Knowledge that Transforms

Armando J. Baqueiro, James J. Breen, David E. Mead, Donald E. Wise, The Labor Force Decision of Married Female Teachers: A Comment, The Review of Economics and Statistics, Vol. 58, No. 2 (May, 1976), pp. 241-244

children indicate that women with older children tend to be in the full-time group. The negative coefficients for the ages of the second and fourth children themselves imply that individuals with high values for these variables are least likely to be classified as full-time workers. The interactions between the children or the non-linearity of the relation between ages and the labor supply behavior of the wife probably account for the alternating signs.9

A great deal of research has been done in recent years on the effects of capital inflows on real investment, saving and output growth in developing countries.' It appears that in many instances these inflows have, in effect, been used for financing an expansion of consumption rather than investment. This note attempts to reinterpret the new research in the broader context of intertemporal resource allocation and intertemporal consumption opportunities. The acceptance of foreign capital, of course, augments the total amount of resources potentially available for current domestic real expenditure (consumption and investment). The invested portion of the foreign capital receipts adds to future potential net domestic product, but part of the domestic product increase may be absorbed by the associated debt service, income remittances and capital repatriations. If the domestic rate of return exceeds the cost of foreign capital, any one of the following three types of capital inflow response is possible: 1) both current and future consumption increases; 2) current consumption increases, while future consumption decreases, or 3) current consumption decreases, while future consumption increases. Crude empirical estimates of the true responses, based on the new research, are now possible.

T HIS paper utilizes cross spectral analysis to examine the relationship between consumer price movements in the United States and Canada. We hope to shed light on the extent of the of the cost of living in Canada on that of the United States. Although a number of very competent studies have been undertaken which deal with the nature of economic interdependence between the two countries (among others, see Brecher and Reisman, 1957; Bryce, 1939; Chambers, 1958; Gibson, 1956; Rosenbluth, 1957; and Wonnacott, 1961), specific questions of timing and amplitude characteristics of consumer price series over cycles of varying length have yet to be fully explored. A recent article by Bonomo and Tanner applied spectral analysis to industrial production series for the two countries and found statistically significant relations between American and Canadian economic cycles of lengths between 3 and 100 months (1972, p. 7.). Following Wonnacott's observations that production and price indices may very well be viewed as alternative indicators of dependence (1961, p. 6), we propose to test for the existence of significant relationships in U.S. and Canadian prices to further explore the nature of the hypothesized Canadian dependence on the United States. In section II, we discuss some considerations involved in the use of spectral analysis. Section III reviews the empirical findings, and section IV contains our conclusions. II. A Brief Overview of Spectral Analysis

IN a short comment on Jorgenson's survey article on investment (1971), R. Eisner states that . . abandoning implicit as well as explicit assumptions of perfect competition, desired capital stock should depend upon production functions and supply and demand functions for inputs and outputs, as seen by business decision-makers.1 The main purpose of this paper is to confirm Eisner's argument by demonstrating that a model of the demand for capital services estimated from an empirical relation between quantities and prices need not necessarily be based on neoclassical competitive theory but can be derived from any other non-competitive or imperfectly competitive theory.2 A second aim is to estimate the elasticity of substitution and returns to scale which characterize the Canadian manufacturing industry. In the first section a general long-run model of the use of capital services is specified. Conditions for a competitive equilibrium are then reviewed. The second section argues that the competitive-equilibrium paradigm should be rejected because of a serious problem of identification of the parameters of the model. In the third section two types of derived demand for capital services Cobb-Douglas (CD) and constant elasticity of substitution (CES) are developed and then applied to quarterly data for the total Canadian manufacturing industry (1947-1964). A summary of the main conclusions appears in the final section.