Knowledge that Transforms

[This paper is concerned with the estimation of an econometric model for the Israeli economy as it existed through 1965. The model is disaggregated to seven sectors and contains substantial detail for import and export equations. Multiplier analysis suggests that the economy is stable for unemployment rates around eight percent but is unstable at full employment unless discretionary fiscal and monetary policies are applied. A new version of the IS-LM curve is developed to explain this result. The model is used to "forecast" the recession of 1966 and it is determined that the ex post record is more successful than official government predictions issued at that time.]

[A value share is defined as the ratio of the expenditure of the ith commodity to total expenditure. Some value shares go up and others go down in successive periods, and in this article the problem is raised whether one can define transitions from the ith share to the jth in an attractive way. The procedure is applied to Dutch data in the period 1921-1963.]

Computes a GLS matrix weighted estimator for a panel data set. meangroup.src does a similar estimator, but uses simple weighted average rather than a matrix-weighted average. Swamy(1970), Efficient Inference in a Random Coefficient Regression Model, Econometrica, vol 38, 311-323. (This abstract was borrowed from another version of this item.)

[This paper presents a general formalism for calculating the effect of taxes on income distribution, and the resultant effect on income inequality. We first derive a closed form expression for income inequality (defined from a Lorenz curve) in terms of the income density function. By way of illustration, we use this expression to calculate the effect of a proportional and a lump sum tax on income inequality in a simple exponential income distribution. The results show that the effect of a lump sum tax imposed after a proportional tax is a function of the proportional tax rate, even though the proportional tax itself does not change inequality.]

[The purpose of this article is to suggest and demonstrate a procedure for testing economy wide linear programming models.The suggested procedure applies the linear programming model to an historical period. In general, the model's optimal solution will not be identical to the actual historical solution. Differences between the model's optimal and the economy's actual solutions could be explained by alternative sets of hypotheses--on the one hand, market imperfections, and on the other hand, defects in the linear programming model. Ordinary statistical tests could then be applied in testing the alternative hypotheses. In order to demonstrate the procedure, a linear programming model designed for prescribing an optimal economic structure for the Greek economy during the period 1954-61 is presented and tested.]

[In this paper we are concerned with the distribution of observed or reported incomes in the context of a model that assumes underreporting. A form of `errors-in-variables' model is considered and the Pareto distribution is shown to exhibit certain invariance properties. Under this model (a) the distribution of observed incomes suitably truncated coincides with the true distribution if and only if the distribution is of the Pareto form and (b) a variable having a linear regression on true income has a linear regression on observed income also if and only if the distribution is of the Pareto type.]

This paper develops a sequential model of the individual's economic decision problem under risk. On the basis of this model, optimal consumption, investment, and borrowing-lending strategies are obtained in closed form for a class of utility functions. For a subset of this class the optimal consumption strategy satisfies the permanent income hypothesis precisely. The optimal investment strategies have the property that the optimal mix of risky investments is independent of wealth, noncapital income, age, and impatience to consume. Necessary and sufficient conditions for long-run capital growth are also given.