W HILE there are many general equilibrium models of trade and protection in the literature on economic theory, most empirical analyses of protection use partial equilibrium models. However, partial equilibrium analysis is useful only if the general equilibrium effects can be ignored safely. It is the contention of this paper that the production effects of protection should be analysed in a dynamic general equilibrium framework with investment and the foreign exchange rate as endogenous variables.' In section II, a dynamic general equilibrium model of trade and protection for the systematic analysis of alternative trade policies in a market economy, and the important tactical decisions made for empirical implementation using Australian data are described. The estimates of effective protection obtained from the model are presented in section IIL'2 The differences between the partial and general equilibrium approach are discussed in section IV and the conclusions summarized in section V.

Is the capital function distinct from the entrepreneurial function in modern economies? Or does a person have to be wealthy before he or she can start a business? Knight and Schumpeter held different views on the answer to this question. Our empirical findings side with Knight: Liquidity constraints bind, and a would-be entrepreneur must bear most of the risk inherent in his venture. The reasoning is roughly this: The data show that wealthier people are more inclined to become entrepreneurs. In principle, this could be so because the wealthy tend to make better entrepreneurs, but the data reject this explanation. Instead, the data point to liquidity constraints: capital is essential for starting a business, and liquidity constraints tend to exclude those with insufficient funds at their disposal.

The U.S. dollar price of the U.K. pound sterling is tested for a speculative bubble, defined as a period with a nonzero median in excess returns. A nonparametric procedure is developed which controls for data mining over the period of flexible exchange rates and finds a negative bubble in the excess return to holding sterling rather than dollar assets during 1981-84. Possible interpretations are boot-strap equilibria (rational bubbles), asymmetric fundamentals, and nonrational expectations.

This study examines the relationships among firm growth, firm size, and firm age for a sample of manufacturing firms between 1976 and 1982. Firm growth is found to decrease with firm age and firm size. These findings are robust to alternative assumptions concerning the effects of sample censoring and the functional form of the growth relationship. The inverse growth-age relationship is consistent with a theory of firm learning proposed by Boyan Jovanovic while the inverse growth-size relationship is inconsistent with a number of theories that assume or imply Gibrat's law. Copyright 1987 by University of Chicago Press.

Is the capitalist function distinct from the entrepreneurial function in modern economies? Or does a person have to be wealthy before he or she can start a business? Frank H. Knight and Joseph A. Schumpeter held different views on the answer to this question. The authors' empirical findings side with Knight: liquidity constraints bind, and a would-be entrepreneur must bear most of the risk inherent in his venture. The reasoning is roughly this: the data show that wealthier people are more inclined to become entrepreneurs. In principle, this could be so because the wealthy tend to make better entrepreneurs, but the data reject this explanation. Instead, the data point to liquidity constraints: capital is essential for starting a business, and liquidity constraints tend to exclude those with insufficient funds at their disposal. Copyright 1989 by University of Chicago Press.

About 4.2 million men and women operate businesses on a full-time basis. Comprising more than a tenth of all workers, they run most of our nation’s firms and employ about a tenth of all wage workers. The fraction of the labor force that is self-employed has increased since the mid-1970s after a long period of decline.1 This paper examines the process of selection into self-employment over the life cycle and the determinants of self-employment earnings using data from the National Longitudinal Survey of Young Men (NLS) for 1966–1981 and the Current Population Surveys for 1968–1987.