Knowledge that Transforms

Economic production systems may break up into subeconomies of goods and processes that can function independently of each other. This article first explores the various kinds of decompositions that may exist in production schemes, nonlinear as well as linear. Some recent techniques developed in graph theory are adopted to ascertain the decompositions possible for a given production system and the precedence relations between the subeconomies of the decomposition. Finally, I show how the concept of tearing from simultaneous equations theory might be used to analyze square input-output models for potential decompositions.

This paper investigates the household demand for four financial assets: marketable bonds, time and savings deposits at commercial banks, life insurance reserves, and savings accounts at other financial institutions-credit unions, savings and loan associations, and mutual savings banks. The focus of the analysis is on the substitution relationships among liquid assets, and between these assets and marketable securities. The explanatory variables used in the study are: income, wealth, and the yields on various assets included in household portfolios.

Arc elasticity is estimated for liquor by simply comparing state sales before and after price increases, standardized by states in which price did not change. The technique can be used wherever there are several economic units independent with respect to price changes; it allows causal interpretation and it permits comparison of various length-of-run elasticities.