Knowledge that Transforms

I. Introduction, 712. — II. The deterministic model, 712. — III. The stochastic model, 714.

Introduction, 283. — I. The portfolio manager's preference for current income and capital gains, 284. — II. Bank preferences and market yields, 289. — III. The values of zi and b derived from market yields, 292. — IV. The values of zj and b derived from a present value analysis, 294. — Conclusion, 301. — Appendix, 301.

Let me note some points of agreement between Minabe and myself. First, I agree that capacity or full employment national income cannot be incorporated into a family consumption function as a ratchet effect. It is the peak income that the family actually earned that determines the extent of their resistance to cuts in living standards and not the peak income that they might have earned if fully employed. Second, I agree that a good statistical fit is not everything. In an age of distributed-lag functions, where investigators seldom put any a priori restrictions on the profile of distributed-lagged weights, any econometrician with access to a computer can come up with decent statistical results. He need only persevere. Where I disagree is on two points he makes early in the note: (1) that the essential spirit of the ratchet effect is lost in my model, and (2) that the Duesenberry model is not suitable for defining conditions of steady growth and therefore not a useful building block in constructing a model of joint interaction. The first point is by far the more important and I will attempt to answer it first. For if the essential spirit of the ratchet effect were missing, a link would be lacking connecting the demand and supply sides of the market in my model. I say a link rather than all links, as Minabe implies, because there is still the influence running from demand to supply that he neglects. To facilitate the discussion, I shall write the DuesenberryModigliani, (D-M), function in a manner more in keeping with Modigliani's formulation. Thus write: ct=0.5yt+0.4yt* where the lower-case letters ct, Yt, and yt* represent family consumption, current income, and peak income attained, which may be the current income. Then the aggregate version of the (D-M) function becomes Ct = 0.5Yt+0.4Yt* where each upper-case letter represents the aggregate version of the family measures. The coefficients chosen are of no consequence as the argument is independent of their values. Now assume that there are only three families whose incomes are represented by Yl, Y2, and Y3. Table I brings out the essential issues. Again the numbers chosen are arbitrary but of no special consequence, chosen primarily for computational convenience. They

I. Goals and methodology, 304. — II. The Cairncross theory, 306. — III. Construction of a model, 308. — IV. Testing the model, 311. — V. The results and their implications, 318. — VI. A simple correlation analysis, 322. — VII. Conclusions, 324.

I. The modified CPCS model and its economic significance, 704. — II. The solution of the model, 706. — III. The equilibrium growth path, 707. — IV. Conclusion, 708.

I. An alternative model, 66.—II. Production and trade, 68.—III. Summary and conclusions, 75.

I. Introduction, 262. — II. The economic environment, 263. — III. Mechanics of planning, 265. — IV. Material reserves, 266. — V. Plan formulation and material balances. 267. — VI. Effects of uncertainty, 268. — VII. Plan execution and the costs of incorrect planning, 270. — VIII. Short- and long-term plans, 272. — IX. Optimal planning and dynamics programming, 273. — X. Sensitivity analysis, 276. — XI. Concluding remarks, 278. — Appendix: Proof of the form of an optimal policy, 278.

Journal Article Optimal Choice of Monetary Policy Instruments in a Simple Stochastic Macro Model: Rejoinder Get access William Poole William Poole Board of Governors, Federal Reserve System Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 85, Issue 4, November 1971, Pages 716–717, https://doi.org/10.2307/1882277 Published: 01 November 1971

I. The data and the models, 645. — II. The results of cross-section equations, 646. — III. Residuals from group regressions, 659. — IV. Over time variation, 660. — V. Balanced versus unbalanced growth, 662. — VI. Conclusions, 666.

I. Introduction, 40.—II. A neoclassical approach to labor absorption with factor price variability, 42.—III. Asian history and simulation: a look at the models' predictions, 49.—IV. Estimation with Philippine manufacturing data, 54.—V. Conclusion, 64.