Journal Article Winter's Fundamental Selection Theorem: Reply Get access Sidney G. Winter Sidney G. Winter U. S. General Accounting Office Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 105, Issue 4, November 1990, Pages 1075–1077, https://doi.org/10.2307/2937888 Published: 01 November 1990
Brian D. Wright, Peter G. Warr; The Isolation Paradox, the Social Discount Rate, and Neutrality: Further Thoughts, The Quarterly Journal of Economics, Volume 10
Journal Article Consumer Investment in Product-Specific Capital: The Monopoly Case Get access Thomas J. Holmes Thomas J. Holmes University of Wisconsin Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 105, Issue 3, August 1990, Pages 789–801, https://doi.org/10.2307/2937899 Published: 01 August 1990
Journal Article Winter's Fundamental Selection Theorem: A Disproof Get access Scott Moss Scott Moss University of ManchesterManchester Polytechnic Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 105, Issue 4, November 1990, Pages 1071–1074, https://doi.org/10.2307/2937887 Published: 01 November 1990
The fact that most eldealy individuals in the United States choose to maintain a flat age-wealth profile, rather than buy individual life annuities, stands in contrast to central implications of the standard life-cycle model of consumption-saving behavior. The analysis in this paper lends support to an explanation for this phenomenon based either on the cost of annuities, importantly including the element of that cost due to adverse selection, or on the interaction of that cost and an intentional bequest motive. Expected yields offered on individual life annuities in the United States are lower by some 4-6%, or 2 1/2-4 1/2% after allowing for adverse selection, than yields on alternative long-term fixed-income investments. Simulations of an extended model of life-cycle saving and portfolio behavior, allowing explicitly for uncertain lifetimes and Social Security, show that yield differentials in this range can account for the observed behavior, even in the absence of a bequest motive, during the early years of retirement. By contrast, at older ages the combination of yield differentials in this range and a positive bequest motive is necessary to do so.
The qualitative restrictions available on the individual coefficients of a model are frequently insufficient to sign its multipliers. To eliminate this lack of determinacy, additional relations among coefficients must be incorporated into the analysis. In 1966 Lancaster proposed an algorithm for qualitative comparative statics with the very useful property . . that certain types of information, not qualitative in the strict sense, can be incorporated directly and quite simply into the system [1966, p. 281]. The same procedure was later adopted by Ritschard for the analysis of large-sized policy models [1983, p. 1164]. However, Burns and Formuzis have argued that the results obtained in the presence of constraints, are dependent on the order in which the original equations of the model were written [1970, p. 697]. To eliminate this difficulty, they suggested altering the order of the equations by trial and error, a procedure that is inefficient and will not work in many instances. The purpose of this note is to systematize the introduction of constraints. After a brief restatement of Lancaster's method, an algorithm is presented that provides information on the nature of the constraints needed to produce unambiguous solutions. Alternatively, if the analyst has an intuitive notion of the signs of the multipliers, the procedure can be used to indicate the form of constraints that will produce them. Basically, the method proposed generates sign patterns (including zeros) of additional equations that will yield any given solution consistent with the initial specification of the model. These additional equations are linear combinations of those in the given system. In fact, they constitute the minimum number of such combinations that can yield a determinate solution. It may be difficult, especially in large models, to reconcile the available a priori information with the sign patterns implied by the algorithm. In such cases, to supply the analyst with additional sets
This paper argues that the collapse of stock prices in October 1929 generated temporary uncertainty about future income which led consumers to forgo purchases of durable goods. That the Great Crash generated uncertainty is evidenced by the decline in surety expressed by contemporary forecasters. That this uncertainty affected consumer behavior is shown by the fact that spending on consumer durables declined drastically in late 1929, while spending on perishable goods rose slightly. This effect is confirmed by the fact that there is a significant negative relationship between stock market variability and the production of consumer durables in the prewar era. "Uncertainty is worse than knowing the truth, no matter how bad"
Journal Article Export Subsidies as an Outcome of the Management-Labor Conspiracy Get access Kiminori Matsuyama Kiminori Matsuyama Northwestern University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 105, Issue 3, August 1990, Pages 803–813, https://doi.org/10.2307/2937900 Published: 01 August 1990
This paper considers a model with monopolistic competition and multiple equilibria, rankable by output, employment, and the Pareto criterion. While papers in the literature assume a linear production technology and derive a continuum of equilibria, we assume a standard diminishing returns production function and find a finite set of equilibria. Our new feature is the assumption that firms behave in a risk-averse manner. A low-level equilibrium is sustainable because firms, at the low profits level associated with the equilibrium, become extremely cautious in their employment decisions.
Journal Article The Isolation Paradox and the Discount Rate for Benefit-Cost Analysis: A Comment Get access David M. Newbery David M. Newbery University of California, Berkeley Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 105, Issue 1, February 1990, Pages 235–238, https://doi.org/10.2307/2937827 Published: 01 February 1990