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Golden Rule (fiscal policy)

About: Golden Rule (fiscal policy) is a(n) research topic. Over the lifetime, 661 publication(s) have been published within this topic receiving 9789 citation(s).

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Journal ArticleDOI
Abstract: This paper studies competitive equilibrium over time of a one good model in which the agents are members of a population which grows at a constant rate. Each agent lives for n periods and in the i-th period of his life receives an endowment of ei units of goods. Goods can neither be produced nor stored. The model is thus the n-period generalization of the two- and three-period models studied by Samuelson in [4]. We seek to ascertain the structure of the time paths of consumption in these models. Our results can be summarized roughly as follows: In general, there will exist two kinds of steady state paths, (i) golden rule paths in which the rate of interest equals the growth rate of population and (ii) “balanced” paths in which the aggregate assets or indebtedness of the society as a whole is zero (a fundamental fact about dynamic models is that it is possible for aggregate debt not to equal aggregate credit as it must in the static case). A model is termed classical if in the golden rule state aggregate assets are negative (or debt positive) and Samuelson (following [4]) in the opposite case. It is conjectured that the golden rule program is globally stable in the classical case and the balanced program is stable in the Samuelson case. This is established for the special case n = 2.

453 citations

Book ChapterDOI
01 Jan 1961
Abstract: This chapter presents an understanding of Solovian growth and the economic growth issue It discusses the way in which a brilliant peasant named Oiko Nomos claimed a prize for optimum investment ratio The Solovians were deeply impressed by Oiko and his theorems Oiko suggested that associated with the golden-rule path is a unique capital–output ratio If one's present capital–output ratio is smaller, then consumption must be slowed until the ratio is no longer deficient If the present ratio exceeds the golden-rule ratio, then consumption must be made at a fast rate until the capital–output ratio is no longer excessive The chapter discusses the way in which the kingdom followed the golden rule of accumulation

409 citations

Journal ArticleDOI
Abstract: This paper examines empirically the effects of multimarket contact on pricing in the U. S. airline industry. The analysis of the time-series and cross-sectional variability of airline fares in the 1000 largest domestic city-pair routes reveals the presence of statistically significant and quantitatively important multimarket effects—fares are higher in city-pair markets served by carriers with extensive interroute contacts. These findings are consistent with the claims of industry experts that airlines live by the "golden rule"; i.e., that they refrain from initiating aggressive pricing actions in a given route for fear of what their competitors might do in other jointly contested routes. During his testimony, Mr. Steven B. Elkins (Senior Director of marketing systems development for Northwest Airlines) cited an example in which Northwest lowered fares on night flights that were flying with empty seats in a number of routes from Minneapolis and Upper Midwest cities to various West Coast cities. He said that Continental Airlines swiftly responded by cutting prices in important Northwest markets … Mr. Elkins's memo advises Northwest pricing analysts: "We Will Live by the Golden Rule!" In his testimony, he explained that, "the Golden Rule in that context was that I did not want my pricing analyst initiating actions in another carrier's market like Chicago for fear of what that other carrier might do to retaliate" [Wall Street Journal, October 9,1990, p. B1].

377 citations

01 Jan 1996

181 citations

Journal ArticleDOI
Abstract: This study examines two ways by which education might affect the probability of civil war onset. First, educational investment provides a strong signal to the people that the government is attempting to improve their lives, which is apt to lower grievances, even in desperate times. Second, education can generate economic, political, and social stability by giving people tools with which they can resolve disputes peacefully, making them less likely to incur the risks involved in joining a rebellion. This theory is tested by examining the effect of educational expenditures, enrollment levels, and literacy rates on the probability of civil war onset from 1980 through 1999. The results provide evidence for both the grievance and stability arguments, providing strong support for the pacifying effects of education on civil war.

176 citations

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