a globally flexible almost ideal demand system the almost ideal demand system is combined with the fourier expenditure system subject to the assumption that preferences are of the price independent generalized logarithmic class the resulting demand system has the desirable features of each of its components aggregate demand equations are consistent with preferences of a representative consumer and consistent estimates of elasticities are obtained for all observed prices application of the new demand system to u s consumption of meats and fish reveals that it fits the data well and that the restriction to the usual specification is rejected

financial firm production of monetary services a generalized symmetric baroett variable profit function approach an alternative monetary production model of financial firms is employed to investigate supply side monetary aggregation financial firms are conceived to produce monetary services as outputs through financial intermediation a new method for testing the existence of consistent monetary output aggregates in financial firms production technology is developed in terms of a multiproduct firm s variable profit function and the method does not require homotheticity of the aggregator function we use a generalized symmetric barnett flexible functional form that specification satisfies global curvature conditions and retains its flexibility under the null hypothesis of weak separability neither of those properties is possessed by other flexible functional forms

profit function approximations and duality applications to agriculture monte carlo simulations of profit functions indicate that flexible functional forms may be ranked nearly the same with respect to allen uzawa partial substitution elasticities or price and fixed factor elasticities flexible functional form approximations of output price elasticities are generally worse than approximations of input price or fixed factor elasticities minflex laurent functional forms did not appear to approximate underlying elasticities any better than did their translog and generalized leontief counterparts

indirect addilog translation of indirect utility functions the difficulty of specifying a set of consumer demand equations that can simultaneously display compatibility with rational economic behaviour regularity and have the capacity to represent a comprehensive spectrum of consumer behaviour flexibility is well known a variety of approaches have been investigated in the literature but scope for substantial improvement remains the approach of this paper is to start from indirect utility functions producing globally regular if inflexible systems and to improve flexibility by adding parameters through a device termed indirect addilog translation on connait bien la difficulte de specifier un ensemble d equations de demande du consommateur qui puisse en meme temps etre compatible avec un comportement economique rationnel regularite et avoir la capacite de representer un spectre comprehensif de comportements du consommateur flexibilite la litterature specialisee a propose une variete d approches mais il y a encore place a beaucoup d amelioration l approche suggeree dans ce memoire part des fonctions indirectes d utilite qui produisent des systemes globalement reguliers meme s ils sont inflexibles et en ameliore la flexibilite en ajoutant des parametres via un procede qu on a nomme traduction indirecte addilog

methods for measuring the economic impact of ambient pollutants on the agricultural sector discussion ing from pope models for measuring economic impact should consider the follow ing three principles a it should be flexible enough to describe the underlying environ ment b it should accommodate theory and c it should provide results that directly lead to policy implications in this discussion these principles are employed as a criterion for judg ing the merits of papers by dixon garcia and mjelde dgm hamilton mccarl and adams hma and atkinson adams and crocker aac a discussion of their papers is followed by suggestions for future research methods in measuring impacts of ambient pol lutants

target zones and exchange rate dynamics this paper develops a simple model of exchange rate behavior under a target zone regime it shows that the expectation that monetary policy will be adjusted to limit exchange rate variation affects exchange rate behavior even when the exchange rate lies inside the zone and is thus not being defended actively somewhat surprisingly the analysis of target zones turns out to have a strong formal similarity to problems in option pricing and investment under uncertainty

a model of the financial firm with imperfect asset and deposit elasticities abstract the paper develops an intertemporal model to estimate the production technology of financial firms such as banks price taking is testable in each separate market for assets and liabilities and competitive price taking is a nested special case such tests are applied both to outputs and inputs empirical results for a sample of banks in new york and new jersey indicate that price taking applies only in markets for labor and time deposits in markets for loans demand deposits cash and materials the price taking hypothesis is not accepted

