Knowledge that Transforms

Phillips [9], Lipsey [6], and others have argued that the partial relationship between the rate of change of money wages and the unemployment rate is convex. The possibility that there may exist other nonlinearities, in the relationship between wage change and its determinants, including interaction effects, has not been examined. This note reports the result of a test of six hypotheses concerning nonlinearities in the determination of the rate of change of money wages. The test gave support to two of the hypotheses: (1) the trade-off between money wage change and the unemployment rate is convex; (2) the unemployment rate and the rate of change of the cost of living interact in their influence on money wage change. The elasticity of money wage rates to the cost of living varies positively with the unemployment rate. The point of departure was Perry's [7] equation for United States manufacturing: 1

I NTERNATIONAL comparison of trade barriers has always been complicated by the problem that the barriers take different, and not easily comparable forms: tariffs, exchange controls, differential sales taxes on domestic and imported products, explicit commodity quotas, implicit or hidden quotas (in the cases of western state trading and all of the trade conducted by the communist nations), and so forth. In 1958 a distinguished panel of experts headed by Gottfried Haberler [4] suggested that the degree of protection can be very roughly judged by the extent to which the price paid to the producer exceeds the world price for importers. . They were well aware of many of the difficulties of this method such as the effect on both domestic and world prices of the goods in question of subsidies given to both exporters and domestic producers. The United Nations Economic Commission for Europe used this technique in 1960 [ 12 ] to study agricultural protection in Western Europe. They also were aware of many of the statistical and methodological pitfalls of this technique and, in particular, called attention to the problems raised by the existence of disequilibrium exchange rates and the levy of tariffs on commodities requiring differential amounts of fabrication in the importer. Several other workers have also found the Gatt approach convenient, e.g., Dardis and Pryor [4, 8]. Pryor, interested in comparing the trade barriers by Eastern and Western Europe, respectively, to the exports of underdeveloped nations as a result of discussions which grew out of UNCTAD I. innovated by adjusting the ratios of domestic to world prices for the fact that the price levels of some nations are biased upward by a relatively large reliance on sales as opposed to income taxation. I point out in this paper two major difficulties with the use of the ratio of domestic to world (or import) price as a proper and unambiguous measure of barrier to imports. The first has to do with problems of defining barrier in view of the several different price ratio-quantity relationships which are possible under differing circumstances and assumptions. Second, the implications for this method of disequilibrium prices and repressed inflation are explored. This is particularly relevant for comparisons involving the Union of Soviet Socialist Republics and Eastern Europe [7] since the economies of these nations have consistently experienced repressed inflation. However, it is also relevant to comparisons which would have included Western Europe after World War II and some of the underdeveloped nations at present.

HE relationship of finance charges to T terms of consumer installment contracts (such as loan size and maturity) and to regional variables has been well established in the literature [8] [12]. Our study demonstrates the importance of the characteristics of the borrower, particularly his overall wealth position, in determining the cost of credit. Although this study examines the determinants of automobile finance rates, the general results should be applicable to the financing of other consumer durables.

M OST of the problems of measurements of productivity are related in one way or another to problems of aggregation. This statement also covers the measurement of technical change. There are few, if any, conceptual problems in measuring a production process which consists of a single factor and a single product. As soon as more factors or more products are included, complications arise. Some of these are examined in this paper. In the absence of technical change (TC) the main finding is our claim that the well-known concept of index number bias has no empirical validity and is therefore irrelevant in answering some of the questions it has been supposed to answer. In introducing TC, a natural definition of neutral TC (NTC) is suggested so that changes in output can be allocated to NTC, differential TC (DTC), and changes in inputs. It is shown how in general DTC is measured as NTC. An important role in our discussion is played by aggregates derived from the underlying production function. To illustrate the use of such aggregates a multiproduct production function is partly estimated. We start this paper by presenting the empirical production function which serves as illustration in subsequent discussion. In section III we take up the question of index number bias. In section IV we define the two forms of technical change and deal with the effects of NTC and changes in inputs on output. In section V the measurement of DTC is discussed.

T HE concept of the capital-output ratio has played an almost indispensable part in economic planning in underdeveloped countries, notwithstanding numerous theoretical objections. The range of areas in which the concept is brought into play stretches from judgement-free projections of capital requirements and of future growth rates to the wise man's role of setting an acceptable target rate of growth and of selecting investment criteria. However, progress has been seriously hampered partly because the available empirical evidence has been very limited in the coverage of various countries and also in the level of sectoral disaggregation.' In the present paper, we make use of certain new data whose analysis seems to suggest that the conventional notion of relative factor-endowments and choice of production techniques needs to be re-examined. The main objectives of this study are two: first, we present a comprehensive statistical analysis of detailed sectoral output-capital ratios for a large number of countries. Second, in doing so, this paper will point to a surprising characteristic of present-day economic underdevelopment. This evidence has a significant bearing on a number of related topics.

CANADA was one of 52 countries participating in the negotiations of 1964-1967. Because of the openness of the Canadian economy, the potential results of these trade liberalizations on its imports and exports are of special interest.' In this study we forecast the price effects of the Kennedy Round on Canada's trade as of 1973, when all the negotiated tariff reductions are scheduled to have occurred. We consider the impacts on total Canadian imports and exports to the United States, and analyze them disaggregatively by commodity groups. This is done by means of a four-stage procedure: