Phillippe Aghion and Abhijit Banerjee
- Published in print:
- 2005
- Published Online:
- January 2007
- ISBN:
- 9780199248612
- eISBN:
- 9780191714719
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199248612.003.0001
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This introductory chapter begins with a brief discussion of the authors’ dissatisfaction with other economists’ positions regarding the instability of capitalist economies. The development of a model ...
More
This introductory chapter begins with a brief discussion of the authors’ dissatisfaction with other economists’ positions regarding the instability of capitalist economies. The development of a model of the aggregate economy is described. An overview of the chapters included in this volume is presented.Less
This introductory chapter begins with a brief discussion of the authors’ dissatisfaction with other economists’ positions regarding the instability of capitalist economies. The development of a model of the aggregate economy is described. An overview of the chapters included in this volume is presented.
W. M. Gorman
C. Blackorby and A. F. Shorrocks (eds)
- Published in print:
- 1996
- Published Online:
- November 2003
- ISBN:
- 9780198285212
- eISBN:
- 9780191596322
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198285213.003.0026
- Subject:
- Economics and Finance, Microeconomics
A weakness of the paper ’Aggregation in the short and long run’ (Ch. 25) is the use of strong convexity assumptions––these assumptions seem easier to justify in the short run, rather than the long ...
More
A weakness of the paper ’Aggregation in the short and long run’ (Ch. 25) is the use of strong convexity assumptions––these assumptions seem easier to justify in the short run, rather than the long run. In this paper (which is from an unpublished typescript from Nuffield College, Oxford, 1982), all firms, actual and potential, have constant‐returns‐to‐scale technologies, hence, those that actually exist in any particular equilibrium are determined endogenously, but their outputs are of course undetermined; this is consistent with the structure of many general equilibrium models. Gorman begins by assuming that there is an input aggregate in each firm as well as in the economy as a whole; as in Ch. 25, this implies the existence of an output aggregate in each firm and in the economy. Equilibrium is characterized by zero profits and a finite production plan for every firm, and this in turn determines those firms that exist in the equilibrium. The main result is one seen in the previous aggregation papers: an aggregate exists if and only if it is deployed efficiently among those firms producing positive outputs.Less
A weakness of the paper ’Aggregation in the short and long run’ (Ch. 25) is the use of strong convexity assumptions––these assumptions seem easier to justify in the short run, rather than the long run. In this paper (which is from an unpublished typescript from Nuffield College, Oxford, 1982), all firms, actual and potential, have constant‐returns‐to‐scale technologies, hence, those that actually exist in any particular equilibrium are determined endogenously, but their outputs are of course undetermined; this is consistent with the structure of many general equilibrium models. Gorman begins by assuming that there is an input aggregate in each firm as well as in the economy as a whole; as in Ch. 25, this implies the existence of an output aggregate in each firm and in the economy. Equilibrium is characterized by zero profits and a finite production plan for every firm, and this in turn determines those firms that exist in the equilibrium. The main result is one seen in the previous aggregation papers: an aggregate exists if and only if it is deployed efficiently among those firms producing positive outputs.
W. M. Gorman
C. Blackorby and A. F. Shorrocks (eds)
- Published in print:
- 1996
- Published Online:
- November 2003
- ISBN:
- 9780198285212
- eISBN:
- 9780191596322
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198285213.001.0001
- Subject:
- Economics and Finance, Microeconomics
W. M. (Terence) Gorman has been a major figure in the development of economics during the past 40 years. His publications on separability, aggregation, duality, and the modelling of consumer demand ...
