Knowledge that Transforms

Journal Article Monetary Policy in an Inside-Money, Open Economy: Comment Get access Basant K. Kapur Basant K. Kapur National University of Singapore Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 96, Issue 2, May 1981, Pages 349–356, https://doi.org/10.2307/1882395 Published: 01 May 1981

Journal Article Monetary Policy in an Inside-Money, Open Economy: Reply Get access Donald J. Mathieson Donald J. Mathieson International Monetary Fund Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 96, Issue 2, May 1981, Pages 357–361, https://doi.org/10.2307/1882396 Published: 01 May 1981

Journal Article Statistical cost Analysis Re-Revisited: Reply Get access James M. Griffin James M. Griffin University of Houston Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 96, Issue 1, February 1981, Pages 183–187, https://doi.org/10.2307/2936150 Published: 01 February 1981

In a recent article A. Y. C. Koo [1973] sought to advance a “more general theory of land tenancy” and draw implications for land reform. While his contention that different models of share-tenancy (with conflicting efficiency properties) have different implications for land reform is correct, unfortunately, his mathematical analysis of oligopoly land market is both misleading and erroneous. It is misleading in the sense that it is not (as a close look at the model would verify) an oligopoly model of share-rental determination, which it purports to be. Thus, on this account, it is not really a critique of either Bardhan and Srinivasan [1971] or of Cheung [1974], which it claims to be.1 Rather it is an oligopoly model of determination of fixed-rental in the landlease market. If so, it loses much of its importance, at least empirically, since the fixed-rental system is of limited empirical significance. And the efficiency arguments for and against the share-rental lease, which he advances in the beginning, and also the land-reform question of reducing the share-rental become irrelevant for the analysis that follows. Second, even if we consider his mathematical argument on land renting on its own grounds, it is unfortunately marred by a mathematical flaw that prevails throughout his analysis and leads him to counterintuitive results. Section I gives a restatement of the Koo model and points to its errors and the resulting counterintuitive results. Section II reformulates the model in correct terms and shows how intuitively and empirically plausible results may be derived therefrom.

The paper argues that appropriate domestic policies — more particularly, the real wage policy that is stressed here — can reduce the extent of foreign dependence of a country. It shows that foreign aid sufficient to achieve a given level of per capita domestic income is positively related to the real wages in an LDC with unemployment. The paper also links the level of real wages and the rate of technical change to the possibilities for self-sufficiency (from foreign aid) in the long run.

Linear expenditure systems are widely used to describe consumption and portfolio decisions. However, the complexity of these models makes estimation a formidable task. In earlier work, an exchangeability assumption was used to incorporate subjective a priori information into the estimation of asset demand equations. Here, an alternative hierarchical approach is described and illustrated. This procedure provides a framework in which the identification of a limited number of distinct reasons for prior uncertainty can be converted into a full prior covariance matrix. Such a matrix can then be combined with prior means and the sample data to yield Bayesian parameter estimates.

One argument used to justify a rate of discount for benefit-cost analysis below the market rate is based on a divergence of private and collective behavior known as the “isolation paradox.” In this paper we reexamine this argument using a three-period general equilibrium model incorporating the intergenerational structure of benevolence assumed by earlier writers. We show that in this model the appropriate rate of discount is the market rate, regardless of the existence of the isolation paradox. In the absence of other market distortions, no shadow pricing of capital inputs is necessary in the calculation of net present value.