on the existence of markov consistent plans under production uncertainty strotz 1956 and pollak 1968 were among the first to study the behaviour of an economic agent whose preferences change over time they suggested that such an agent would choose a consistent plan which they described as the best plan that he would actually follow a markov consistent plan has a particularly simple structure current decisions are independent of past decisions except insofar as past decisions affect the current values of state variables unfortunately markov consistent plans do not generally exist in this paper we demonstrate that the existence problem dissappears for finite horizon problems when one introduces even a small amount of smooth uncertainty into production

utility functionals with nonpaternalistic intergenerational altruism the case where altruism extends to many generations abstract the paper considers utility functinals which embody nonpaternalistic intergenerational altruism so that each generation s utility level depends not only on its own consumption but also on other possibly infinitely many generations utility levels two concepts of utility functionals are proposed they are based on the supposition either that people regard dead ancestors utility levels as givens or that in evaluating present and future consumptions people consider how the ancestors would respond if they were alive unique existence of such functionals is proved and some properties analyzed under a condition which basically says that the degrees of altruism are not excessive

why there are organized futures markets i shall present an explanation of the existence of organized futures markets with more predictive power than the two prevailing rival views my explanation briefly is this an organized futures market facilitates trade among strangers one of the rival prevailing views is a defense of futures trading it asserts that an organized futures market furnishes legitimate businessmen with a means of hedging so that they can obtain insurance against price risk the other prevailing view is an attack on organized futures markets it asserts that such markets enable speculators to manipulate prices to the detriment of outsiders who are less well informed and to the detriment of legitimate businessmen such as farmers the attack on organized futures markets likens them to gambling casinos the defense sees them as a form of insurance neither the attack nor the defense is valid the correct explanation is closely related to why we conduct trade using money instead of by barter

a complete characterization of optimal growth paths in an aggregated model with a non concave production function the convexity of technology has played a crucial role in economic analyses of optimal one sector growth problems for example two of the key results on the traditional model of ramsey 1928 that have relied on the convexity of the technology are that optimal intertemporal growth involves moving monotonically towards a unique steady state as in cass 1965 koopmans 1965 and that the value function is a concave differentiable function of the initial capital stock as in benveniste and scheinkman 1979

discounting and altruism to future decision makers is discounting of future decision makers consumption utilities consistent with pure altruism toward those decision makers that is a concern that they are better off according to their own likewise forward looking preferences it turns out that the answer is positive for many but not all discount functions used in the economics literature in particular hyperbolic discounting of the form used by phelps and pollak rev econ studies 35 1968 201 and laibson quart j econ 112 1997 443 is consistent with exponential altruism towards future generations more generally we establish a one to one relationship between discount functions and altruism weight systems and provide sufficient as well as necessary conditions for discount functions to be consistent with pure altruism

nonpaternalistic intergenerational altruism abstract the paper develops a concept of equilibrium behaviour and establishes its existence in a model of nonpaternalistic intergenerational altruism each generation derives utility from its own consumption and the utilities of its successors equilibrium capital stocks are time monotone and therefore converge to a steady state finally when each generation s utility depends on that of at least two successors equilibria may be inefficient this is shown by an example where feasible programs exist providing greater consumption compared to the equilibrium path for every generation

rawlsian intergenerational justice as a markov perfect equilibrium in a resource technology the rawlsian maximin criterion is combined with nonpaternalistic altruistic preferences in a nonrenewable resource technology the maximin programme is shown to be time inconsistent for a subset of initial conditions a solution to this intergenerational conflict is found under a given assumption as a generically unique subgame perfect equilibrium

futures and actual markets how they are related in order to explore how futures markets affect the market for the commodity or asset underlying the futures contract this study takes as its central theme the analogy between futures and money the relation between monetary and real phenomena is isomorphic to the relation between a futures contract and the underlying asset success in establishing the validity of this isomorphism will have several advantages first it will throw new light on some important aspects of futures trading by pointing out the analogies with the corresponding monetary phenomena which are better understood this enables students of futures to learn from the lessons of the monetary branch of economics second students of money also can learn from that knowledge about futures which has been more thoroughly analyzed than the corresponding monetary phenomena by demonstrating that there is an isomorphism between money and futures these two branches of economics can illuminate each other this ap

dynamic allocation in an altruistic overlapping generations economy abstract this paper is concerned with the issue does there exist a social security program which can be maintained period after period to address this issue the paper considers dynamic allocation in an altruistic overlapping generations economy the altruism is intergenerational nonpaternalistic and two sided it is assumed that generations coexisting in the same period agree on a social welfare function which evaluates the consumption of various generations and play a game against those living in different periods a perfect equilibrium of this game is shown to exist and its properties are examined journal of economic literature classification numbers c72 d62 h55