stochastic saddlepoint systems stabilization policy and the stock market abstract we examine the effects of introducing stochastic shocks into a linear rational expectations model with saddlepoint dynamics generated by a forward looking asset price we derive the fundamental differential equation governing the path of the asset price as a function of the sluggish variable the equation does not admit closed form solutions in general but we provide a complete qualitative characterization of the solution paths which are symmetric about equilibrium these are the relevant solutions to consider in the presence of symmetric boundary conditions we present an application of the analysis to fiscal stabilization policy where public expenditures are only adjusted when gnp moves outside a threshold around a target level the impact of such a policy on the level of the stock market is considered and it is shown how the market will anticipate such state contingent policy changes whether the expectations are stabilizing or not is shown to depend on whether the stock market is positively or negatively correlated with gnp

an empirical example of the condorcet paradox of voting in a large electorate social choice theory suggests that the occurrence of cyclical collective preferences should be a widespread phenomenon especially in large groups of decision makers however empirical research has so far failed to produce evidence of the existence of many real world examples of such and none in large electorates this paper demonstrates the existence of a real cyclical majority in a poll of danish voters preferred prime minister using pair wise comparisons this result is compared with those of a similar poll but by using different voting methods each resulting in different choices the example demonstrates the empirical reality of cyclical collective preferences and the importance of the choice of institutions

the rationale of the mean standard deviation analysis skewness preference and the demand for money publisher summary this chapter discusses the rationale of the mean standard deviation analysis skewness preference and the demand for money in january 1969 issue of the review of economic studies karl borch and martin feldstein separately criticized the widely used mean variance analysis of portfolio selection borch contended that any system of upward sloping mean standard deviation e s indifference curves can be shown to be inconsistent with the basic axiom of choice under uncertainty he pointed out that one can always pick any two points on an upward sloping indifference curve to represent two bernoulli distributions with probability 1 p of gaining the same amount x in both the cases and probability p of gaining y1 in the case of one distribution and y2 in the case of the second distribution with y2 y1 if the second distribution represents the point to the northeast of the other point then by the dominance axiom the second distribution must be preferred to the first which contradicts the basic meaning of indifference curves feldstein by using a log utility function and a lognormal distribution for investment outcome showed that e s indifference curves for a risk averter need not be convex downwards though upward sloping they would change from convex to concave once the standard deviation of the outcome exceeds the mean multiplied by on the face of it this seems to suggest that risk aversion might decrease as risk is increased beyond a certain extent

which road leads to stable money demand this paper denies that the demand for money function is any more unstable than other demand functions and maintains that the controversies regarding unstable money demand are produce by poor methodology that is not shared by other areas of the field of economics when investigating demand function properties this abstract was borrowed from another version of this item

estimating functional forms in cost prices abstract klaus conrad 1983 developed the cost price approach based upon the notion of partially fixed factor proportions as an alternative to the traditional neoclassical method of modeling cost and production functions he showed that a simplified version of his model could be used to estimate a cobb douglas cost function in cost prices we have been able to estimate the full form of conrad s proposed model and extend his technique to the ces and generalized leontief cost functions we also illustrate how to model technical change in cost prices and in cost shares

exact and superlative welfare change indicators an exact welfare change indicator is defined to be a known function of the price and quantity data for two periods for a utility maximizing consumer which is exactly equal to the hicksian equivalent variation a welfare change indicator is termed superlative if it is exactly equal to the equivalent variation for an expenditure function which has a second order approximation property the paper exhibits a number of superlative welfare change indicators and also reviews the earlier attempts of hicks and weitzman to obtain equivalent variation measures that had a second order approximation property

