[The comparative statics of optimization models which have nonlinear constraints are examined. It is shown that most of the standard results of "linear" comparative statics still apply. However, it is also shown that individual substitution and income effects are systematically affected by the nature and degree of nonlinearity of the constraint. A model of quantity/quality trade-offs, previously examined in the literature, is analyzed, and several new results are developed.]
[This paper models the dynamics of the earnings distribution among successive generations of workers as a stochastic process. The process arises from the random assignment of abilities to individuals by nature, together with the utility maximizing bequest decisions of their parents. A salient feature of the model is that parents cannot borrow to make human capital investments in their offspring. Consequently the allocation of training resources among the young people of any generation depends upon the distribution of earnings among their parents. This implies in turn that the often noted conflict between egalitarian redistributive policies and economic efficiency is mitigated. A number of formal results are proven which illustrate this fact.]
[This paper emphasizes the importance of endogenous (price) uncertainty as distinct from the standard exogenous uncertainty about the state of the world. Markets where agents can enter into forward contracts contingent upon future spot prices are studied with respect to existence of equilibrium, occurrence of speculation, and efficiency.]
[Previous work in the demand for freight transportation has followed an aggregate approach without any consideration of the underlying behavior of the individuals who actually make mode-choice decisions. In this paper, we analyze mode-choice behavior at the level of the individual decision maker with the purpose of applying the results to various issues related to intermodal competition. Based on a theory of shipper/receiver behavior, a random expected utility model suitable for econometric analysis is developed and estimated. Data for the empirical analysis consists of a large number of shipments covering a wide range of commodities, lengths of haul, and origin-destination pairs. The transport modes considered in the analysis are regulated and unregulated motor freight and rail. The central conclusion is that each mode has an opportunity to attract a substantial amount of traffic in particular markets through either service or price competition. In general, however, it appears that the opportunities for attracting traffic are greater through lower rates than improvements in service quality.]
[This paper is concerned with characterizing the probability distributions that describe the (stochastic) stationary state of a neoclassical model of optimal growth. In particular, using both theoretical analysis and numerical simulation, we search for systematic relationships between savings (and investment) rates and variability of the economy's aggregates.]
[Competitive adjustment processes in labor markets where firms and workers are heterogeneous but well informed are studied. A natural notion of equilibrium for such markets is defined, and a plausible adjustment process is shown under reasonable assumptions always to converge to an equilibrium; this allows a generalization of several existence results in the literature. Finally, the relationship between market institutions (such as who makes offers) and which of the range of equilibria that heterogeneity makes possible arises, is studied. Generalizing results of Gale and Shapley and Shapley and Shubik, it is shown that all agents on a given side of the market agree on which is the best equilibrium, and that the equilibrium that emerges is the one most favored by the agents on the side of the market that makes offers in the adjustment process. The process can also be viewed as an algorithm for transportation and optimal assignment problems.]
[Agents are assumed to have smooth preferences with natural boundary conditions. For large regular economies, satisfying an indeconposability conditions, it is shown that core allocations and competitive allocations converge to each other with a rate inversely proportional to the number of agents m. To the extent that the indecomposability condition is harmless, 1/m can be regarded as the normal rate of convergence. However, if indifference surfaces are allowed to have kinks, 1/m cannot be regarded as normal. This is treated in Part II [6].]
[It is well known from the Monte-Carlo work of Nerlove that using the standard within-group estimator for dynamic models with fixed individual effects generates estimates which are inconsistent as the number of "individuals" tends to infinity if the number of time periods is kept fixed. In this paper we present analytical expressions for these inconsistencies for the first order autoregressive case.]
Linear time series models have come to dominate the macroeconomic literature on rational expectations and equilibrium business cycle theory. But the explicit solution of such models has generally required strong restrictions upon the exogenous process of stochastic shocks (e.g., temporal independence) as well as upon the values of various demand and supply elasticities. This paper exhibits a solution technique, the method of z-transforms, which does not require one to impose such restrictions. The value of this method is illustrated by applying it to completely characterize the symmetric, stationary, rational expectations equilibria of a naive linear model of land speculation. This approach also permits systematic study of the informationally asymmetric equilibria of the model. THIS PAPER develops a method for analyzing rational expectations (RE) equilibria in linear economic models. The methods I shall discuss usually enable one to determine whether or not a given model has a RE equilibrium and, if one exists, to exhibit an explicit expression for the stochastic process of equilibrium prices. The techniques apply to linear models driven by stationary processes of exogenous random shocks.