More
W. M. (Terence) Gorman has been a major figure in the development of economics during the past 40 years. His publications on separability, aggregation, duality, and the modelling of consumer demand are recognized as fundamental contributions to economic theory. Many of his unpublished papers have achieved similar status as privately circulated classics. This volume brings together, for the first time, all Gorman's important work on aggregation across commodities and agents, including separability, budgeting, representative agents, and the construction of capital and labour aggregates; much of this has never been published before. The 26 chapters are arranged in two parts: I. Separability and budgeting, and II. Aggregation across agents and firms. Each chapter (except the first) is preceded by an editorial introduction describing its origin and place within the literature, as well as the main results themselves. The book is of interest to academic economists interested in the foundations of consumer and producer theory, and in the interface between microeconomics and macroeconomics. A second volume of works, Modelling and Methodology, covers topics on duality, demand, trade, and welfare.Less
W. M. (Terence) Gorman has been a major figure in the development of economics during the past 40 years. His publications on separability, aggregation, duality, and the modelling of consumer demand are recognized as fundamental contributions to economic theory. Many of his unpublished papers have achieved similar status as privately circulated classics. This volume brings together, for the first time, all Gorman's important work on aggregation across commodities and agents, including separability, budgeting, representative agents, and the construction of capital and labour aggregates; much of this has never been published before. The 26 chapters are arranged in two parts: I. Separability and budgeting, and II. Aggregation across agents and firms. Each chapter (except the first) is preceded by an editorial introduction describing its origin and place within the literature, as well as the main results themselves. The book is of interest to academic economists interested in the foundations of consumer and producer theory, and in the interface between microeconomics and macroeconomics. A second volume of works, Modelling and Methodology, covers topics on duality, demand, trade, and welfare.
Young‐Iob Chung
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780195178302
- eISBN:
- 9780199783557
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195178300.003.0004
- Subject:
- Economics and Finance, South and East Asia
This chapter examines the economic reforms for capital formation and economic transformation, as well as the estimation of aggregate investment in Korea under Japanese rule between 1905 and 1945. The ...
More
This chapter examines the economic reforms for capital formation and economic transformation, as well as the estimation of aggregate investment in Korea under Japanese rule between 1905 and 1945. The reform measures examined are those that removed economic and political obstacles, and those that established a new infrastructure to accommodate the workings of a government-controlled but market-oriented economy aimed at promoting capital formation and economic development. The estimation of investment considered not only the aggregate sum, but also the different nationalities (namely, Japanese, foreigners, and Koreans). The chapter also evaluates the impact of foreign investment, especially that of the Japanese, on Korean investment in terms of catalytic, linkage, oppression effects, as well as the benefits derived from external economies. Investment in human capital is assessed in terms of the overall expansion of the school system, student enrollments, and educational opportunities for Japanese and Koreans. The analysis includes private education, particularly that of the Christian missionaries, which played an important role in educating future Korean leaders.Less
This chapter examines the economic reforms for capital formation and economic transformation, as well as the estimation of aggregate investment in Korea under Japanese rule between 1905 and 1945. The reform measures examined are those that removed economic and political obstacles, and those that established a new infrastructure to accommodate the workings of a government-controlled but market-oriented economy aimed at promoting capital formation and economic development. The estimation of investment considered not only the aggregate sum, but also the different nationalities (namely, Japanese, foreigners, and Koreans). The chapter also evaluates the impact of foreign investment, especially that of the Japanese, on Korean investment in terms of catalytic, linkage, oppression effects, as well as the benefits derived from external economies. Investment in human capital is assessed in terms of the overall expansion of the school system, student enrollments, and educational opportunities for Japanese and Koreans. The analysis includes private education, particularly that of the Christian missionaries, which played an important role in educating future Korean leaders.
Young‐Iob Chung
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780195178302
- eISBN:
- 9780199783557
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195178300.003.0008
- Subject:
- Economics and Finance, South and East Asia
This chapter analyzes the impact of investment on Korea's economic growth and structural changes relative to aggregate production — which is measured in terms of gross domestic product — during the ...
More
This chapter analyzes the impact of investment on Korea's economic growth and structural changes relative to aggregate production — which is measured in terms of gross domestic product — during the 40 years of Japanese rule. This is followed by an assessment of structural changes in industry, mining, transportation, communications, commerce, finance, agriculture, forestry, and fishing, together with changes in industrial and agricultural organizations, which transformed the Korean economy from agrarian to semi-industrial. This chapter also analyzes the rise of the modern sector, the expansion of businesses, the monopolistic tendency in the industrial sector, changes in the make-up of land ownership, the rise in the scale of landholding, the enlargement of land tenancy, and the worsening status of working farmers, which affected both income and wealth distribution in Korea. The type of goods produced in the manufacturing is examined, particularly between the heavy, chemical, and light industries; the extent of “manufactured goods”; and the rise of the service sectors. The increased volume and changing patterns of foreign trade are also assessed, including the kinds of goods and services traded, Japanese dominance over the Korean economy, and Korea's economic dependency on Japan.Less
This chapter analyzes the impact of investment on Korea's economic growth and structural changes relative to aggregate production — which is measured in terms of gross domestic product — during the 40 years of Japanese rule. This is followed by an assessment of structural changes in industry, mining, transportation, communications, commerce, finance, agriculture, forestry, and fishing, together with changes in industrial and agricultural organizations, which transformed the Korean economy from agrarian to semi-industrial. This chapter also analyzes the rise of the modern sector, the expansion of businesses, the monopolistic tendency in the industrial sector, changes in the make-up of land ownership, the rise in the scale of landholding, the enlargement of land tenancy, and the worsening status of working farmers, which affected both income and wealth distribution in Korea. The type of goods produced in the manufacturing is examined, particularly between the heavy, chemical, and light industries; the extent of “manufactured goods”; and the rise of the service sectors. The increased volume and changing patterns of foreign trade are also assessed, including the kinds of goods and services traded, Japanese dominance over the Korean economy, and Korea's economic dependency on Japan.
