Knowledge that Transforms

John F. Wilson, Wendy E. Takacs, Differential Responses to Price and Exchange Rate Influences in the Foreign Trade of Selected Industrial Countries, The Review of Economics and Statistics, Vol. 61, No. 2 (May, 1979), pp. 267-279

Work supported by the RANN Division of the National Science Foundation under Grant #GSF SIA 75-00379.

Journal Article Surplus-sharing Local Games in Dynamic Exchange Processes Get access Henry Tulkens, Henry Tulkens CORE, Université Catholique de Louvain Search for other works by this author on: Oxford Academic Google Scholar Shmuel Zamir Shmuel Zamir Hebrew University of Jeruslaem Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 46, Issue 2, April 1979, Pages 305–313, https://doi.org/10.2307/2297053 Published: 01 April 1979 Article history Received: 01 May 1976 Accepted: 01 April 1978 Published: 01 April 1979

Volker Böhm, Pierre Lévine; Temporary Equilibria with Quantity Rationing, The Review of Economic Studies, Volume 46, Issue 2, 1 April 1979, Pages 361–377, https

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The article investigates the Ronald Findlay-Stanislaw Wellisz and T. N. Srinivasan-Bhagwati (F-W-S-B) two-by-two small-country model of traditional international trade theory. Section I recapitulates the basic F-W-S-B analysis, retaining the two-by-two model but distinguishing between the with-distortion and the no-distortion cases. Section II examines the many-good-and-factors cases: goods equal factors, no distortion; good equal factors, with distortion; goods outnumber factors, no distortion; goods outnumber factors, with distortion; factors outnumber goods, no distortion and factors outnumber goods, with distortion. Section III offers concluding observations, indicating the applicability of the analysis to other problems in trade theory and the relationship of the results to mathematical programming. The F-W-S-B model is characterized by three key features: constant-returns-to-scale production functions; two primary factors producing two graded goods; and fixed foreign prices for the two traded goods. The uniqueness and stationarity of the marginal variational shadow prices in the two-by-two F-W-S-B model, with and without the specified distortions, do not necessarily carry over to the cases with unequal numbers of goods and factors that need to be analyzed as soon as the author consider many goods and factors. The analysis leads to many observations. First, the relative numbering of factors and goods is of signifiance. Second, the analysis has clear applicability to the transfer problem, conceived not as a transfer of purchasing power, but rather as a transfer of factors of production as may be the case when reparations payments have to be made in barter. Third, the analysis has applicability therefore to the theory of international factor mobility.

Stiglitz elaborates on equilibrium in product markets with imperfect information.

At a minimum, this paper should serve as a warning against too easy an acceptance of the view that the costs of sustained inflation are small relative to the costs of unemployment. If a temporary reduction in unemployment causes a permanent increase in inflation, the present value of the resulting future welfare costs may well exceed the temporary short-run gain. Previous analyses have underestimated the cost of a permanent increase in the inflation rate because they have ignored the growth of the economy and therefore the growth of the future instantaneous welfare costs. In the important case in which the growth of aggregate income exceeds the social discount rate, no reduction in unemployment can justify any permanent increase in the rate of inflation. Quite the contrary, if the inflation rate is above its optimal level, the economy should then be deflated to reduce the inflation rate regardless of the temporary consequences for unemployment.

This paper offers an explanation of the use of mandatory-retirement clauses in labor contracts. It argues that the date of mandatory retirement is chosen to correspond to the date of voluntary retirement, but the nature of the optimal wage profile results in a discrepancy between spot wage and spot VMP (value of the worker's marginal product). This is because it is preferable to pay workers less than VMP when young and more than VMP when old. By doing so, the problem is solved, so the contract with mandatory retirement is Pareto efficient. A theory of agency is presented and empirical evidence which supports the hypothesis is provided.