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Full-Text Articles in Social and Behavioral Sciences

Current Account, Exchange Rate, And Monetary Dynamics In A Stochastic Equilibrium Model, Richard H. Clarida Mar 1984

Current Account, Exchange Rate, And Monetary Dynamics In A Stochastic Equilibrium Model, Richard H. Clarida

Cowles Foundation Discussion Papers

We construct a simple stochastic open-economy macro-economic model from the decision rules of rational optimizing agents, solving explicitly for the relationship between the model’s deep parameters, and the variance-covariance matrix of equilibrium returns on domestic and foreign assets. We use the model to study the dynamic relationship between exchange rate changes and current account flows in response to domestic monetary shocks, to establish the conditions under which exchange rate depreciations accompany current account deficits, and to investigate the link between time preference, risk aversion, and the dynamic exchange rate and current account response to monetary disturbances. The model generates current …


A Note On Biology, Time And The Golden Rule, Martin Shubik Mar 1984

A Note On Biology, Time And The Golden Rule, Martin Shubik

Cowles Foundation Discussion Papers

No abstract provided.


Robust Estimation Of Location In A Gaussian Parametric Model: Ii, Donald W.K. Andrews Mar 1984

Robust Estimation Of Location In A Gaussian Parametric Model: Ii, Donald W.K. Andrews

Cowles Foundation Discussion Papers

This paper extends the results of Andrews (1984) which considers the problem of robust estimation of location in a model with stationary strong mixing Gaussian parametric distributions. Three neighbourhood systems are considered, each of which contains the Hellinger neighbourhoods used in Andrews (1984). Optimal robust estimators for this dependent random variable model are found to be bounded influence estimators with optimal psi functions which are very nearly of Huber shape. These estimators are quite robust against different “amounts” of dependence, and against lack of dependence. To generate the optimal estimators a minimax asymptotic risk criterion is used, where minimaxing is …


Excess Labor And The Business Cycle, Ray C. Fair Feb 1984

Excess Labor And The Business Cycle, Ray C. Fair

Cowles Foundation Discussion Papers

No abstract provided.


Effects Of Expected Future Government Deficits On Current Economic Activity, Ray C. Fair Feb 1984

Effects Of Expected Future Government Deficits On Current Economic Activity, Ray C. Fair

Cowles Foundation Discussion Papers

No abstract provided.


Insurance, Flexibility And Non-Contingent Trades, Russell Cooper Feb 1984

Insurance, Flexibility And Non-Contingent Trades, Russell Cooper

Cowles Foundation Discussion Papers

This paper considers non-contingent trades through either forward markets or simple contracts. The point of the inquiry is to understand the costs and benefits of trades of this nature. We focus on the tradeoff between insurance (a benefit) and the loss of flexibility in decisions (a cost) as determining properties of trading in forward markets. This tradeoff is also used to explore contract length.


On A Variable Dimension Algorithm For The Linear Complementarity Problem, Ludo Van Der Heyden Jan 1984

On A Variable Dimension Algorithm For The Linear Complementarity Problem, Ludo Van Der Heyden

Cowles Foundation Discussion Papers

In an earlier paper we presented a variable dimension algorithm for solving the linear complementarity problem (LCP). We now extend the class of LCP’s that can be solved by this algorithm to include LCP’s with copositive plus coefficient matrices. The extension, inspired by Lemke [1965], is obtained by introducing an artificial dimension and by applying the variable dimension algorithm to the enlarged LCP.


Net Present Value Maximization And Imperfections In The Loan Market: A Note, Cynthia Van Hulle Jan 1984

Net Present Value Maximization And Imperfections In The Loan Market: A Note, Cynthia Van Hulle

Cowles Foundation Discussion Papers

There seems to be some confusion in the literature whether or not imperfections in the lending-borrowing market, and in particular, differences in lending and borrowing rates, would destroy shareholder unanimity. The purpose of this note is to show that imperfections in this market are not really relevant to stockholder agreement concerning the optimality of the net present value rule. To do this, the paper uses a new criterion guaranteeing unanimity and which basically only requires that investors are sufficiently competitive, i.e., spanning or the notion of firm competition recently proposed by L. Makowiski [9] generally turn out to be unnecessary …


Monopoly Provision Of Product Quality With Uninformed Buyers, Russell Cooper, Thomas W. Ross Jan 1984

Monopoly Provision Of Product Quality With Uninformed Buyers, Russell Cooper, Thomas W. Ross

Cowles Foundation Discussion Papers

This essay is concerned with a monopolist’s incentives to provide a high quality goods when some of its customers cannot observe quality prior to purchase. We show that if all buyers have the same tastes for quality, the monopolist will not try to take advantage of the poorly informed. When tastes differ, however, some quality randomization may become profitable as a means to loosen binding self-selection constraints. The profitability of randomization is shown to depend upon the relative degrees of risk aversion of the buyers and on the convexity of the firm’s cost of quality function. We view our results …


Fiscal And Monetary Policy In A General Equilibrium Model, Truman F. Bewley Jan 1984

Fiscal And Monetary Policy In A General Equilibrium Model, Truman F. Bewley

Cowles Foundation Discussion Papers

No abstract provided.