Steven French and Décio Krause
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199278244
- eISBN:
- 9780191603952
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199278245.003.0003
- Subject:
- Philosophy, Philosophy of Science
This chapter presents the history of quantum statistics, from its beginnings in Planck’s work, through the development of Bose-Einstein and Fermi-Dirac statistics, to the more recent work on forms of ...
More
This chapter presents the history of quantum statistics, from its beginnings in Planck’s work, through the development of Bose-Einstein and Fermi-Dirac statistics, to the more recent work on forms of parastatistics, focusing on the role played by considerations of particle identity and individuality. The new physics was taken to imply that quantum particles are non-individuals in some sense. This provides the framework for a novel account of Bohr’s view of particle individuality, which further illuminates his complementarity interpretation as well as Born and Schrödinger’s broadly structuralist approaches. Schrödinger’s view that identity does not apply to quantum particles is emphasized, as is Weyl’s incorporation of this view into his treatment of aggregates of particles.Less
This chapter presents the history of quantum statistics, from its beginnings in Planck’s work, through the development of Bose-Einstein and Fermi-Dirac statistics, to the more recent work on forms of parastatistics, focusing on the role played by considerations of particle identity and individuality. The new physics was taken to imply that quantum particles are non-individuals in some sense. This provides the framework for a novel account of Bohr’s view of particle individuality, which further illuminates his complementarity interpretation as well as Born and Schrödinger’s broadly structuralist approaches. Schrödinger’s view that identity does not apply to quantum particles is emphasized, as is Weyl’s incorporation of this view into his treatment of aggregates of particles.
Phillippe Aghion and Abhijit Banerjee
- Published in print:
- 2005
- Published Online:
- January 2007
- ISBN:
- 9780199248612
- eISBN:
- 9780191714719
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199248612.003.0008
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This chapter begins with a synthesis of the topics covered in the preceding chapters. It argues that in order to explain the recent boom and bust episode in the United States, one should turn ...
More
This chapter begins with a synthesis of the topics covered in the preceding chapters. It argues that in order to explain the recent boom and bust episode in the United States, one should turn attention to models of the stock market. It sketches an approach to booms and crashes that gives a central role to technical progress and the expansion of new markets.Less
This chapter begins with a synthesis of the topics covered in the preceding chapters. It argues that in order to explain the recent boom and bust episode in the United States, one should turn attention to models of the stock market. It sketches an approach to booms and crashes that gives a central role to technical progress and the expansion of new markets.
David Soskice
- Published in print:
- 2007
- Published Online:
- September 2008
- ISBN:
- 9780199206483
- eISBN:
- 9780191709715
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199206483.003.0003
- Subject:
- Business and Management, Political Economy
This chapter shows how production regimes are complementary to welfare state regimes and political systems, perusing a number of arguments which have been developed over the period since the original ...
More
This chapter shows how production regimes are complementary to welfare state regimes and political systems, perusing a number of arguments which have been developed over the period since the original publication of VoC in 2001. These complementarities serve as a background for understanding a fourth complementarity which has not been discussed before in any detail — that between CMEs and conservative systems of aggregate demand management. This is critical in understanding the quite different patterns of adjustment of CMEs and LMEs to the demand shocks of the last decade. It argues that while LMEs can use discretionary monetary and fiscal policy, CMEs find this much harder. The chapter also explains why income restraint, and hence, real exchange rate depreciation is more effective in small CMEs than large CMEs.Less
This chapter shows how production regimes are complementary to welfare state regimes and political systems, perusing a number of arguments which have been developed over the period since the original publication of VoC in 2001. These complementarities serve as a background for understanding a fourth complementarity which has not been discussed before in any detail — that between CMEs and conservative systems of aggregate demand management. This is critical in understanding the quite different patterns of adjustment of CMEs and LMEs to the demand shocks of the last decade. It argues that while LMEs can use discretionary monetary and fiscal policy, CMEs find this much harder. The chapter also explains why income restraint, and hence, real exchange rate depreciation is more effective in small CMEs than large CMEs.
