A common finding is that the forward discount is a biased predictor of future exchange rate changes. We use survey data on exchange rate expectations to decompose the bias into portions attributable to the risk premium and expectational errors. None of the bias in our sample reflects the risk premium. We also reject the claim that the risk premium is more variable than expected depreciation. Investors would do better if they reduced fractionally the magnitude of expected depreciation. This is the same result that many authors have found with forward market data, but now it cannot be attributed to risk.

I. Two consumers, 3. — II. Many consumers, 12. — III. Varying supply price, 20. — IV. Varying marginal utility of income, 22.

The general model, 660. — The regression model, 663. — Correlation and regression results, 666. — Evaluation, 667. — Some conclusions, 670. — Appendix, 671.

Scope of paper, 341. — Any open market policy hinges on a well-performing government securities market, 342. — How the market facilitates monetary policy, 351. — Why monetary policy prefers short-term securities, 358. — Open market operations for other objectives, 363. — Concluding observations, 371.

Journal Article Pigou's Wealth and Welfare Get access Allyn A. Young Allyn A. Young Cornell University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 27, Issue 4, August 1913, Pages 672–686, https://doi.org/10.2307/1883448 Published: 01 August 1913

This paper investigates the effects of market-wide changes in health insurance by examining the single largest change in health insurance coverage in American history: the introduction of Medicare in 1965. I estimate that the impact of Medicare on hospital spending is over six times larger than what the evidence from individual-level changes in health insurance would have predicted. This disproportionately larger effect may arise if market-wide changes in demand alter the incentives of hospitals to incur the fixed costs of entering the market or of adopting new practice styles. I present some evidence of these types of effects. A back of the envelope calculation based on the estimated impact of Medicare suggests that the overall spread of health insurance between 1950 and 1990 may be able to explain about half of the increase in real per capita health spending over this time period.

This paper simulates the impact of the AIDS epidemic on future living standards in South Africa. I emphasize two competing effects. On the one hand, the epidemic is likely to have a detrimental impact on the human capital accumulation of orphaned children. On the other hand, widespread community infection lowers fertility, both directly, through a reduction in the willingness to engage in unprotected sexual activity, and indirectly, by increasing the scarcity of labor and the value of a woman's time. I find that even with the most pessimistic assumptions concerning reductions in educational attainment, the fertility effect dominates. The AIDS epidemic, on net, enhances the future per capita consumption possibilities of the South African economy.

Public policies designed to increase utilization of existing technologies may also affect incentives to develop new technologies. This paper investigates this phenomenon by examining policies designed to increase usage of preexisting vaccines. I find that these policies were associated with a 2.5-fold increase in clinical trials for new vaccines. For several diseases, the induced innovation is socially wasteful, though small in magnitude. In one case, however, the "dynamic" social welfare benefits from induced innovation exceed the policies' "static" benefits from increasing vaccination with existing technology. These findings underscore the importance of including technological progress in economic analysis of public policy.

In a partially reformed economy, distortions beget distortions. Segments of the economy that are freed from centralized control respond to the rent-seeking opportunities implicit in the remaining distortions of the economy. The battle to capture, and then protect, these rents leads to the creation of new distortions, even as the reform process tries to move forward. In this paper I illustrate this idea with a study of the People's Republic of China. Under the plan, prices were skewed so as to concentrate profits, and hence revenue, in industry. As control over factor allocations was loosened, local governments throughout the economy sought to capture these rents by developing high margin industries. Continued reform, and growing interregional competition between duplicative industries, threatened the profitability of these industrial structures, leading local governments to impose a variety of interregional barriers to trade. Thus, the reform process led to the fragmentation of the domestic market and the distortion of regional production away from patterns of comparative advantage.