Knowledge that Transforms

[This paper deals with simultaneous estimation of supply and demand functions for money in the United States. It gives special attention to supply formulations relating the money stock to maximum possible money stocks and to demand functions incorporating the product of national income and the rate of interest. The estimations test and attempt to improve on these formulations, and they provide evidence on the effects of changing measurement techniques of economic time series. Specifically, substantial differences emerge between estimates using quarterly averages of daily data on stock and flow variables and similar estimates using one-day end-of-quarter figures to characterize a series over a quarter. In the context of this investigation, quarterly average data appear superior in describing the true economic series, as at least some a priori judgments would suggest.]

[A system of demand functions is said to exhibit "generalized additive separability" (GAS) if it can be written in the form xi = fi(yi, R(Y)), i = 1,..., n, where yi is the normalized price of the ith good, and R is a function of all normalized prices. That is, GAS implies that "other prices" enter the demand functions only through an index function, R. This paper shows that the demand functions corresponding to directly and indirectly additive utility functions, the Fourgeaud-Nataf demand functions, and Houthakker's self-dual addilog system exhibit GAS. The direct utility functions corresponding to indirect additivity and the self-dual addilog are characterized, and a production function interpretation of some of these results is suggested. "Generalized strong separability" (GSS) and "generalized weak separability" (GWS) are defined, and it is shown that GSS includes both direct and indirect weak separability.]

[The estimation of a CES production function for real sectoral value added with factor augmenting technological change first is discussed, with emphasis on the possible effects of the deflation procedure utilized and on the attempt to estimate relatively long-run parameters. The estimates of that function for nine Chilean sectors then are examined with respect to the implied degree of sectoral flexibility, the absorption of surplus labor, the implications for linear assumptions about Chilean production functions, the distribution of income, and the degree of constraint on long-run growth due to a relative shortage of a primary factor.]

Axel Mossin, A Mean Demand Function and Individual Demand Functions Confronted with the Weak and the Strong Axioms of Revealed Preference: An Empirical Test, Econometrica, Vol. 40, No. 1 (Jan., 1972), pp. 177-192

[The relationship between the contingent commodity and asset approaches to consumer behavior under uncertainty is used in examining Slutsky equations for assets. The menu of assets describes an "attainable set" of contingent commodities; it is shown that a number of types of changes in the distributions of returns on assets leave this attainable set unaltered and that the effects of such changes in distributions on asset demands are simply related to the effects of a change in the asset price on demands.]