Robert E. Jensen, [Observations on Jensen's Experimental Design for Study of Effects of Accounting Variations in Decision Making]: A Rejoinder, Journal of Accounting Research, Vol. 5, No. 2 (Autumn, 1967), pp. 230-251

Journal Article A Productivity Theory of Wage Levels—An Alternative to the Phillips Curve Get access E. Kuh E. Kuh Massachusetts Institute of Technology Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 34, Issue 4, October 1967, Pages 333–360, https://doi.org/10.2307/2296554 Published: 01 October 1967

Journal Article Balanced Growth and Stability in the Johansen Vintage Model Get access E. Sheshinski E. Sheshinski Massachusetts Institute of Technology Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 34, Issue 2, April 1967, Pages 239–248, https://doi.org/10.2307/2296812 Published: 01 April 1967

Journal Article Tests of a Capital-Theoretic Model of Technological Change Get access R. E. Lucas, Jr. R. E. Lucas, Jr. Carnegie Institute of Technology Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 34, Issue 2, April 1967, Pages 175–189, https://doi.org/10.2307/2296807 Published: 01 April 1967

This paper presents the results of a simulation study of the dynamic characteristics of the model built by Professor Chow whose purpose was to study statistically the relevance of the multiplier, accelerator, and liquidity preference as determinants of the national income of the United States.

THE PROBLEMS of distribution in an economic system may be analysed either by means of the behavioral assumptions of a competitive model or by the more flexible techniques of n person game theory. In the competitive model, consumers are assumed to respond to a set of prices by maximizing utility subject to a budget constraint and producers by maximizing profit. Consistent production decisions and an allocation of commodities are obtained by the determination of a set of prices at which all markets are in equilibrium. The analysis of these problems by means of n person game theory requires us to specify the production and distribution activities that are available to an arbitrary coalition of economic agents. It is frequently sufficient to summarize the detailed strategic possibilities open to a coalition by the set of possible utility vectors that can be achieved by the coalition. For example, in a pure exchange economy each coalition will have associated with it the collection of all utility vectors that can be obtained by arbitrary redistributions of the resources of that coalition. The core of an n person game is a generalization of Edgeworth's contract curve. A vector of utility levels is suggested which is feasible for all of the players acting collectively, and an arbitrary coalition is examined to see whether it can provide higher utility levels for all of its members. If this is possible, the utility vector which was originally suggested is said to be blocked by the coalition. The core of the n person game consists of those utility vectors which are feasible for the entire group of players and which can be blocked by no coalition. As we have seen during the last several years, there is an intimate connection between these two methods of analysis. If the conventional assumptions of the competitive model are made, such as convexity of preferences and convexity and constant returns to scale for the production set, then there will be a price system at which all markets are in equilibrium and a resulting assignment of commodity bundles to consumers. The utility vector associated with this competitive equilibrium may be shown to be in the core. Even further, if the number of consumers tends

T HIS SURVEY was made of the engineers and scientists at the Schenectady, New York, plants of the General Electric Company. It has no connection in any way with the General Electric Company itself and was neither approved nor disapproved by that Company. All the people surveyed are college graduates. About 15 per cent are supervisors or managers. This group is of interest to economists for three reasons. First, their annual incomes, $7,000 to over $20,000 before taxes, are in a bracket that accounts for a large share of the total saving done in this country. Second, these are all professional employees of a large company and their anticipated incomes are well defined and not subject to the extreme fluctuations that are common among self-employed professionals. The study of such a group should allow a good test to be made of Friedman's Permanent Income Hypothesis. In addition, this group is especially useful for such a test because it belongs to an association that conducts an annual salary survey and gives each member a set of curves that shows all salaries of the group as functions of age. They can see from these curves what their expected salaries will be for the rest of their working lives and, therefore, they have an extremely good measure of their permanent incomes. Third, this group can be used to test Duesenberry's Relative Income Hypothesis because it is a small, homogeneous, isolated group that lives in the over-all community but usually is not really a part of it. These people make friends only within their own group, the managerial group, and a certain few white collar groups. They are isolated at work and live apart in their own suburbs. They are, as the song puts it so well, the tickey-tackey people. Their tastes and standards are similar and their incomes and status relative to each other are of great importance. Their incomes are high in relation to others in the area, but their consumption is dependent upon where their incomes stand in relation to others in their small group so their saving pattern should test the Relative Income Hypothesis.

IN order to evaluate alternative stabilization policies, it is necessary to-ascertain the properties of the system into which these are to be introduced. Since this is very difficult in economics, the usual practice is to postulate simple systems which are amenable to analysis by general methods, and then to consider the impact of various stabilization on these systems. Such an approach led Baumol, for example, to conclude that policies automatic or not which appear to be properly designed may very well turn out to aggravate fluctuations [2, p. 21]. This somewhat pessimistic conclusion was suggested by an analysis of the transient response of a deterministic linear system. The question naturally arises whether results similar to those derived by Baumol also hold for stochastic systems. The purpose of this paper is to extend the tools and results derived by Baumol to a linear stochastic system. Since attention will be focussed on the stochastic response of the system, this paper can be viewed as an elaboration of some of the problems discussed by Friedman [5] in connection with stabilization policy. In the next section, some of the properties of stochastic linear systems and linear stabilization are described. Methods which may be used to evaluate alternative stabilization are considered in section III. The paper concludes with several comments on the implications of minimum-variance stabilization policies.