Dirk U. Pfeiffer, Timothy P. Robinson, Mark Stevenson, Kim B. Stevens, David J. Rogers, and Archie C. A. Clements
- Published in print:
- 2008
- Published Online:
- September 2008
- ISBN:
- 9780198509882
- eISBN:
- 9780191709128
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198509882.003.0003
- Subject:
- Biology, Disease Ecology / Epidemiology
This chapter outlines techniques for visualizing spatial data, and describes methods that might be applied in the early phase of an analysis where the objective is to detect obvious spatial patterns ...
More
This chapter outlines techniques for visualizing spatial data, and describes methods that might be applied in the early phase of an analysis where the objective is to detect obvious spatial patterns and to screen a dataset for errors. It discusses the use of point data, aggregated data, and continuous data. It also considers elements of good cartography and other factors that need to be taken into account when communicating spatial information to a wider audience.Less
This chapter outlines techniques for visualizing spatial data, and describes methods that might be applied in the early phase of an analysis where the objective is to detect obvious spatial patterns and to screen a dataset for errors. It discusses the use of point data, aggregated data, and continuous data. It also considers elements of good cartography and other factors that need to be taken into account when communicating spatial information to a wider audience.
Dirk U. Pfeiffer, Timothy P. Robinson, Mark Stevenson, Kim B. Stevens, David J. Rogers, and Archie C. A. Clements
- Published in print:
- 2008
- Published Online:
- September 2008
- ISBN:
- 9780198509882
- eISBN:
- 9780191709128
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198509882.003.0005
- Subject:
- Biology, Disease Ecology / Epidemiology
This chapter explores various methods by which spatial and spatio-temporal disease clusters can be identified statistically. It argues that a priori choice of cluster size can have profound effects ...
More
This chapter explores various methods by which spatial and spatio-temporal disease clusters can be identified statistically. It argues that a priori choice of cluster size can have profound effects on the results. The grave concern arises that by exploring a range of maximum cluster sizes an upper cluster size threshold can be chosen that presents a pattern of clustering best suited to support a particular argument, rather than that which best reflects reality. This may cast doubt on the validity of the numerous studies that have been reported using scan circles, and in particular those based on the spatial scan statistic.Less
This chapter explores various methods by which spatial and spatio-temporal disease clusters can be identified statistically. It argues that a priori choice of cluster size can have profound effects on the results. The grave concern arises that by exploring a range of maximum cluster sizes an upper cluster size threshold can be chosen that presents a pattern of clustering best suited to support a particular argument, rather than that which best reflects reality. This may cast doubt on the validity of the numerous studies that have been reported using scan circles, and in particular those based on the spatial scan statistic.
Robert J. Shiller
- Published in print:
- 1998
- Published Online:
- November 2003
- ISBN:
- 9780198294184
- eISBN:
- 9780191596926
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198294182.003.0004
- Subject:
- Economics and Finance, Macro- and Monetary Economics, Financial Economics
For the purpose of hedging risks to standards of living, the logical place to look first would be to markets for claims on total income; but such markets do not exist, and they have apparently never ...
