Knowledge that Transforms

Journal Article Welfare Aspects of International Trade in Goods and Securities: An Addendum Get access Elhanan Helpman, Elhanan Helpman Tel-Aviv University Search for other works by this author on: Oxford Academic Google Scholar Assaf Razin Assaf Razin Tel-Aviv University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 94, Issue 3, May 1980, Pages 615–618, https://doi.org/10.2307/1884588 Published: 01 May 1980

This paper uses a simple difference equation model to investigate the dynamic characteristics of the foreign exchange market under a regime of flexible exchange rates. It is shown that unhedged trade transactions can produce a dynamically unstable market, particularly if contracts are denominated in the seller's currency. We then examine the influence of trade hedging, using either the forward market or an artificial currency unit, and find that it considerably enhances the overall likelihood of stability.

All western economies are mixed in the sense that there is both a marketed and a nonmarketed sector of firms. A natural question then arises: Should unincorporated business use higher or lower discount rates than incorporated business does? The same question has been a source of much controversy in public finance. Some authors, among them Arrow and Lind [1970] and Samuelson [1964], argue that public enterprises should use a lower discount rate because the government is better able to absorb risk and can more effectively diversify investments. Another group, which finds Hirshleifer [1966] and Diamond [1967] among its supporters, maintains that the discount rate should be the same for projects with comparable risk profiles, regardless of who undertakes them. As Diamond states:

Journal Article A Disequilibrium Macroeconomic Model: A Correction Get access Stephen M. Miller Stephen M. Miller University of Connecticut Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 95, Issue 1, August 1980, Pages 197–198, https://doi.org/10.2307/1885357 Published: 01 August 1980

Jagdish N. Bhagwati, Balbir S. Sihag; Dual Markets, Rationing, and Queues*, The Quarterly Journal of Economics, Volume 95, Issue 4, 1 December 1980, Pages 775–7

Meade demonstrates how, in the absence of futures markets for many commodities, indicative planning can supply economic agents with the requisite information about future market conditions. An incentive scheme designed to encourage agents to relay accurate information to central planners is introduced into Meade's model. It is then shown how the Groves and Loeb voting procedure can be used to determine whether an indicative planning program would be beneficial.

This paper analyzes the effects of contracts for exhaustible resources. The conclusions are as follows: (1) for a single mine, with increased risk production for the spot market falls, long-term contracting increases, total output falls, contract length generally decreases, equilibrium spot prices increase, and contract prices may rise or fall; (2) with changing economies because of past production, output (spot prices) rises (fall) and then falls (rise), and this scalloped pattern remains with entry and storage included; and (3) contracting permits pairwise gains, may create losses for others, and prices are “fuzzy” signals as they may change for several different reasons.

In a recent article William Comanor and Robert Smiley [1975] attempt assessment of the impact of multi-industry monopoly on the personal distribution of wealth in the United States. The conclusions of their study are striking: possibly one-half of existing wealth holdings by the richest 2.4 percent of American households is due entirely to capitalized monopoly gains. Yet the methods by which this and similar estimates are obtained suffer from certain difficulties: first with regard to the theoretical framework implicit in the estimation procedure, and second with regard to several parameters used in the application of this framework. The following two sections, respectively, present these difficulties.

William S. Comanor, Robert H. Smiley; Monopoly and the Distribution of Wealth: Revisited, The Quarterly Journal of Economics, Volume 94, Issue 1, 1 February 198

It is shown that two of the axioms necessary for the expected utility rule imply the Principle of Insufficient Reason. Whenever a decision maker knows the possible states of the world, but completely lacks information about the plausibility of each single state, he has to behave as if all states occurred with the same objective probability, known with certainty. The result is applied to decision trees and used to solve a problem formulated by Savage in order to discredit the classical version of the Principle of Insufficient Reason.