This paper investigates the conjecture that oligopolistic pricing behavior will invalidate the Lucas-Sargent policy-ineffectiveness proposition even if expectations are formed rationally. The procedure is to examine the properties of an analytical macroeconomic model that incorporates a simplified version of the MPS wage-price sector. It is shown that the validity of the conjecture depends upon the precise manner in which lags are built into the price adjustment equation. A crucial condition is isolated and used to motivate an empirical test. The results, based on quarterly U.S. data, are predominantly consistent with the ineffectiveness proposition.

This paper examines the rules governing the optimal distribution of educational resources originally developed by Arrow, in the context of a model in which some attempt is made to provide a rationale for government expenditure. Thus while there is a private market providing a perfect substitute for government education, if the government cannot adopt the lump-sum taxation which would make exclusive reliance on the private market optimal, but has to rely on an income tax for redistribution, then an optimally chosen scheme of educational provision by the government will powerfully reinforce the redistributive effect of income tax.

This paper investigates the conjecture that oligopolistic pricing behavior will invalidate the Lucas-Sargent policy-ineffectiveness proposition even if expectations are formed rationally. The procedure is to examine the properties of an analytical macroeconomic model that incorporates a simplified version of the MPS wage-price sector. It is shown that the validity of the conjecture depends upon the precise manner in which lags are built into the price adjustment equation. A crucial condition is isolated and used to motivate an empirical test. The results, based on quarterly U.S. data, are predominantly consistent with the ineffectiveness proposition.

This paper examines the rules governing the optimal distribution of educational resources originally developed by Arrow, in the context of a model in which some attempt is made to provide a rationale for government expenditure. Thus while there is a private market providing a perfect substitute for government education, if the government cannot adopt the lump-sum taxation which would make exclusive reliance on the private market optimal, but has to rely on an income tax for redistribution, then an optimally chosen scheme of educational provision by the government will powerfully reinforce the redistributive effect of income tax.