[This paper investigates the role of inheritances in the determination of the national distribution of wealth. Assuming that households care both about their own consumption and that of their descendants, we construct a model of family bequest behavior. Then, embedding the model in a simple consumption-loan framework, we study the evolution of the national distribution of wealth. A key generalization of previous work is that we allow bequests to both male and female children so that each family receives two inheritances (one from the husband's parents and one from the wife's). This means the national distribution of wealth develops in a complicated manner depending on mating patterns. Using a fixed-point argument we prove the existence of a stationary distributionof wealth consistent with accurate expectations on the part of all households. We then present a test for uniqueness and several economic characterizations of all possible equilibria.]
When traders come to a market with different information about the items to be traded, the resulting market prices may reveal to some traders information originally available only to others.The possibility for such inferences rests upon traders having "models" or "expectations" of how equilibrium prices are related to initial information.This relationship is endogenous, which motivates the term "rational expectations equilibrium."This paper shows that, in a particular model of asset trading, if the number of alternative states of initial information is finite then, generically, rational expectations equilibria exist that reveal to all traders all of their initial information. INTRODUCTION1WHEN TRADERS COME to a market with different information about the items to be traded, the resulting market prices may reveal to some traders something about the information available to other traders.This phenomenon might be important in the case of assets whose eventual values or utilities are not perfectly known to all traders at the time of purchase, as in the trading of land with uncertain quantities of mineral deposits, or in the trading of common stocks.A thorough theoretical analysis of this situation probably requires a more detailed specification of the trading mechanism than is usual in general equilibrium analysis.Nevertheless, it is tempting to try to obtain results that are as independent as possible of the specifics of the trading mechanism, by using some suitable concept of equilibrium.The possibility for one trader to make inferences from market prices about the information possessed by other traders rests upon his having a "model" or "expectations" of how equilibrium prices are determined, i.e., how equilibrium prices are related to the information initially possessed by the various traders.But this relationship is endogenous to the market system, and if traders have any opportunity to compare the results of the operation of the market with their own models, then a suitable equilibrium concept would require that their models not be obviously controverted by their observations of the market.This motivates the term "rational expectations equilibrium."The particular rational expectations equilibrium that one would obtain depends upon the traders' models or expectations of the relationship between traders' 1 I am grateful to Jerry Green, Leonid Hurwicz, James Jordan, and David Kreps for very helpful discussions of the problems treated in this paper.
[We study a team with many processes; the output process depends on the resources allocated to it by the resource manager, on a local decision by the process manager, and on a (random) parameter of the process. We compare two communication patterns: (1) resource allocations are based on full information, but local decisions are based only on corresponding local information; (2) all decisions are based on full information. We show that, if the criterion is expected average output per process, and if the process parameters are independent and identically distributed, then (under certain regularity assumptions) for "large" teams the additional communication among process managers in (2) over (1) has approximately no value.]
[Considerable research effort has been devoted to the determinants of changes in money wage rates. Most of this research has used aggregate wage index data to form the dependent variable. However, there are substantial difficulties involved with the use of such data. Recently a number of important papers have appeared which systematically examine these difficulties and recommend appropriate estimation and hypothesis testing procedures. The conclusions obtained from the use of these appropriate methods are quite negative. One purpose of this study is to determine whether this negative assessment of economists' knowledge of the determinants of wage changes is in fact appropriate. In order to do this, the study employs individual contract data. The study also examines the expectations hypothesis, the effect of unanticipated inflation on wage changes ("catch-up") and the effect of uncertainty about future inflation on negotiated wage settlements.]
first-order stationary Markoff process with zero mean and autocorrelation coefficient p, - 1 < p < 1, the greatest lower bound for the efficiency of the least-squares estimator of 8 (relative to the Gauss-Markoff estimator) over the interval 0;p < 1 is .753763. This compares with a greatest lower bound of .535898 for the relative efficiency of the Cochrane-Orcutt estimator of 38.
[This paper studies the effects of irreversibility of capital investment upon optimal exploitation policies for renewable resource stocks. It is demonstrated that although the long-term optimal sustained yield is not affected by the assumption of irreversibility (except in extreme cases), the short-term dynamic behavior of an optimal policy may depend significantly upon the assumption. It is suggested that the results may have profound implications for problems of rehabilitation of overexploited fisheries and other renewable resource stocks.]
[This paper is concerned with the identification and estimation of the parameters in a dynamic simultaneous equations model with stationary disturbances when both the endogenous and exogenous variables are subject to random measurement errors. A frequency domain approach is suggested to fully utilize the information contained in the data. The first part of this paper explores the identification criteria. The second part of this paper suggests estimation methods for such a model. Both full information and limited information estimation methods are studied and their respective gains and losses are evaluated.]
The paper presents a model of wealth distribution that makes use of Gibrat's law of proportionate effect to explain the way wealth is distributed and how the distribution changes over time. The stochastic factor in each period is shown to be the result of deliberate choices by individual decision makers regarding their savings, investment, and bequests, given their inherited wealth and natural ability. The source of randomness is two-fold: uncertainty about the rates of return and randomness of the distribution of natural skills. Also studied is the impact of government tax parameters on the inequality of wealth. Two categories of taxes are distinguished: taxes on flows, such as those on income, portfolio returns, and earnings, and those on the stock, such as wealth or estate taxes.