More
For the purpose of hedging risks to standards of living, the logical place to look first would be to markets for claims on total income; but such markets do not exist, and they have apparently never even been proposed. By making it possible to hedge the capital value of a stream of aggregate income, markets in perpetual claims or perpetual futures, long‐term swap markets, or retail analogues of these would facilitate management of the kind of longer‐run income risk that really matters to individuals and organizations; nations or other groupings of people could also use such markets to insure themselves against the prospect of a declining standard of living or the prospect of relative poverty. By hedging such risks, these macro markets would allow the natural tendency for convergence of incomes to reduce inequality of incomes, and might make significant progress toward equalizing wealth across nations, regions, categories of people, and individuals. There could be markets for hedging the risk of fluctuations in aggregate income, national income, or aggregate labour income for each country (or even region) of the world, and these could be divided up in different ways—although since most people's income is labour income, creating markets for claims on total income means for the most part creating markets for claims on labour income. The different sections of the chapter consider possible hedging arrangements in perpetual claims or perpetual futures markets for national incomes (market structures and associated institutions), whether income markets should be in actual or full‐employment income, and various measurement issues associated with incomes (including uncertainty).Less
For the purpose of hedging risks to standards of living, the logical place to look first would be to markets for claims on total income; but such markets do not exist, and they have apparently never even been proposed. By making it possible to hedge the capital value of a stream of aggregate income, markets in perpetual claims or perpetual futures, long‐term swap markets, or retail analogues of these would facilitate management of the kind of longer‐run income risk that really matters to individuals and organizations; nations or other groupings of people could also use such markets to insure themselves against the prospect of a declining standard of living or the prospect of relative poverty. By hedging such risks, these macro markets would allow the natural tendency for convergence of incomes to reduce inequality of incomes, and might make significant progress toward equalizing wealth across nations, regions, categories of people, and individuals. There could be markets for hedging the risk of fluctuations in aggregate income, national income, or aggregate labour income for each country (or even region) of the world, and these could be divided up in different ways—although since most people's income is labour income, creating markets for claims on total income means for the most part creating markets for claims on labour income. The different sections of the chapter consider possible hedging arrangements in perpetual claims or perpetual futures markets for national incomes (market structures and associated institutions), whether income markets should be in actual or full‐employment income, and various measurement issues associated with incomes (including uncertainty).
Stephen Broadberry and Mary O'Mahony
- Published in print:
- 2007
- Published Online:
- May 2007
- ISBN:
- 9780199212668
- eISBN:
- 9780191712807
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199212668.003.0013
- Subject:
- Economics and Finance, Financial Economics
This chapter provides an overview of Britain's labour productivity performance during the 20th century, incorporating the catching-up and convergence perspective. It is shown that physical capital ...
More
This chapter provides an overview of Britain's labour productivity performance during the 20th century, incorporating the catching-up and convergence perspective. It is shown that physical capital and human capital have both played an important part in Britain's productivity performance, accounting for large portions of British labour productivity growth and Britain's labour productivity gaps with the United States and continental Europe.Less
This chapter provides an overview of Britain's labour productivity performance during the 20th century, incorporating the catching-up and convergence perspective. It is shown that physical capital and human capital have both played an important part in Britain's productivity performance, accounting for large portions of British labour productivity growth and Britain's labour productivity gaps with the United States and continental Europe.
Tony Atkinson, Bea Cantillon, Eric Marlier, and Brian Nolan
- Published in print:
- 2002
- Published Online:
- November 2003
- ISBN:
- 9780199253494
- eISBN:
- 9780191595882
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199253498.003.0004
- Subject:
- Economics and Finance, Public and Welfare
Commences the analysis of social indicators for use in the EU monitoring process, starting with the portfolio as a whole, where a three‐tier structure of indicators is envisaged. There would be a ...
More
Commences the analysis of social indicators for use in the EU monitoring process, starting with the portfolio as a whole, where a three‐tier structure of indicators is envisaged. There would be a small set of lead ‘headline’ indicators (Level l), supported by a wider range of indicators at Level 2, where both levels would be common across member states; to these, member states would be encouraged to add their choice of Level 3 indicators, to highlight specificities in particular areas, and to help interpret the Level l and 2 indicators. The Level l and 2 indicators would be presented in the form of a level of performance, rather than a ranking, so that improvements in country performance can be clearly seen. The difficulties of aggregate performance measures are discussed, and two different types of aggregation outlined—the aggregation of aggregate indicators, and the aggregation of different elements of deprivation at the individual level (which are then summed over individuals to form an aggregate index for the country). The Level l and 2 indicators would also be disaggregated in a number of ways, and the importance is highlighted of giving separate indicators for women and men, and of examining the regional dimension wherever possible.Less
Commences the analysis of social indicators for use in the EU monitoring process, starting with the portfolio as a whole, where a three‐tier structure of indicators is envisaged. There would be a small set of lead ‘headline’ indicators (Level l), supported by a wider range of indicators at Level 2, where both levels would be common across member states; to these, member states would be encouraged to add their choice of Level 3 indicators, to highlight specificities in particular areas, and to help interpret the Level l and 2 indicators. The Level l and 2 indicators would be presented in the form of a level of performance, rather than a ranking, so that improvements in country performance can be clearly seen. The difficulties of aggregate performance measures are discussed, and two different types of aggregation outlined—the aggregation of aggregate indicators, and the aggregation of different elements of deprivation at the individual level (which are then summed over individuals to form an aggregate index for the country). The Level l and 2 indicators would also be disaggregated in a number of ways, and the importance is highlighted of giving separate indicators for women and men, and of examining the regional dimension wherever possible.
