This chapter discusses demand for leisure and the transactions demand for money that is imbedded in a demand system derived from a specified utility function. The Stone–Geary utility function is dynamized by the introduction of state variables as parameters. The differential equation for money shows that it has a special feature. Short-run effects are derived using the first-order conditions together with the budget constraint and the state equations. Long-run demand equations are obtained by substituting the conditions into the first-order conditions and imposing the budget constraint. There is a real need for a theory of demand in which the word income designates what it suggests, that is, the sum of labor and nonlabor income, and in which labor income depends both on the wage rate and on the number of hours worked or not worked.
[The existence of comprehensive sets in R extasciicircum3 which cannot be transformed onto convex sets by means of ordinal transformations (i.e., continuous, strictly increasing transformations of the coordinate axes) is established. Such sets can be realized as the disposable hulls of pure exchange economies with convex preference orderings.]
[In this paper the process of exchange is formulated as a noncooperative game. The game is analogous to the familiar institution of competitive bidding in a sealed-tender auction in which one agent (the auctioneer) chooses among trades offered by the other agents (the bidders). Using various regularity assumptions it is shown that this noncooperative game has a Nash equilibrium which yields an allocation in the core of the corresponding cooperative game of exchange. Also, as the bidders are replicated by division this allocation (aggregated by types) converges to a Walrasian allocation in which each type's budget constraint (using the efficiency prices) is satisfied. Thus it appears that bidding is a competitive process for achieving a cooperative outcome, and in the limit, a market outcome.]
[There has been increasing concern recently over the use of the simple first order Markov form to model error autocorrelation in regression analysis. The consequence of misspecifying the error model will be especially serious when the regressors include lagged values of the dependent variable. The purpose of this paper is to develop Lagrange multiplier tests of the assumed error model against specified ARMA alternatives. It is shown that all of the tests can be regarded as asymptotic tests of the significance of a coefficient of determination, and a table is provided which gives details of two general tests and several special cases.]
[For a competitive commodity market with uncertain future prices, the rational behavior of a speculator is described and is used as a basis for the discussion of a self-fulfilling expectations equilibrium.]
Abs tract This paper proposes an econometric methodology to deal with life cycle earnings and mobility among discrete earnings classes. First, we use panel data on male log earnings to estimate an earnings function with permanent and serially correlated transitory components due to both measured and unmeasured variables. Assuming that the error components are normally distributed, we develop statements for the probability that an individual's earnings will fall into a particular but arbitrary time sequence of poverty states. Using these statements, we illustrate the implications of our earnings model for poverty dynamics and compare our approach to Markov chain models of income mobility. *Thls draft supersedes an earlier version of this paper which was