Stochastic Equilibrium And Turnpike Property: The Discounted Case, Ramon Marimon Dec 1983

Stochastic Equilibrium And Turnpike Property: The Discounted Case, Ramon Marimon

Cowles Foundation Discussion Papers

The existence of the modified golden rule and the turnpike property are proved for a multi-sector stochastic growth model. The (exogenous) stochastic environment is represented by a stationary stochastic process that influences preferences, technology and resources. A social planner maximizes the expected sum of discounted utilities. The conditions required in order to obtain these results, are the natural strengthening of the stability conditions of the deterministic case. As in the deterministic case, the discount factor must be close to one in order to guarantee the almost sure (and in the mean) convergence of optimal interior programs. It is proved that …


The Optimality Of Regulated Pricing: A General Equilibrium Analysis” And “An Optimal Tax Rule For Average Cost Pricing, Donald J. Brown, Geoffrey M. Heal Dec 1983

The Optimality Of Regulated Pricing: A General Equilibrium Analysis” And “An Optimal Tax Rule For Average Cost Pricing, Donald J. Brown, Geoffrey M. Heal

Cowles Foundation Discussion Papers

No abstract provided.


Dominance And Shareholder Unanimity: A New Approach, Cynthia Van Hulle Dec 1983

Dominance And Shareholder Unanimity: A New Approach, Cynthia Van Hulle

Cowles Foundation Discussion Papers

No abstract provided.


The Exact Distribution Of The Stein-Rule Estimator, Peter C.B. Phillips Nov 1983

The Exact Distribution Of The Stein-Rule Estimator, Peter C.B. Phillips

Cowles Foundation Discussion Papers

This paper derives the exact density of the Stein-rule estimator in the setting of the general linear regression. The derivation is facilitated by the author’s development of new algebraic methods that involve an extension of the Weyl calculus. General formulae for the moments of the estimator are also provided.


Finite Sample Econometrics Using Era's, Peter C.B. Phillips Nov 1983

Finite Sample Econometrics Using Era's, Peter C.B. Phillips

Cowles Foundation Discussion Papers

The paper considers approximate distribution theory as a way to deliver practical improvements over asymptotic methods. Trials of the adequacy of asymptotic series based approximations are conducted and the results exhibit the need for further improvements. An alternative approach is suggested which utilizes a family of extended rational approximants (ERA’s). ERA’s build on the strength of primitive exact theory or asymptotic series; they allow us to blend information from diverse analytic numerical and experimental sources. The ultimate objective of the approach is to incorporate directly into software constructive functional approximants relevant to statistical practice. An illustration is provided.


Intertemporally Separable Overlapping Generations Economies, John Geanakoplos, Heracles M. Polemarchakis Sep 1983

Intertemporally Separable Overlapping Generations Economies, John Geanakoplos, Heracles M. Polemarchakis

Cowles Foundation Discussion Papers

No abstract provided.


A Note On The “Corelessness” Of Antibalance Of A Game, Martin Shubik, Shlomo Weber Sep 1983

A Note On The “Corelessness” Of Antibalance Of A Game, Martin Shubik, Shlomo Weber

Cowles Foundation Discussion Papers

No abstract provided.


On University Education In Econometrics: Remarks On An Article By Eric R. Sowey, Peter C.B. Phillips Sep 1983

On University Education In Econometrics: Remarks On An Article By Eric R. Sowey, Peter C.B. Phillips

Cowles Foundation Discussion Papers

No abstract provided.


Multimarket Oligopoly, Jeremy I. Bulow, John Geanakoplos, Paul D. Klemperer Aug 1983

Multimarket Oligopoly, Jeremy I. Bulow, John Geanakoplos, Paul D. Klemperer

Cowles Foundation Discussion Papers

Actions a firm takes in one market may affect its profitability in other markets, beyond any joint economies or diseconomies in production. The reason is that an action in one market, by changing marginal costs in a second market, may change competitors’ strategies in that second market. We show how to calculate the strategic consequences in market 2, of a change in conditions in market 1 or of a firm’s action in market 1. Qualitatively, the same results hold for both simultaneous markets and sequential markets: whether a more aggressive (i.e., lower price or higher quantity) strategy in the first …


Information Patterns And Nash Equilibria In Extensive Games, Pradeep Dubey, Mamoru Kaneko Aug 1983

Information Patterns And Nash Equilibria In Extensive Games, Pradeep Dubey, Mamoru Kaneko

Cowles Foundation Discussion Papers

No abstract provided.