Hendrik S. Houthakker and Peter J. Williamson
- Published in print:
- 1996
- Published Online:
- November 2003
- ISBN:
- 9780195044072
- eISBN:
- 9780199832958
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/019504407X.003.0006
- Subject:
- Economics and Finance, Financial Economics
Drawing on Chs. 4 and 5 (which discuss the supply and demand for securities separately), this chapter investigates whether economics has anything helpful to say about the prices of shares and related ...
More
Drawing on Chs. 4 and 5 (which discuss the supply and demand for securities separately), this chapter investigates whether economics has anything helpful to say about the prices of shares and related securities by reviewing the most important ideas suggested by economic theory in this area and assessing their usefulness in the real world. In the first two sections, two fairly ancient but still popular models of equity (share) prices are examined, one of which (the steady growth model) views shares as claims to future dividends and the other (the asset model) views them as claims to the underlying net assets (corporate net worth). For the most part, these models look at the shares of individual companies in isolation, not at the market as a whole, and that is their weakness, but the asset model in particular provides important insights into aggregate equity values; as an aside to this discussion it is shown that aggregate dividends have the intriguing feature of being an approximately constant percentage of national income, which means that corporate equities offer protection (though not perfect protection) against inflation as well as participation in the real growth of the economy. The third section looks at the Capital Asset Pricing Model (CAPM) – a discovery of the 1960s that, by considering equities in relation to each other, provided important new insights into the relation between risk and return. A more recent alternative approach known as Arbitrage Pricing Theory is discussed next, and finally there is a section (an appendix) on stock indexes.Less
Drawing on Chs. 4 and 5 (which discuss the supply and demand for securities separately), this chapter investigates whether economics has anything helpful to say about the prices of shares and related securities by reviewing the most important ideas suggested by economic theory in this area and assessing their usefulness in the real world. In the first two sections, two fairly ancient but still popular models of equity (share) prices are examined, one of which (the steady growth model) views shares as claims to future dividends and the other (the asset model) views them as claims to the underlying net assets (corporate net worth). For the most part, these models look at the shares of individual companies in isolation, not at the market as a whole, and that is their weakness, but the asset model in particular provides important insights into aggregate equity values; as an aside to this discussion it is shown that aggregate dividends have the intriguing feature of being an approximately constant percentage of national income, which means that corporate equities offer protection (though not perfect protection) against inflation as well as participation in the real growth of the economy. The third section looks at the Capital Asset Pricing Model (CAPM) – a discovery of the 1960s that, by considering equities in relation to each other, provided important new insights into the relation between risk and return. A more recent alternative approach known as Arbitrage Pricing Theory is discussed next, and finally there is a section (an appendix) on stock indexes.
Lars Peter Hansen and Thomas J. Sargent
- Published in print:
- 2013
- Published Online:
- October 2017
- ISBN:
- 9780691042770
- eISBN:
- 9781400848188
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691042770.003.0013
- Subject:
- Economics and Finance, History of Economic Thought
This chapter outlines a setting with heterogeneity among households' preferences of a kind that violates the conditions for Gorman aggregation. Households' Engel curves are still affine, but ...
More
This chapter outlines a setting with heterogeneity among households' preferences of a kind that violates the conditions for Gorman aggregation. Households' Engel curves are still affine, but dispersion of their slopes prevents Gorman aggregation. However, there is another sense in which there is a representative household whose preferences are a peculiar kind of average over the preferences of different types of households. The chapter shows how to compute and interpret this preference ordering over economy-wide aggregate consumption. This complete markets aggregate preference ordering cannot be computed until one knows the distribution of wealth evaluated at equilibrium prices, so it is less useful than the one produced by Gorman aggregation.Less
This chapter outlines a setting with heterogeneity among households' preferences of a kind that violates the conditions for Gorman aggregation. Households' Engel curves are still affine, but dispersion of their slopes prevents Gorman aggregation. However, there is another sense in which there is a representative household whose preferences are a peculiar kind of average over the preferences of different types of households. The chapter shows how to compute and interpret this preference ordering over economy-wide aggregate consumption. This complete markets aggregate preference ordering cannot be computed until one knows the distribution of wealth evaluated at equilibrium prices, so it is less useful than the one produced by Gorman aggregation.
