Knowledge that Transforms

This paper establishes a set of conditions for the uniqueness and stability of the equilibrium price in exchange and production economies. Building on the earlier work of J. M. Grandmont and W. Hildenbrand, it shows that increasing heterogeneity in preferences (in some well-defined sense) causes aggregate Engel curves to become increasingly linear. So sufficient dispersion, together with the assumption that preferences and endowments are independently distributed, leads to the aggregate excess demand function satisfying the law of demand. Uniqueness and stability of the equilibrium price follows.

We establish the asymptotic sampling distribution of general functions of quantile-based estimators computed from samples that are not necessarily independent. The results provide the statistical framework within which to assess the progressivity of taxes and benefits, their horizontal inequity, and the change in the inequality of income which they cause. By the same token, these findings characterise the sampling distribution of a number of popular indices of progressivity, horizontal inequity, and redistribution. They can also be used to assess welfare and inequality changes using panel data, and to assess poverty when it depends on estimated population quantiles. We illustrate these results using micro data on the incidence of taxes and benefits in Canada.

This paper introduces random versions of successive approximations and multigrid algorithms for computing approximate solutions to a class of finite and infinite horizon Markovian decision problems (MDPs). We prove that these algorithms succeed in breaking the curse of dimensionality for a subclass of MDPs known as discrete decision processes (DDPs).

Game theory, Duopoly supergame, Asymmetric Cournot duopoly

We consider an auction in which k identical objects of unknown value are auctioned off to n bidders. The k highest bidders get an object and pay the k + 1st bid. Bidders receive a signal that provides information about the value of the object. We characterize the unique symmetric equilibrium of this auction. We then consider a sequence of auctions A r with n r bidders and k r objects. We show that price converges in probability to the true value of the object if and only if both k r → ∞ and n r - k r → ∞, i.e., both the number of objects and the number of bidders who do not receive an object go to infinity.

This paper considers the problem of determining the number of factors in a multivariate nonparametric relationship. The definition of factors given is broad enough to encompass a number of potential applications in econometrics, including inferring the rank of demand, consistent tests for lack of identification in linear instrumental variable models, and testing arbitrage pricing theory. The paper gives both series and kernel methods for testing hypotheses concerning, and consistent estimation of, the number of factors. The methods are compared in a small simulation study and in an application to determining the rank of demand systems.

Centro de Informacion y Documentacion Cientifica (CINDOC). C/Joaquin Costa, 22. 28002 Madrid. SPAIN / CINDOC - Centro de Informaciòn y Documentaciòn Cientìfica

General characterizations of valid confidence sets and tests in problems which involve locally almost unidentified (LAU) parameters are provided and applied to several econometric models. Two types of inference problems are studied: (1) inference about parameters which are not identifiable on certain subsets of the parameter space, and (2) inference about parameter transformations with discontinuities. When a LAU parameter or parametric function has an unbounded range, it is shown under general regularity conditions that any valid confidence set with level 1 − α for this parameter must be unbounded with probability close to 1−α in the neighborhood of nonidentification subsets and will have a non-zero probability of being unbounded under any distribution compatible with