The Exact Distribution Of Zellner's Sur, Peter C.B. Phillips Aug 1983

The Exact Distribution Of Zellner's Sur, Peter C.B. Phillips

Cowles Foundation Discussion Papers

This paper derives the exact finite sample distribution of the two-stage GLS (generalized least squares) estimator in a multivariate linear model with general linear parameter restrictions. This includes the seemingly unrelated regression (SUR) model as a special case and generalizes presently known exact results for the latter system. The usual classical assumptions are made concerning nonrandom exogenous variables and normally distributed errors.


Organizing Production In A Large Economy With Costly Communication, Paul R. Milgrom, Robert J. Weber Jul 1983

Organizing Production In A Large Economy With Costly Communication, Paul R. Milgrom, Robert J. Weber

Cowles Foundation Discussion Papers

We show that in a large production economy, the cost of collecting the information required by a planner to set nearly optimal prices is negligible relative to the total output of the economy. The cost of collecting the information required to set a nearly optimal production plan for each firm in the economy is not negligible. This conclusion stands in contrast to common opinion that determining optimal prices requires as much information as determining an optimal plan.


The Exact Distribution Of Exogenous Variable Coefficient Estimators, Peter C.B. Phillips Jul 1983

The Exact Distribution Of Exogenous Variable Coefficient Estimators, Peter C.B. Phillips

Cowles Foundation Discussion Papers

This paper derives the exact probability density function of the instrumental variable (IV) estimator of the exogenous variable coefficient vector in a structural equation containing n + 1 endogenous variables and N degrees of overidentification. A leading case of the general distribution that is more amenable to analysis and computation is also presented. Conventional classical assumptions or normally distributed errors and nonrandom exogenous variables are employed.


Forward Rates And Future Policy: Interpreting The Term Structure Of Interest Rates, Robert J. Shiller, John Y. Campbell, Kermit L. Schoenholtz Jun 1983

Forward Rates And Future Policy: Interpreting The Term Structure Of Interest Rates, Robert J. Shiller, John Y. Campbell, Kermit L. Schoenholtz

Cowles Foundation Discussion Papers

No abstract provided.


Worker Asymmetric Information And Involuntary Unemployment, Russell Cooper Jun 1983

Worker Asymmetric Information And Involuntary Unemployment, Russell Cooper

Cowles Foundation Discussion Papers

No abstract provided.


Macroeconomics Under Debate, James Tobin Jun 1983

Macroeconomics Under Debate, James Tobin

Cowles Foundation Discussion Papers

No abstract provided.


Profit-Sharing In A Collusive Industry, Martin J. Osborne, Carolyn Pitchik Jun 1983

Profit-Sharing In A Collusive Industry, Martin J. Osborne, Carolyn Pitchik

Cowles Foundation Discussion Papers

We study a model in which collusive duopolists divide up the monopoly profit according to their relative bargaining power. We are particularly interested in how the negotiated profit shares depend on the sizes of the firms. If each can produce at the same constant unit cost up to its capacity, we show that the profit per unit of capacity of the small firm is higher than that of the large one. We also study how the ratio of the negotiated profits depends on the size of demand relative to industry capacity, and how this ratio changes with variations in demand.


Linear Complementarity And The Average Volume Of Simplicial Cones, Roger Howe Jun 1983

Linear Complementarity And The Average Volume Of Simplicial Cones, Roger Howe

Cowles Foundation Discussion Papers

Samle [S] has recently shown how to estimate the average number of pivot steps in Lemke’s algorithm for the linear complementarity problem (LCP) in terms of the “volumes” of certain cones. In this paper we discuss the notion of average volumes of cones, and give two applications to the LCP.


Multiperiod Insurance Contracts, Russell Cooper, Beth Hayes May 1983

Multiperiod Insurance Contracts, Russell Cooper, Beth Hayes

Cowles Foundation Discussion Papers

No abstract provided.


Fiscal Incidence In A Dynamic Life-Cycle Model With Land, Christophe Chamley Apr 1983

Fiscal Incidence In A Dynamic Life-Cycle Model With Land, Christophe Chamley

Cowles Foundation Discussion Papers

No abstract provided.