Under the gold-exchange standard, national currencies have supplemented gold as an international means of payment. The extent to which the fiduciary component of international reserves can be expanded depends on the reserve policies of central banks. Investigation of these policies is essential in assessing the adequacy of international reserves and the urgency of reducing the U.S. balance of payments deficit. Therefore, in this paper, we extend and test Kenen's model on reserve policies of central banks [4] and show its implications for U.S. balance of payments policy.'

The household production model provides a framework for the theory of the household, and most applications have focused on its implications for market and nonmarket behavior. In this paper I examine the consequences of the new home economics for welfare analysis, and in particular for the cost-of-living index. In the household production framework market are combined with time to produce These commodities, rather than the market goods, are the arguments of the household's preference ordering; the demand for and time is a derived demand, since are not desired for their own sake, but only as inputs into the production of commodities.' This paper is an analysis of the implications of the household production model for welfare evaluation, not a critique of the model. Hence, it accepts the fundamental distinction between and commodities, and assumes that commodities as well as are observable and measurable.2 The distinction between technology and tastes follows unambiguously from that between and commodities. In orthodox demand theory the household's preference ordering is defined over the goods and welfare analysis is based on those preferences. The cost-ofliving index is defined as the ratio of the minimum expenditures required to attain a particular indifference curve of this preference ordering under two price regimes. In the household production model the preference ordering over the commodity space provides a corresponding basis for welfare evaluation. One way to extend the notion of the cost-of-living index to the framework is to define it as the ratio of the minimum expenditures required to attain a par

The essential question for a positive theory of arts financing is: what determines the quantities and relative shares of the different sources of arts support? These sources include the earned admission revenues from purely private financing, and the unearned primarily lump sum money grants given by individual private contributors, corporations, foundations, and governments at all levels. Unfortunately, our analytical understand

This paper derives some analytic results concerning the possible effects of a tax-based incomes policy (TIP), and compares them to the effects of a wage subsidy or a decreased payroll tax. The policies are compared using a model of firm equilibrium which is somewhat simpler than that of Yehuda Kotowitz and Richard Portes, and R. W. Latham and David Peel. Because the model is one of firm equilibrium, it ignores both interactions among firms and workers, and the bargaining process. As a result, it cannot answer all possible questions about the effectiveness of a TIP. Nevertheless, the model can address an important question that lies at the very heart of the issue of the possible effectiveness of a TIP: in what way would a TIP influence a firm to change its wage and price decisions, assuming nothing else in the economy were to be changed. If, as shown below, certain versions of TIP

Here F(x) and G(x) are less-than cumulative probability distributionis where x is a continuous or discrete random variable representing the outcome of a prospect. The closed interval [a, b] is the sample space of both prospects. The integral shown in Rule 2 and those shown throughout the paper are Stieltjes integrals. Recall that the Stieltjes integral fb f(x)dg(x) exists if one of the functions f and g is continuous and the other has finite variation in [a, b]. Let D1, D2, and D3 be three sets of utility functions ?(x). D1 is the set containing all utility functions with 4(x) and +1(x) continuous, and 41(x) >0 for all xE[a, b]. D2 is the set with ?(x), ?1(x), ?2(x) continuous, and q$j(x)>0, 02(x)?O for all xC[a, b]. D3 is the set with ?(x), ?1(x), ?2(X), ?3(X) continuous, and +1(x) > 04 2(x) O O for all xC[a, b]. Here +1(x) denotes the ith derivative of +(x). Hadar and Russell proved that Rule 1 is valid for all ,CD1 and Rutle 2 is valid for all ED2. The authors point out that the set of probability distributions that can be ordered by means of second-degree stochastic dominance is, in general, larger than that which can be ordered by means of first-degree stochastic dominance. Note that in Rule 2, they assume that +(x) is not only an increasing function of x but also exhibits weak global risk aversion, a condition guaranteed by requiring the second derivative of ?(x) to be nonpositive. In this paper, a condition which will be called third-degree stochastic dominance is considered. It is based on the following assumption about the form of the utility function ?(x). From a normative point of view, one expects the risk premium associated with an uncertain prospect to become smaller the greater is the individual's wealth. The plausibility and implications of this assumption h'ave been explored by John Pratt, as well as others. The risk premium of an uncertain prospect is that amount by which the certainty equivalent of the prospect differs from its expected value. In mathematical terms, given the prospect F(x) with expected value A, the corresponding risk premium -t is obtained by solving the following equation. rb

producers' and consumers' durable goods, yielding a stream of benefits which are compared with a stream of costs. Births occur if the present value of the benefits exceeds the present value of the costs. The theory has been used by Malthusians to rationalize the casual observation that population growth rates increase during the early stages of economic development and then, perhaps, fall later on as