With the rapid growth in various types of corporate combinations, many opportunities arise in which increased internal efficiency in the allocation of capital budgeting resources may be obtained. Although the resource-transfer methodology proposed in this paper is discussed within the context of a merger/acquisition environment, the operational analysis conveivably could be applied to multiproduct, multifirm, or multinational situations. This study examines an application in which a linear programming model can be used operationally as an analytical planning device (1) to obtain efficient capital budgets for the merged companies, and (2) to quantify the monetary value of potential gains in efficiency produced by a merger. Conceptually, the model assists management in searching for excess capacity in each company, efficiently combines scarce resources, selects an optimal project list for the merged company, and indicates what the composition of the new capital budget should be. In addition, a variable step function provides for multiplicative adjustments in common resource constraints. These adjustments might be positive (negative) if the combination results in a more than proportionate increase (decrease) in the availability of a scarce resource.

Donald H. Woods, Eugene F. Brigham, Stockholder Distribution Decisions: Share Repurchases or Dividends?, The Journal of Financial and Quantitative Analysis, Vol. 1, No. 1, Proceedings of the First Annual Meeting of the Western Finance Association (Mar., 1966), pp. 15-26

This study puts forth stationarity considerations in explaining the observed breakdown between aggregate Discount Window borrowing and the spread between the Federal Funds rate and the discount rate during the post-1987 period. Tests with biweekly data indicate stationarity for adjustment borrowing, but cannot reject the unit root for the spread. The Goodfriend–Dutkowsky dynamic implicit cost formulation can accommodate the contrasting stationarity properties. Structural restrictions are compatible with stationary borrowing and a stationary or near integrated spread. While empirical findings from the static model indicate greater bank reluctance to borrow over time, the dynamic model gives considerably less support.

Donald H. Dutkowsky, William G. Foote, Intertemporal Substitution in Macroeconomics: Consumption, Labor Supply, and Money Demand, The Review of Economics and Statistics, Vol. 74, No. 2 (May, 1992), pp. 333-338

The authors derive a model of money demand for an optimizing consumer with rational expectations in a discrete time infinte hortizon framework under uncertainty. Mone y demand responds to unanticipated changes in income, one period expe ctations of future bond and money interest rates, unanticipated curre nt interest rates, and past anticipations of current rates. The deriv ed consumption function mirrors money demand behavior. Joint estimati on of the consumption and money demand equations by weighted nonlinea r least squares corroborates the predicted effects, particularly inco me neutrality. This money demand model substantially outperforms a co nventional specification in post-sample simulation over 1975-85.

Donald H. Straszheim, Mahlon R. Straszheim, An Econometric Analysis of the Determination of Prices in Manufacturing Industries, The Review of Economics and Statistics, Vol. 58, No. 2 (May, 1976), pp. 191-201