[A dynamic noncooperative game in which firms choose output and cost-reducing investment sequences is developed. The sequences exhibit several properties of manufacturing industries. Several steady states exist. Under some reasonable conditions only industry structures in which firms have different market shares can be locally stable steady states. So the model presents one explanation of the source of differences among firms in homogeneous good oligopolies.]
This paper develops a test of the rational expectations hypothesis advanced by Muth [18]. The framework considered here allows for multiperiod expectations of several endogenous variables, with or without lagged exogenous variables. In conventional (linear) models, the hypothesis implies that the expectations are linear in certain relevant variables, and restricts the coefficients of these variables to be certain functions of the parameters in the imbedding model. The test is developed as a test of the validity of these restrictions. The paper also treats the estimation problem in some details, under the alternative hypothesis which is taken as simply the negation of the rational expectations hypothesis.
[This paper is an exploration of the empirical implications for the behavior of consumer-workers of treating unemployment as a constraint on choice rather than the result of it. The consequences of one family member's unemployment for the constrained commodity demand functions and the labor supply functions of other family members are first examined and then the normative interpretation of unemployment's compensation is considered. The final section of the paper contains estimates of a simple set of aggregate labor supply and commodity demand functions that are based on utility maximization and that explicitly recognize the presence of both constrained and unconstrained microeconomic units.]
[This paper presents the theoretical development of bounds tests and exact tests for serial correlation in the context of a simultaneous equation model which are analogous to those developed for single equation models. The powers of the exact tests are estimated and compared using Monte Carlo simulation of a three equation model.]
asymptotic variances of multipliers for nonlinear models. It is used to estimate the uncertainty of the results of eight policy experiments for a particular model. ALTHOUGH MACROECONOMETRIC MOI)ELS are widely used to analyze the effects of alternative government actions on the economy, estimates of the uncertainty of these effects are rarely, if ever, presented. This is, of course, not surprising, since most macroeconometric models are nonlinear. Unlike for linear models, formulas for the asymptotic variances of impact and dynamic multipliers are not known for nonlinear models. ’ It is possible, however, to estimate these variances for nonlinear models by stochastic simulation, and the purpose of this paper is to discuss the method by which this can be done. The method is discussed in Section 2, and results of applying the method to eight policy experiments for the model in Fair [7,10] are presented in Section 3.3 Given the obvious importance of knowing how much confidence to place on the results of any particular policy experiment in a model, it is hoped that this study will stimulate others to obtain uncertainty estimates for their models similar to those presented in Section 3. 2. THE METHOD The. method can be applied to a model that is nonlinear in both variables and coefficients. Let G denote the total number of equations in the model, M the number of stochastic equations, and N the total number of predetermined (both exogenous and lagged endogenous) variables. Assume (for exposition.4 con-venience only) that the model is quarterly, and let the ith equation of the model for quarter t be written: (1) CpdYi,, YGh Zlb, ZN,,
Robert A. Pollak, Terence J. Wales, Comparison of the Quadratic Expenditure System and Translog Demand Systems with Alternative Specifications of Demographic Effects, Econometrica, Vol. 48, No. 3 (Apr., 1980), pp. 595-612
In our previous paper, "Optimal Allocation of Public Goods...," (1977) we presented a mechanism for determining efficient public goods allocations when preferences are unknown and consumers are free to misrepresent their demands for public goods. We proved the basic welfare theorem for this model: If consumers are competitive in markets for private goods and follow Nash behavior in their choice of demands to report to the mechanism, then equilibria will be Pareto optimal. In this paper we show this result is not vacuous by proving that an equilibria will be Pareto optimal. In this paper we show this result is not vacuous by proving that an equilibrium will exist for a wide class of economies. Our conditions are slightly stronger than those required to prove the existence of a Lindahl equilibrium. In order to rule out the possibility of bankruptcy, we assume additionally that at all Pareto optimal allocations, private goods consumption is bounded away from zero.
[In this paper the Le Chatelier principle for a Leontief model due to Samuelson and Morishima is extended to a more general system of nonlinear equations. The global strong version of the principle as well as the weak one is presented without using any determinant theory or calculus. The strong version is concerned with comparative statics when some constraints are relaxed together with changes in parameters. It is also shown that our results are applicable to the system of excess demand functions which satisfy the gross substitute condition.]
In many economic situations, individuals carry out activities as coalitions, and have personal preferences for belonging to specific groups (coalitions). These situations are studied in the framework of cooperative games with coalition structures, by defining for each player a utility function with two arguments, namely his consumption bundle and the coalition to which (s)he belongs. The optimality analysis brings out a surprising property of the games with coalitions, namely that transfers among coalitions may be necessary to attain Pareto optimality. Moreover, quite restrictive assumptions are needed to rule out this property. The analysis is concerned with the conditions under which no has incentives and opportunities to change Two concepts of individual stability of a coalition structure are introduced, and their existence properties are analyzed. 1.1 Summary IN MANY ECONOMIC SITUATIONS, individuals carry out activities as Thus, individuals organize themselves in firms for production purposes and in clubs for consumption purposes; or they rely upon local communities for the provision of public goods. In such situations, individuals typically have personal preferences for belonging to specific groups (coalitions). First, they are concerned with the size of the group and personalities of its members. Second, they are concerned with qualitative and quantitative characteristics of the group activities: Working conditions in the firms, facilities available at the clubs, local public goods. Cooperative games with coalition structures provide a natural framework for a formal analysis of these situations, when the individuals partition themselves into A general way of introducing explicitly personal preferences for membership in specific coalitions is to define for each player a utility function with two arguments, namely his consumption bundle and the coalition to which he belongs. It then seems natural to speak about games with hedonic coalitions. A model of an economy, or cooperative game, with coalitions is introduced in Section 1.2. The agents organize themselves in coalitions which form a partition (i.e., each agent belongs to one and only one coalition). Each coalition, endowed with a production set, produces public and private goods. Each agent consumes the public goods produced by the coalition to which he belongs, and private goods. His preferences are represented by a utility function which is strictly increasing in private goods and continuous in private as well as public goods, but which depends upon the coalition in an arbitrary way. Our initial interest was to study the of coalitions in this model. Section 3 is devoted to that topic. However, in the course of our study, we encountered an