futures trading market interrelationships and industry structure futures markets arise as a response to economic uncertainty one goal of this paper is to measure how futures trading in existing contracts changes in response to changes in uncertainty caused by inflation a difficult issue that other researchers have addressed is why only a small handful of all markets have successful futures markets see e g telser and higginbotham although we do not provide a complete answer to this question we make progress toward an answer by investigating the covariance structure of various futures prices this allows us to predict which markets are the least needed and to see whether

information and competitive advantage the rise of general motors during the mid 1920s alfred p sloan instituted a number of innovations designed to provide the operating divisions at general motors with more accurate and more timely information regarding final consumer demand these innovations have not received much attention in attempts to explain general motors remarkable rise to dominance of the u s domestic automobile industry the present article reviews these events and provides statistical tests affirming the success of these innovations at the same time as general motors increases in profitability and market share

fractional reserve banking in grain fractional reserve banks namely enterprises being legally liable to pay some substance on demand while regularly having too little on hand to satisfy all their obligations are commonly associated exclusively with money conceivably fractional reserve banks can deal in substances other than money as it happens chicago s warehousemen of the 1860s practiced fractional reserve banking not in dollars or sterling but in grain l these warehousemen operated in the style of a conventional financial intermediary borrowing short through demand deposits in order to lend long the natural evolution of fractional reserve banking in grain in nineteenth century chicago was interrupted however ever more stringent laws the result of repeated campaigns against fraudulent receipts eventually forced chicago s warehousemen to keep 100 percent reserves consequently the organization of the grain trade past and present not only provides information about the development of fractional reserve banking in general but reveals the effects of a rare experiment in outlawing fractional reserve banking

forward market and international trade many studies on hedging currency risk and international trade 6 14 18 17 have investigated the simultaneous hedging and production decisions with the nonstochastic home and foreign earnings assumption these studies derived a separation theorem which shows that the production decision made by a multinational firm for international trade is independent of the distribution of the exchange rate and dependent only on the forward price the separation theorem has two different implications first although the production decision is shown to depend on the forward price there is still a missing link connecting the trading activity in the forward markets with international trade second exchange rate uncertainty will not have an impact on the level on trade since the forward price can be used by multinational firms as a guide for the expected future spot rate the first implication seems to contradict results by britto 8 and telser 37 demonstrating that futures price has a real impact on resource allocation and production within an economy the second implication is inconsistent with a number of other empirical studies 2 11 12 22 29 that have shown exchange rate uncertainty has an adverse effect on trade and other studies 5 13 that have found exchange rate volatility to have a positive impact on trade although some studies 7 27 do recognize stochastic foreign income in the foreign hedging they ignore the two kinds of issues discussed above thus this paper attempts to investigate the simultaneous decisions for foreign exchange hedging and production under a stochastic assumption of foreign earnings a simple model is developed here to examine a the interaction of forward markets with international trade and b the impact of exchange risk on trade by endogenizing the forward price in a variety of scenarios this paper derives several interesting results under the stochastic foreign income scenario a new foreign exchange hedging rule which incorporates the covariability of foreign earnings and exchange risk is derived further we find that the separation theorem breaks down under such a situation interestingly we are able to show a positive linkage between trading activity in forward markets and export furthermore

regime cycles democracy autocracy and revolution in post soviet eurasia research on regime change has often wound up chasing events in the post soviet world because it has frequently assumed that regime change if not simple instability implies a trajectory toward a regime type endpoint like democracy or autocracy a supplemental approach recognizes that regime change can be cyclic not just progressive regressive or random in fact regime cycles are much of what we see in the postcommunist world where some states have oscillated from autocracy toward greater democracy then back toward more autocracy and with recent colored revolutions toward greater democracy again an institutional logic of elite collective action focusing on the effects of patronalpresidentialism is shown to be useful in understanding such cyclic dynamics explaining why revolutions occurred between 2003 and 2005 in ukraine georgia and kyrgyzstan but not in countries like russia azerbaijan and uzbekistan

intergenerational altruism with future bias abstract we show that standard preferences of altruistic overlapping generations exhibit future bias which involves preference reversals associated with increasing impatience this underlies a conflict of interest between successive generations we explore the implications of this conflict for intergenerational redistribution when there is a sequence of utilitarian governments representing living generations and choosing policies independently over time we argue that future bias creates incentives to legislate and sustain a pay as you go pension system which every government views as a self enforcing commitment mechanism to increase future old age transfers

markov perfect equilibria in altruistic growth economies with production uncertainty this paper concerns the existence of markov perfect equilibria in altruistic growth economies previous work on deterministic models has established existence only under extremely restrictive conditions we show that the introduction of production uncertainly yields an existence theorem for aggregative infinite horizon models with very general forms of altruism journal of economic literature classification numbers