Lutz G. Arnold
- Published in print:
- 2002
- Published Online:
- October 2011
- ISBN:
- 9780199256815
- eISBN:
- 9780191698385
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199256815.003.0002
- Subject:
- Economics and Finance, Financial Economics
This chapter examines some of the most important developments in Keynesian economics — the Keynesian income expenditure analysis, the multiplier accelerator model, the Hicks-Fleming-Mundell model, ...
More
This chapter examines some of the most important developments in Keynesian economics — the Keynesian income expenditure analysis, the multiplier accelerator model, the Hicks-Fleming-Mundell model, and aggregate supply-aggregate demand (AS-AD) analysis. It explains that the income expenditure analysis demonstrates that if investment is exogenous, the economy may fail to reach full employment equilibrium due to lack of AD. It also discusses that the interaction of the Keynesian multiplier and the principle of acceleration suffices to explain business cycles. This chapter also clarifies that if prices are sticky, lack of AD may prevent the achievement of full employment even though investment is interest elastic. It is also pointed out that with nominal wage stickiness instead of price stickiness, expansionary demand-side policies raise both equilibrium aggregate production and the equilibrium price level. Lastly, this chapter discusses that Keynesian economics gave rise to the so-called neoclassical synthesis.Less
This chapter examines some of the most important developments in Keynesian economics — the Keynesian income expenditure analysis, the multiplier accelerator model, the Hicks-Fleming-Mundell model, and aggregate supply-aggregate demand (AS-AD) analysis. It explains that the income expenditure analysis demonstrates that if investment is exogenous, the economy may fail to reach full employment equilibrium due to lack of AD. It also discusses that the interaction of the Keynesian multiplier and the principle of acceleration suffices to explain business cycles. This chapter also clarifies that if prices are sticky, lack of AD may prevent the achievement of full employment even though investment is interest elastic. It is also pointed out that with nominal wage stickiness instead of price stickiness, expansionary demand-side policies raise both equilibrium aggregate production and the equilibrium price level. Lastly, this chapter discusses that Keynesian economics gave rise to the so-called neoclassical synthesis.
Shantong Li
- Published in print:
- 2006
- Published Online:
- May 2007
- ISBN:
- 9780195189322
- eISBN:
- 9780199783823
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195189322.003.0003
- Subject:
- Economics and Finance, International
This chapter examines the effects of external liberalization on China's economic growth, employment, and income distribution. The sections are organized as follows. Section 1 describes China's macro ...
More
This chapter examines the effects of external liberalization on China's economic growth, employment, and income distribution. The sections are organized as follows. Section 1 describes China's macro environment following trade liberalization. Section 2 reviews China's experience with liberalization. Section 3 analyzes the macro impact of liberalization through a decomposition of aggregate demand. Section 4 focuses on the distributive effects of liberalization through a decomposition of employment and productivity. The social impact of liberalization is dealt with in Sections 5 and 6.Less
This chapter examines the effects of external liberalization on China's economic growth, employment, and income distribution. The sections are organized as follows. Section 1 describes China's macro environment following trade liberalization. Section 2 reviews China's experience with liberalization. Section 3 analyzes the macro impact of liberalization through a decomposition of aggregate demand. Section 4 focuses on the distributive effects of liberalization through a decomposition of employment and productivity. The social impact of liberalization is dealt with in Sections 5 and 6.
Korkut Boratav and Erinc Yeldan
- Published in print:
- 2006
- Published Online:
- May 2007
- ISBN:
- 9780195189322
- eISBN:
- 9780199783823
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195189322.003.0014
- Subject:
- Economics and Finance, International
This chapter examines the facts and processes characterizing the dynamic macroeconomic adjustments in Turkey since the start of its reforms toward global integration. The study is organized as ...
