Knowledge that Transforms

The pure theory of consumer demand is a thoroughly developed topic, more so than is its use in providing extra information to improve estimates of demand parameters. In this paper some aspects of the Slutsky-Hicks-Allen theory of demand are used in conjunction with multivariate statistical analysis to provide estimates of elasticities of domestic demand for several New Zealand meats. These estimates are more efficient, in a statistical sense, and considerably superior for prediction purposes than are corresponding results obtained by more standard methods. In addition, the utility maximization theory is tested to see if it is an hypothesis capable of explaining observed demand for the meats considered.

This article is concerned with the theory of the bottleneck problem experienced by a developing economy, say that of an underdeveloped country which is trying to achieve specified production goals over a fixed time period, where there is competition for restricted resources and limited external aid, including for example competition between the needs for consumer goods and capital goods. The problem is viewed as a generalized type of nonlinear programming problem. Mathematically, a basic difficulty in such a model is of course its enormous size; and it is desirable to find methods of testing approximate solutions. One such test is provided by the duality theory of nonlinear programming, which is shown to apply to this situation, so that the problem can be regarded as either of two distinct problems, which are shown to have the same optimal solution. Economically, these two problems may be described in terms of determining the optimal procedure at any given time during the period in terms of what has already happened, or alternatively in terms of what is required to happen subsequent to that time. The two problems involve respectively maximization and minimization, so that, in particular, upper and lower bounds for the value of production can be calculated for any particular production plan.

This paper concerns itself with the following problem: Suppose the true production function is of the CES type with constant returns to scale. If we fit an unrestricted Cobb-Douglas production function instead, what is the nature of the bias in the estimate of the returns to scale parameter?

A Review of Probability Distributions and Their Properties Definition and Characteristics of a Stochastic Process Some Important Classes of Stochastic Processes Stationary Processes The Brownian Motion and the Poisson Process, Levy Processes Renewal Processes and Random Walks Martingales in Discrete Time Branching Processes Regenerative Phenomena Markov Chains Tauberian Theorems.