exchange rate bands with price inertia this problem by committing member states to taking suitable action to prevent cross parities from straying outside some given publicly announced range and williamson s proposal for target zones was explicitly aimed at preventing exchange rate misalignment among the principal industrial countries subsequently the louvre accord struck between members of the group of seven in i 987 involved unpublished commitments designed to constrain fluctuation between the u s dollar and the currencies of its major trading partners funabashi i988 given the obvious practical importance of understanding the implications of such policy commitments for the economy in general and the exchange rate in particular it is perhaps not surprising that the seminal work by krugman i 988 i989 on exchange rate determination within a band has aroused considerable interest under the assumption that the velocity of money follows a brownian motion process he obtains an explicit solution for the exchange rate as a function of the fundamental which shows that the presence of a commitment to intervene so as to defend the band exerts a stabilising influence on the exchange rate even before any such intervention takes place in their contribution to this emerging literature froot and obstfeld i989 note that krugman s minimalist stochastic specification can be derived from a monetary model of exchange rates where prices are perfectly flexible and full employment prevails where international interest differentials match expected exchange rate changes and the exchange rate preserves purchasing power parity cf mussa 1976 and they show that the behaviour of the rate inside a currency band can be obtained using results on regulated brownian motion processes cf harrison i985 using the same framework and techniques flood and garber i989 indicate how the rate will respond to noninfinitesimal intervention and svensson i 989 examines the effect of bandwidth on the stochastic behaviour of interest rates klein i989 considers the effects of uncertainty about the width of the band

on the empirical relevance of condorcet s paradox condorcet s paradox occurs when there is no alternative that beats every other alternative by majority the paradox may pose real problems to democratic decision making such as decision deadlocks and democratic paralysis however its relevance has been discussed again and again since the celebrated works of arrow social choice and individual values 1963 and black the theory of committees and elections 1958 the discussion varies from one extreme to the other from very relevant to practically irrelevant this paper tries to bring more clarity to the discussion by reviewing the literature on the empirical relevance of condorcet s paradox since a definition of the paradox for even numbers of voters and alternatives and for weak voter preferences is missing in the literature we first define the paradox clearly and simply then three topics are investigated namely domain conditions culture and the likelihood of the paradox and the empirical detection of the paradox domain conditions express regularities in voter preference profiles that prevent the paradox frequent observations of these domain conditions would make condorcet s paradox empirically less important cultures define probability distributions over the set of voter preferences observation of cultures might be a first step to indicate the relevance of the paradox the empirical detection of the paradox speaks for itself we will try to identify the number of observations of the paradox so far the overall conclusion is that the empirical relevance of condorcet s paradox is still unsettled

on the flexibility of the rotterdam model abstract the rotterdam model is a discrete approximation to a continuous time model and the approximation errors are known to be small unlike other approximations with fixed parameters at the point of approximation the rotterdam model s coefficients differ at each observation but are treated as constants during estimation this procedure introduces relatively large approximation errors which are a potential source of bias in this paper the performance of the rotterdam model in reproducing the characteristics of four integrable demand systems is assessed as anticipated the model s performance is directly related to the variability of the underlying coefficients and the bias in the parameter estimates is minimal if the coefficients are relatively constant the model can also discriminate well against an invalid alternative hypothesis however in the absence of a computationally feasible varying parameter methodology the conclusion has to be that tests of parameter stability are essential when using the rotterdam model