More
This chapter examines the facts and processes characterizing the dynamic macroeconomic adjustments in Turkey since the start of its reforms toward global integration. The study is organized as follows. Section 2 focuses on the analytics of macro adjustments of the two distinct (i.e., 1980-1988/1989 and 1989-2000) phases of liberalization. Section 3 quantifies the macro adjustments via a set of decomposition exercises and traces the evolution of real output and sources of aggregate demand. Microlevel adjustments and related decomposition exercises, in turn, are investigated in Section 4 for the manufacturing sector. The distributional effects of liberalization of commodity trade and finance are summarized in Section 5, and Section 6 gives a conclusion.Less
This chapter examines the facts and processes characterizing the dynamic macroeconomic adjustments in Turkey since the start of its reforms toward global integration. The study is organized as follows. Section 2 focuses on the analytics of macro adjustments of the two distinct (i.e., 1980-1988/1989 and 1989-2000) phases of liberalization. Section 3 quantifies the macro adjustments via a set of decomposition exercises and traces the evolution of real output and sources of aggregate demand. Microlevel adjustments and related decomposition exercises, in turn, are investigated in Section 4 for the manufacturing sector. The distributional effects of liberalization of commodity trade and finance are summarized in Section 5, and Section 6 gives a conclusion.
Roman Frydman and Michael D. Goldberg
- Published in print:
- 2013
- Published Online:
- October 2017
- ISBN:
- 9780691155234
- eISBN:
- 9781400846450
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691155234.003.0005
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This chapter examines the imperfect knowledge imperative in modern macroeconomics and finance theory. It argues that the Rational Expectations Hypothesis (REH) has nothing to do with how even ...
More
This chapter examines the imperfect knowledge imperative in modern macroeconomics and finance theory. It argues that the Rational Expectations Hypothesis (REH) has nothing to do with how even minimally reasonable profit-seeking individuals forecast the future in real-world markets. It attributes REH's insurmountable epistemological difficulties and widespread empirical problems to a single, overarching premise that underpins contemporary macroeconomics and finance theory: nonroutine change is unimportant for understanding outcomes. It also suggests that contemporary behavioral finance models rest on the same core premise as their REH-based counterparts. Finally, it introduces an alternative approach to modeling individual behavior and aggregate outcomes: Imperfect Knowledge Economics, which opens macroeconomics and finance models to nonroutine change and the imperfect knowledge that it engenders.Less
This chapter examines the imperfect knowledge imperative in modern macroeconomics and finance theory. It argues that the Rational Expectations Hypothesis (REH) has nothing to do with how even minimally reasonable profit-seeking individuals forecast the future in real-world markets. It attributes REH's insurmountable epistemological difficulties and widespread empirical problems to a single, overarching premise that underpins contemporary macroeconomics and finance theory: nonroutine change is unimportant for understanding outcomes. It also suggests that contemporary behavioral finance models rest on the same core premise as their REH-based counterparts. Finally, it introduces an alternative approach to modeling individual behavior and aggregate outcomes: Imperfect Knowledge Economics, which opens macroeconomics and finance models to nonroutine change and the imperfect knowledge that it engenders.
John S. Ahlquist and Margaret Levi
- Published in print:
- 2013
- Published Online:
- October 2017
- ISBN:
- 9780691158563
- eISBN:
- 9781400848652
- Item type:
- chapter
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691158563.003.0001
- Subject:
- Sociology, Politics, Social Movements and Social Change
This chapter explores the variation in organizational norms, governance arrangements, and social networks that produce systematic differences in aggregate behavior. Left-wing longshore union members ...
More
This chapter explores the variation in organizational norms, governance arrangements, and social networks that produce systematic differences in aggregate behavior. Left-wing longshore union members give up time and money to fight on behalf of social justice causes from which they can expect no material return. Parishioners of churches throughout the United States risk jail to shelter asylum seekers. Altruism is common enough, and so are volunteering, political commitment, and unselfish service to others. The chapter asks why and how do some organizations produce membership willingness to self-sacrifice on behalf of a wide range of political and social justice issues. In some instances, the answer may be simple: self-selection. The more interesting cases are those in which individuals join for one reason but come to pursue goals they may not have considered previously.Less
This chapter explores the variation in organizational norms, governance arrangements, and social networks that produce systematic differences in aggregate behavior. Left-wing longshore union members give up time and money to fight on behalf of social justice causes from which they can expect no material return. Parishioners of churches throughout the United States risk jail to shelter asylum seekers. Altruism is common enough, and so are volunteering, political commitment, and unselfish service to others. The chapter asks why and how do some organizations produce membership willingness to self-sacrifice on behalf of a wide range of political and social justice issues. In some instances, the answer may be simple: self-selection. The more interesting cases are those in which individuals join for one reason but come to pursue goals they may not have considered previously.
