Knowledge that Transforms

[This paper provides a general proof of the existence of a proportional price with the interest rate strictly greater than the growth rate associated with any efficient proportional program in the polyhedral technology. Proofs for similar theorems are also given for the programs satisfying the regularity condition in other technologies.]

ordinal approach to welfare comparisons. Given a poverty line, a priori, this index has several appealing properties: (i) it can be computed using readily available information, (ii) it is sensitive to the percentage of the population that is below the line (the head-count ratio), (iii) it depends on the income of the average poor person, and (iv) it depends on the amount of inequality among the poor themselves. In this note, we offer an alternative interpretation and a generalization of Sen's index as an index. These are indices, usually of inequality, that are exact for social evaluation functions. Each index is thus implied by and implies at least one social evaluation function. Essential to the construction of these ethical indices is the notion of the

[We consider the intertemporal problem of optimally consuming a natural resource and exploring for new sources of supply of that resource. Resource consumption yields social utility while the exploration effort controls the uncertainty in the timings of discoveries as well as their magnitudes. The objective is to choose an optimal consumption and exploration policy so as to maximize the expected discounted utility of consumption net of the exploration cost over an infinite planning horizon. We present a controlled storage process model of the problem and under reasonable conditions we characterize the existence and the properties of optimal policies and prices.]

[Using duality theory I show that the Tobin-Houthakker conjecture that a reduction in the ration of one good will increase the consumption of unrationed substitutes and diminish the demand for unrationed complements may not hold in disequilibrium situations.]

[The fine structure of earnings is defined by a theoretically meaningful decomposition of the covariance matrix of earnings (or log earnings) time series. A three-element variance components model is proposed for analyzing earnings of young workers. These components are interpreted as the effects of differential on-the-job training (OJT) and differential economic ability. Several properties of these components and relationships between them are deduced from the OJT model. Background noise generated by a nonstationary first-order autoregressive process, with heteroscedastic innovations and time-varying AR parameters is also assumed present in observed earnings. ML estimates are obtained for all parameters of the model for a sample of Swedish males. The results are consistent with the view that the OJT mechanism is an empirically significant phenomenon in determining individual earnings profiles.]

A continuum of goods is introduced into the general Ricardian model of international trade. By looking at the derived demand for labor, it is demonstrated that the analysis of the model can be reduced to the analysis of an equivalent model of pure exchange in which each country essentially trades its own labor for the labor of other countries. Furthermore, unlike the case where the number of goods is finite, the derived demand for labor becomes a differentiable function of the relative wages of the different countries. How this facilitates the analysis of comparative statics exercises is illustrated by establishing a number of propositions in the theory of growth, technical change, and tariffs. THE RICARDIAN MODEL IS perhaps the simplest formulation in which the technology can be explicitly incorporated into an analysis of international trade. In a general form, it consists of an arbitrary number of countries each of whom use only one factor of production, called labor, to produce an arbitrary number of goods. Each country has a constant returns to scale technology but they differ in the relative amounts of labor required to produce different goods. This generates an incentive for each country to specialize in the production of only certain goods which in turn generates the gains from trade. Although the model is frequently employed to illustrate many of the basic principles of international trade, it is not commonly used to examine those issues which require a detailed analysis of comparative statics. Questions such as how a shift in demand affects the pattern of trade and the relative prices of goods, or the corresponding impact of a tariff, technical change, or growth in the labor force are generally analyzed either with simpler models which do not explicitly incorporate the technology at all or else more sophisticated models which include a technology with several factors of production. The problem with the Ricardian model is that the qualitative properties of the results typically depend upon the pattern of specialization. In order to determine the general equilibrium effect of a small change in the tariff rates, for instance, we must know precisely which countries are completely specialized in the production of which goods and which goods are jointly produced by more than one country. A general analysis of any of these issues, therefore, will require a separate analysis for each possible pattern of specialization. Even with two countries and two goods, there are generally several cases to examine. An even more serious defect is the fact that the first order effect in any one of these cases tells only part of the story of what happens in a world with many goods and discrete parameter changes. In general, a change in some

A. Ronald Gallant, Alberto Holly, Statistical Inference in an Implicit, Nonlinear, Simultaneous Equation Mode in the Context of Maximum Likelihood Estimation, Econometrica, Vol. 48, No. 3 (Apr., 1980), pp. 697-720

Two solution concepts for games without sidepayments are considered: the stable bargaining solution proposed by Harsanyi [6, 7], and the A-transfer value first proposed by Shapley [19]. Some examples of games are considered for which both solution concepts yield results which are highly counter-intuitive, and which seem to be inconsistent with the hypothesis that the games are played by rational players.