new concepts of aggregated money the federal reserve board s recent redefinition of its monetary aggregates followed three years of intensive board staff research on monetary aggregation while the new aggregates ultimately were selected along conventional lines some of the staff s research was oriented towards more fundamental changes in monetary aggregation methods this paper reviews such proposals which are based upon the rigorous application of index number and aggregation theory and of principal components analysis in the construction of economic monetary aggregates the usefulness of aggregation and index number theory in acquiring price indices is widely known the theory of the true cost of living index is an application of aggregation theory examples of applied index number theory include the commerce department s implicit price deflator which is a paasche index and the labor department s consumer price index which is a laspeyres index somewhat less well known is the fact that dual to the theory of economic price aggregates and indices is a theory of economic quantity aggregates and indices an example of a highly reputable quantity index is the divisia quantity index the monetary aggregates traditionally are thought to measure the supplied quantity of an economic good called money whenever monetary aggregates are used in the context of economic theory rather than as simple accounting identities the theory of economic quantity aggregation is specifically applicable however published monetary aggregates in all countries have always been computed as simple sums but as fisher 1922 p 29 observed in the conclusion to his classic treatise on index number theory the simple arithmetic average produces one of the very worst of index numbers and if this book has no other effect than to lead to the total abandonment of the simple arithmetic type of index number it will have served a useful purpose with an example of the simple sum index fisher 1922 p 363 found that the bias alone reaches 36 percent although index number theory has not yet found its way into the monetary theory literature all of the literature on index number theory and aggregation theory for the past half century supports the result long ago deduced by fisher 1922 p 361 that the simple arithmetic index should not be used the views expressed herein are solely those of the authors and do not necessarily represent the views of the board of governors of the federal reserve system this research was partially supported by national science foundation grant soc 76 84459 we are deeply indebted to the conference session s discussant of this paper w erwin diewert for volunteering to cede his allocated journal space to us so that the paper could take its current extended form federal reserve board washington d c

an empirical comparison of flexible demand system functional forms this paper compares the performance of eight frequently used flexible forms that are either 1 locally flexible 2 effectively globally regular or 3 asymptotically globally flexible results show that the functions with global properties generally perform better particularly those models having asymptotic properties results using us consumption data indicate substitutability among the components of consumption at most data points there is also some interesting substitution volatility around the time of recessions in the usa copyright 2001 john wiley sons ltd

cyclical and causal patterns of inflation and gdp growth empirical foundations for the view that high inflation impairs gdp growth are examined using annual data for 115 countries over the period 1960 1995 taking into account country heterogeneity and time specific symmetric shocks as well as endogeneity of inflation and dynamics of gdp growth dynamic panel data models of the effects of inflation on growth are estimated no evidence is found supporting the view that inflation is in general harmful to gdp growth on the other hand there is a negative correlation between contemporaneous intra country inflation and growth for periods characterized by positive oil price shocks

global output growth and volatility spillovers this article examines discernable patterns of real gross domestic product gdp growth co movements across 29 countries using consistent time series data 1912 2008 of these countries only 12 are found to form three statistically significant groupings i e g6 six organization for economic co operation and development oecd european countries g4 four anglo saxon countries and g2 two major asian countries one may then conclude that inter alia geographical proximity cultural ties and the level of socio economic and financial ties among countries determine the global systematic co movements of growth rates our results indicate that any recession in the us initially engulfs other anglo saxon countries as well as g6 and g2 countries before exerting its adverse knock on effects to the rest of the world a multivariate generalized autoregressive conditional heteroscedasticity mgarch model is also used to examine the transmission of gdp growth across these three groups and their corresponding vol

estimating a multiple output generalized box cox cost function cost structure and productivity growth in belgian railroad operations 1950 1986 abstract in this paper we estimate a multiple output generalization of berndt and khaled s box cox cost model to study the cost structure and growth in productivity in belgian railroad operations the estimated model includes several commonly used flexible functional forms as special or limiting cases empirical results indicate approximately constant returns to scale and an average rate of productivity growth of slightly less than 2 over the sample period these findings were robust across cost function specifications casting some doubt on the importance of choosing among flexible functional forms

condorcet winners and the paradox of voting probability calculations for weak preference orders choice literature given this problem social choice theorists have attempted to estimate the probability of condorcet winners given certain empirical or theoretical conditions we shall estimate the probabilities of condorcet winners and intransitive aggregate orders for various numbers of individuals with strong or weak preference orders across various numbers of alternatives we find using computer simulation a stark contrast between these estimates assuming strong individual preferences and the estimates allowing for individuals indifference between pairs of alternatives in contrast to earlier work which depends on the strong preference assumption we suggest that the problem is most acute for small committee decision making and least acute for mass elections with few alternatives

