Knowledge that Transforms

This paper analyzes the degree of short-run, real wage flexibility in a two-sector economy under floating rates. This is done by deriving optimal wage indexation in a contracting framework. We find that the more closed the economy, the lower the degree of wage indexation. As a result, output will fluctuate less around its desired level in a more closed economy. These findings further imply that a given unexpected monetary shock will cause as maller output shock in a more open economy, whereas a given real shock will induce a smaller output shock in a more closed economy.

The optimal level of Social Security benefits depends on balancing the protection that these benefits offer to those who have not provided adequately for their own old age against the welfare costs of distorting economic behavior. The primary such cost is the distortion in private saving. The present paper derives the level of Social Security benefits that is optimal in three basic cases. In the first section of the paper, the optimal level of benefits is derived for an economy in which all individuals do not anticipate retirement at all and therefore do not save. The second and third sections then derive the optimal benefits for economies with two different definitions of attitudes toward retirement and saving.

A model is presented in which governments can select real expenditure levels that are feasible, but are sufficiently high that a balanced budget is impossible. Thus, governments with large expenditures are committed to inflationary finance schemes. This is the case, even though the governments in question have access to lump-sum taxes. In addition, the model can explain why poorer countries tend to make heavier use of the inflation tax than do wealthier countries, and can account for the existence of country-specific fiat monies. The government that does not have access to the printing press can, nonetheless, use emergency taxes or compulsory loans for emergency financing. S.Fischer [1982, p. 297]

Consider a competitive industry using an aggregate of two commodities as an input to production. Suppose that the supply of one of the commodities is stochastic. It can then be shown that investment in flexibility in the ex post choice among the two commodities is likely to result in a sharpening rather than dampening of the stochastic fluctuations in the aggregate commodity price if the supply elasticity is lower for the substitute commodity than for the one with stochastic supply. The paper derives this result and applies it to the case of ex post flexibility in fuel choice with uncertain fuel supply.

In the 1970s there has been a noticeable labor productivity slowdown in Canada. In addition to contributions of such traditional variables as changes in capital intensity and quality of labor, this study quantifies contributions of higher energy and changing import prices to productivity changes. A Taylor series approximation to a restricted profit function representing the Canadian economy helps reveal that rising energy prices have reduced labor productivity by 0.53 percent per year after 1970 and that the underlying modified rates of technical progress in the 1960s and 1970s, having netted out price of energy—and import—effects, are not dissimilar.

Journal Article Capacity Costs, Heterogeneous Users, and Peak-Load Pricing Get access W. John Jordan W. John Jordan Seton Hall University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 100, Issue 4, November 1985, Pages 1335–1337, https://doi.org/10.2307/1885687 Published: 01 November 1985