rationally. If the market becomes very competitive in the sense that the price elasticity of individual demand is close to infinity, then the average price is completely insensitive to short-run unanticipated disturbances. In the intermediate case, if (a) cost disturbances are uniform and (b) demand and cost disturbances are correlated, then the average price is sensitive to cost and insensitive to demand.

Endogenous Growth in an Aging Economy: Evidence and Policy Measures

Abstract: This paper presents a two-sector overlapping generation (OLG) model to capture the impact of population aging on a regional economy (Illinois) and compares the effectiveness of government policy in an endogenous growth perspective. Comparing the computational results of a one-sector OLG model, where an agent’s productivity is given exogenously, this paper confirms that endogenously determined investment in human capital significantly offsets the negative effects of the aging population on the regional economy. This paper also explores if there is room for the government to weaken and prevent the negative effects of the aging population. This paper examines the effects of two kinds of government transfer systems on the regional economy: money transfer and educational transfer systems. The money transfer, which is redistributed to agents by the government, could be used for an individual’s consumption, saving and educational investment. Educational transfer is made directly to the individual proportional to his or her opportunity cost stemming from educational investment. The results show that the educational transfer system is superior to the money transfer system in the long run in terms of per-capita income growth, aggregate welfare improvements and factor price stabilization. However, the results imply that the implementation of an educational transfer system accompanies trade-offs between economic growth and a more equal distribution of income and wealth.