a system of demand equations satisfying effectively global regularity conditions a parametric specification of an indirect utility function in terms oaf expenditure and two unit cost functions is proposed specification of these unit cost functions in terms of regular functions leads to the notion of an effectively globally regular system of demand equations that is a system of demand equations that is regular over a cone in expenditure price space and for which the regular region includes all points in any given sample and all values of nominal expenditure and prices generating higher values of real expenditure than the sample minimum this general model nests a number of popular demand systems such as the linear expenditure system as special cases an empirical application illustrates some of these ideas copyright 1996 by mit press

the demand for gasoline evidence from household survey data summary in this paper we investigate the demand for gasoline in canada using recent annual expenditure data from the canadian survey of household spending over a 13 year period from 1997 to 2009 on three expenditure categories in the transportation sector gasoline local transportation and intercity transportation in doing so we use three of the most widely used locally flexible functional forms the almost ideal demand system aids of deaton and muellbauer 1980 the quadratic aids quaids of banks et al 1997 an extension of the simple aids model that can generate quadratic engel curves and the minflex laurent model of barnett 1983 which can also generate quadratic engel curves we pay explicit attention to economic regularity argue that unless regularity is attained by luck flexible functional forms should always be estimated subject to regularity as suggested by barnett 2002 and impose local curvature to produce inference consistent with neoclassical microeconomic theory our findings indicate that the curvature constrained minflex laurent model is the only model that is able to provide theoretically consistent estimates of the canadian demand for gasoline our estimates show that the own price elasticity for gasoline demand in canada is between 0 738 and 0 570 less elastic than previously reported in the literature copyright 2013 john wiley sons ltd

the new monetary aggregates comment in a recent paper published in this journal berkman 10 disputed the usefulness of the new chained tornquist theil divisia quantity indexes of the economy s flow of monetary services which just have begun to become available within the federal reserve system l while a few of his comments have some merit his criticisms are largely based upon a faulty understanding of aggregation theory and he thereby fails to see the forest for the trees

normalized quadratic systems of consumer demand functions empirically estimated demand systems frequently fail to satisfy the appropriate theoretical curvature conditions we propose and estimate two demand systems for which these conditions can be imposed globally the first is derived from a normalized quadratic reciprocal indirect utility function and the second is derived from a normalized quadratic expenditure function the former is flexible if there are no restrictions on its free parameters but loses flexibility if the curvature conditions need to be imposed the latter is flexible in the class of functions satisfying local money metric scaling even if the curvature conditions need to be imposed

causal relationship between energy consumption and gdp growth revisited a dynamic panel data approach abstract this paper uses the panel data of energy consumption and gdp for 82 countries from 1972 to 2002 based on the income levels defined by the world bank the data are divided into four categories low income group lower middle income group upper middle income group and high income group we employ the gmm sys approach for the estimation of the panel var model in each of the four groups afterwards the causal relationship between energy consumption and economic growth is tested and ascertained we discover a in the low income group there exists no causal relationship between energy consumption and economic growth b in the middle income groups lower and upper middle income groups economic growth leads energy consumption positively c in the high income group countries economic growth leads energy consumption negatively after further in depth analysis of energy related data the results indicate that in the high income group there is a great environmental improvement as a result of more efficient energy use and reduction in the release of co2 however in the upper middle income group countries after the energy crisis the energy efficiency declines and the release of co2 rises since there is no evidence indicating that energy consumption leads economic growth in any of the four income groups a stronger energy conservation policy should be pursued in all countries

long run impacts of inflation across sectors in a small sample of countries this article investigates the long run effects of inflation on economic output for 10 sectors of the economy with a sample of 7 countries the analysis is done using long run restrictions in a vector autoregression and reports long run multipliers with bootstrapped confidence bands the results suggest that some sectors seem to be affected differently than others as well as significant heterogeneity across countries the results suggest the strongest effects in the low inflation countries germany and japan as has been found in similar studies in contrast to research using growth regressions the evidence suggests a positive long run effect of inflation on output

