[In this paper we construct a model that describes the behavior of the foreign exchange market and Exchange Fund. Cross-spectral and regression analysis of daily data are used to show that official intervention contributed significantly to the short-run stability of Canadian exchange rates.]
[The problem of the individual's consumption and portfolio choices over time has been the focus of recent studies by a number of authors. An attempt is made here to extend these results by examining the impact of transaction costs on optimal consumption and portfolio decisions. We are able to show that these costs considerably modify available results and greatly increase the difficulty of analyzing the consumer choice problem. The major reason is that now not only wealth, but also the composition of wealth, becomes important in the decision making process. To keep the exposition reasonably manageable we consider only a constant relative risk averse utility function and confine explicit attention to a two-period horizon. Since it is now necessary to examine portfolio choices in detail, we limit portfolio opportunities to a riskless asset, cash, and a risky asset, stock, with a random return. We assume proportional transaction cost for purchases or sales of stock. Wealth is taken to be the sum of cash and stock at the beginning of a period, while income is assumed to be zero, or included in initial wealth.]
[What can we say about the competitive equilibrium price system for an uncertain economy in which each risk concerns just one individual? Three interrelated concepts of equilibrium are considered. They show how and under which conditions the contingent price for a contract to deliver one unit of some good if some event occurs tends to be equal to the product of the sure price of the good and the probability of the event.]
We present a stochastic model of the employment process in which both the worker's search for jobs and the employer's search for workers are simple Markov processes. An employer's hiring decision is determined by the type of worker applying. Dynamic programming methods are used to find the optimal hiring policy by analyzing the interaction between the two processes. The steady-state distribution of worker unemployment by type is derived. UNDERSTANDING THE CAUSES and effects of racial discrimination in labor markets has been the goal of a considerable volume of economic research.2 Becker [2] provided the seminal study of the theory of racial discrimination. More recently Krueger [10], Welch [14], Thurow [13], McCall [11], and Arrow [1] have examined the processes of racial discrimination. The pure theory of racial discrimination has until now not moved beyond static equilibrium models which presume a full employment economy. The explanation of discrimination in employment (as opposed to discrimination in wages) has thus been limited to rather crude hypotheses. This paper presents a model of the employment process designed to help describe the dynamic relationship between racial unemployment rates. The model is formulated in terms of a particular view of the employment process, often termed the queuing approach.3 The model itself is developed in Section 2. Some of its more interesting features are discussed in Section 3. A formal proof of our proposition and some generalizations of the basic results are reserved for Section 4.
[The existence of an equilibrium is proven for a two-period model in which there are spot transactions and futures transactions in the first period and spot markets in the second period. Prices at that date are viewed with subjective uncertainty by all traders. This introduces the possibility of speculation. Conditions for the existence of a competitive equilibrium include restriction on the nature of price expectations.]
[This paper is concerned with general equilibrium under a weakened version of Walras' Law. Conditions for uniqueness of equilibrium are derived which include the more standard conditions as a special case and which are at the same time free of some of the weaknesses of received theory.]
Aaron and McGuire recently put forward a new method for imputing benefits of government expenditures on public goods for various income classes. They fail to present conclusive empirical results, however, lacking a parameter whose value is heretofore unmeasured. This note uses three independent empirical estimates of this crucial parameter to compute estimates of the net incidence of the fiscal system. For the U.S., 1961, it is found that benefits from public goods are regressively distributed. It is further suggested that the desire to equalize incomes requires provisions of less, not more, public goods.
Peter Schmidt, On the Difference Between Conditional and Unconditional Asymptotic Distributions of Estimates in Distributed Lag Models with Integer-Valued Parameters, Econometrica, Vol. 41, No. 1 (Jan., 1973), pp. 165-169