Knowledge that Transforms

The exact stochastic character of observed data from a Markov process is derived for the case where only aggregate stocks, as opposed to individual transitions, are observed. Particular attention is devoted to the distinction between data generated by a panel study, where a single group of individuals is followed over time, and that generated by random sampling, where the observed groups are not identical over time. Several alternative estimators are developed which take into account the particular stochastic structure of the data.

Necessary and sufficient conditions for Pareto optimality are derived for problems involving convex criteria and convex constraints. For a wide class of convex functions, the characterization of Pareto optimality is given in terms of systems of linear programs, which, under suitable regularization conditions, reduce to a single linear program. The consideration of a system of linear programs and their duals leads naturally to a system of partial prices associated with a Pareto optimum. (Author)

change in the quality of care is primarily due to the increased demand caused by the growth of private and public insurance. The paper presents an analytic model of the hospital industry in which quality affects the demand for hospital services and in which the purchase of private insurance is endogenous. Estimates of key equations of the model based on a cross-section of time series for the individual states for the years 1958 through 1973 are presented. The price adjustment process and dynamic multipliers are discussed. THE COST OF A DAY of hospital care in the United States has increased 600 per cent in the past twenty years, an annual rate of more than 9 per cent. During the

P. C. B. Phillips, A General Theorem in the Theory of Asymptotic Expansions as Approximations to the Finite Sample Distributions of Econometric Estimators, Econometrica, Vol. 45, No. 6 (Sep., 1977), pp. 1517-1534

Takeshi Amemiya, The Maximum Likelihood and the Nonlinear Three-Stage Least Squares Estimator in the General Nonlinear Simultaneous Equation Model, Econometrica, Vol. 45, No. 4 (May, 1977), pp. 955-968

[The optimal policy prescription in response to congestion on a traffic network involves taxes levied so as to increase the private costs of vehicle use by the amount of the costs imposed on other users of the system. However, technical and political constraints may make this taxation policy infeasible. Using assumptions on the effect of taxation on the level and structure of demandfor transportation services, this paper provides guidelines for taxation (and possibly subsidization) in a multi-mode traffic system in which such constraints are effective.]

[In recent studies of economic organization [9 and 15] it has been found necessary to impose certain restrictions (regularity conditions) on the communication process. Such restrictions limit the class of environments for which the organization is Pareto satisfactory. We show that a class of environments admits a Pareto satisfactory (and regular) resource allocation mechanism if and only if the graph of the Pareto correspondence is a union of continuous functions. We also study the shape of the Pareto set for a given environment and the way that set varies as the environment varies. We present examples showing that near any environment whose Pareto utility frontier is homeomorphic to a simplex there is whose Pareto frontier is badly chopped up. We also give an example of a class of environments for which the Pareto correspondence has no continuous selection through a given point.]

[A convenient technique used for solving several types of economic problems is to cast them as optimization problems having the line integral of the (inverse) demand and/or supply functions in the objective. But if these functions are non-integrable (having a nonsymmetric Jacobian matrix) then alternative techniques must be used. This paper surveys these and proposes an additional solution technique, based on making the given functions integrable by making a small number of substitutions and iteratively adjusting a parameter associated with each substitution until a solution is found. The technique is particularly applicable when certain neoclassical assumptions are satisfied.]

[This review of the work done on the formulation and estimation of complete systems of consumer demand functions is primarily concerned with problems and issues around this topic. These issues are partly of a theoretical and partly of an empirical nature. Constraints on such systems, derived from theoretical considerations, are used to deal with the problems of lack of sufficient data, but can sometimes also be tested. Among the various alternative approaches, as yet no clear-cut choice can be made, although it appears that additivity of preferences is too restrictive.]