translog flexible functional forms and substitutability of monetary assets this article attempts to establish the nature of the relationship between monetary assets by estimating a sequence of four nested demand systems the generalized translog the basic translog the linear translog and the homothetic translog the principal attraction of the empirical work is that i am able to test separately for both homothetic and quasi homothetic preferences over monetary assets the tests reject both homotheticity and quasi homotheticity and thus consistency of the strotz gorman two stage optimization i also perform tests on economic theory to establish whether the parameter estimates are consistent with the utility maximizing hypothesis underlying the models these tests indicate that the generalized translog is the preferred model

the optimal level of monetary aggregation in this paper i have three objectives 1 to describe the aggregation theoretic procedure for selecting the optimal monetary aggregates 2 to survey the available empirical evidence for information on the optimal aggregates and 3 to describe the procedures that should be followed to complete a redefinition of the monetary aggregates although all of the federal reserve board s current official aggregates are rejected as targets some newer aggregates are found to be substantially preferable to the official aggregates the board s staff recently completed the official redefinition of its monetary aggregates in a manner largely unrelated to aggregation and index number theory my own research in recent years has sought to remedy that shortcoming except for monetary aggregates most of the data provided by governmental agencies are constructed in accordance with aggregation and index number theory since aggregation theory can be applied to monetary aggregation 1 i constructed new monetary aggregates that are consistent with the economic theory 2 recently the empiri

correlated jumps in crude oil and gasoline during the gulf war this article employs a bivariate poisson jump model to investigate the relationship between the volatility of crude oil and gasoline especially during the period of the gulf war we find that greater jumps occurring in crude oil returns will appear in gasoline returns at the same time but the magnitude of the co movements in volatility falls the covariance is relatively smaller in the second gulf war vs the first conflict the volatility of crude oil is of significantly high levels during periods of the war yet the volatility of gasoline is not as sensitive as crude oil particularly in the second conflict furthermore the jump that occurred by the war did not lead both spot prices to a high persistent level for a long period which fits the feature of the jump models all these findings are important to market traders and hedging strategies

curvature restrictions on flexible functional forms an application of the minflex laurent almost ideal demand system to the pattern of spanish demand 1954 1987 this article introduces a new demand model labeled minflex laurent almost ideal demand system which has been achieved by combining the flexible functional minflex laurent form with the price independent generalized logarithm expenditures structure introduced by muellbauer the model has been applied to analyze the aggregate demand behavior of final consumer goods in the spanish economy from 1954 to 1987 when the flexible functional form has been empirically tested the curvature requirements imposed by economic theory have been studied

changes in the cost of intermediation the case of savings and loans the minimum cost output configuration for a firm may change as the result of a variety of factors including changes in market structure in this paper we test this structural change hypothesis with savings and loan data we find support for the hypothesis that separable constant returns to scale production functions characterize the average savings and loan in our sample in 1983 this is in contrast to the cost complementarities found in 1978 we argue that this result may be the result of regulatory changes that allowed savings and loans to alter their production mix to fully capture the benefits of joint production it seems reasonable to assume that the cost minimizing configuration of a multiproduct firm is potentially subject to nonstationarity during periods of structural change in input and or output markets the late 1970s and early 1980s represent such a period of turbulence for many markets in the financial services industry volatile interest rates combined with technological and regulatory changes may have caused firms in this industry to alter their output mixes in an effort to capture cost complementarities from joint production the purpose of this paper is to test this hypothesis of structural change in the savings and loan industry using both a translog and minflex laurent translog mlt specification of the production function we have chosen to investigate savings and loans s ls during the late 1970s and early 1980s for two reasons first s ls provide an ideal vehicle for testing our hypothesis because they were restricted almost exclusively to mortgages and securities as outputs before the passage of the depository institutions deregulation and monetary control act of 1980 and the garn st germain act of 1982 moreover there were also market changes with respect to both the pricing and mix of inputs i e deposits our second rationale involves the fact that there is a large and growing body of literature in the area of what is now called the

