Knowledge that Transforms

The whole of the advantages and disadvantages of the different employments of labor and stock must, in the same neighborhood, be either perfectly equal or continually tending to equality. If in the same neighborhood, there was any employment evidently either more or less advantageous than the rest, so many people would crowd into it in the one case, and so many would desert it in the other, that its advantages would soon return to the level of other employments. This at least would be the case in a society where things were left to follow their natural course, where there was perfect liberty and where every man was perfectly free. . [17, p. 99]

ANUMBER of economists have endeavored to explain one or more types of local government expenditures. Hawley [6], Brazer [3], Hirsch [7], and Hansen [5] have been prominent among these. Each has employed a one-equation multiple-regression model to express per capita local expenditures as a function of selected independent variables using crosssection data. This paper also contains a multiple-regression analysis of per capita crosssection data. However, two equations derived from explicit optimizing behavior are used. The theory of collective choice through the medium of a social-welfare function was introduced by Bergson [2], and extended by Samuelson [8], Arrow [1], and Graaff [4]. Theil [9], has developed an elaborate empirically oriented analysis in which quadratic social-welfare functions play a major role. Beyond this, social-welfare functions have seldom served as a basis for empirical work. This paper attempts another move in the empirical direction. Some of the concepts of social-welfare analysis are applied to the expenditure and tax decisions of local governments. The collective consumer is the populace of a local area. Collective decisions are made by elected representatives following the rules of a democratic society. It is postulated here that the resultant public expenditure and tax decisions can be explained as if they were the result of maximizing a social welfare function subject to a social budget constraint, both defined in expenditure space. Particular forms for social, or in the current context community, welfare functions and budget constraints are assumed and the consequences of community welfare maximization examined in the next section of this paper. The third section contains descriptions of data, procedures and results for empirical analyses of United States counties on a cross-section basis using the concepts of the preceding section. The behavior implications of estimates for metropolitan and nonmetropolitan counties are examined in the following two sections. A final section contains some concluding remarks.

p HE role of relative prices as determinant of factor demand has received wide attention in recent work. Major contributions 1 have been made by Dale W. Jorgenson who, either alone or with associates, has presented, along with various empirical results and certain policy conclusions, what is called a theory of investment behavior based on the neo-classical theory of optimal accumulation of 2 We shall endeavor in this paper to direct number of tests to critical points of departure in the Jorgenson model. This task has been greatly facilitated by Jorgenson, who has made available to us his own basic quarterly data for total United States manufacturing, thus permitting our re-examination to go forward without confusing the analysis with questions of data comparability.3 The essential burden of Jorgenson's argument is that substitution parameters have been improperly neglected or ignored in most work on the investment function. He accepts the widely held view of the demand for capital stock as function of the output produced but argues that it is also function of the relative price of output and capital. Investment itself then consists of the replacement of depreciating capital stock and distributed lag adjustment of capital to its (usually changing) equilibrium value. Jorgenson also argues that, in quarterly data at least, particular generalization of the techniques by Chenery and Koyck for estimating distributed lag relations is essential. Jorgenson seeks to capture the price or substitution effect in investment with various measures of, or proxies for the implicit rental or 'shadow price' of unit of capital services. ' In his original formulation 5 this depends upon the price of capital goods, q, the rate of depreciation, 8, the rate of interest, r, the relative rate of change of capital goods prices, q/q (capital gains), the rate of direct business taxation, u, and the proportions, v, w, and x, of depreciation, cost of capital, and capital losses (gains) chargeable against taxable income; his rental price for capital services is

International Development

Journal Article Empirical Evidence on the Acceleration Principle: A Comment Get access A. G. Hines A. G. Hines University College, London Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 35, Issue 3, July 1968, Pages 347–349, https://doi.org/10.2307/2296667 Published: 01 July 1968

Journal Article On the Stability of the Golden Rule Path in the Hayekian Production Process Case Get access K. Inada K. Inada Tokyo Metropolitan University and Stanford University Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 35, Issue 3, July 1968, Pages 335–345, https://doi.org/10.2307/2296666 Published: 01 July 1968

R. Sato, M. Beckmann; Neutral Inventions and Production Functions: an Addendum, The Review of Economic Studies, Volume 35, Issue 3, 1 July 1968, Pages 366,

Journal Article A Theory of Saving and Portfolio Selection Get access A. Douglas A. Douglas University of California, Berkeley Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 35, Issue 4, October 1968, Pages 453–463, https://doi.org/10.2307/2296772 Published: 01 October 1968

Journal Article Capital Aggregation and Optimality Conditions Get access J. K. Whitaker J. K. Whitaker Bristol University and University of Virginia Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 35, Issue 4, October 1968, Pages 429–442, https://doi.org/10.2307/2296770 Published: 01 October 1968