monetary contracting between central banks and the design of sustainable exchange rate zones abstract an exchange rate system is a contract which commits central banks to intervene in the foreign exchange market the design features of the system include the rules of intervention the limits placed on exchange rates and the crisis scenario describing possible transitions to new regimes this paper considers the various trade offs one faces in designing an exchange rate system one of these pertains to the amount of reserves which the central banks must have on hand in order to forestall a speculative attack and make the system sustainable the amount of reserves needed depends crucially on the assumed crisis scenario

why so much stability one of duncan black s 1958 more important contributions was a classically simple proof that with complex issues and majority voting a stable outcome is unlikely this very simple proof that there would normally be no motion which can get a majority against all others and hence that any possible outcome is dominated by another has been elaborated and made more precise by later work without most improbable conditions endless cycling would be expected this is particularly true when logrolling is present as it normally is if we look at the real world however we observe not only is there no endless cycling but acts are passed with reasonable dispatch and then remain unchanged for very long periods of time thus theory and reality seem to be not only out of contact but actually in sharp conflict it is the purpose of this article to demonstrate that our existing theory when properly looked at does indeed imply a relatively stable outcome to voting in some cases however this stability will not be a true equilibrium because a random member of a large set will be chosen and then that random outcome will be left unchanged for long periods of time it does not dominate all other outcomes but is retained merely because of its particular history there are already several possible explanations for the observed stability in the literature we will take them up as they become relevant to the general line of reasoning i should however warn the reader that my own previous work including joint work with buchanan will play a major role here this may simply reflect egotism but i think that some of the early work which is now partially forgotten can provide solutions for more modern problems much recent public choice work has involved spatial models and these models frequently ignore logrolling the reason presumably is that it is very hard to put logrolling in a two dimensional diagram we shall begin considering such special models and assume that the issues are the sort that does not lead to logrolling and then turn to more complex logrolling problems with respect to the first situation in which logrolling does not occur there is already one possible explanation for the observed stability in the literature

linear and quadratic spline models for consumer demand functions this paper combines flexible functional form techniques which provide local approximations to indirect preferenc es with respect to prices and incomes with spline techniques that provide global approximations with respect to real income the main technical problem is that real income or utility is an unobserved variable starting with the normalized quadratic expenditure functio n linear and quadratic spline models are introduced theoretically and are empirically estimated using japanese consumer data for four goods fo r the years 1970 87 the semi nonparametric literature initiated by a r gallant is reviewed and a limited semi nonparametric property is claimed to hold for the spline models presented in the paper

when and how do voters try to manipulate experimental evidence from borda elections we study strategic voting in a laboratory experiment using a borda mechanism we find that manipulation rates are surprisingly low even for individuals who know that they possess superior information about the other agents preferences exploring possible explanations we find that manipulation rates rise significantly if individuals are not only informed about the other agents preferences but also about their actual votes this suggests that uncertainty plays a key role in understanding strategic behavior in elections by contrast distributional concerns e g in the form of inequality aversion are found to play a negligible role in our context

picking a loser a social choice perspective on the danish government formation of 1975 all democratic systems are theoretically open to so called election inversions i e instances wherein a majority of the decision makers prefer one alternative but where the actual outcome is another the paper examines the complex 1975 danish government formation process which involved five rounds of negotiations and at least five competing alternatives we demonstrate that in terms of party preferences the final outcome was not the condorcet winner but rather one that could have been beaten by at least three other government alternatives in head to head comparisons the danish procedural system of negative parliamentarism combined with simple plurality rule to produce the electoral inversion

big effects of small interventions the informational role of intervention in exchange rate policy abstract in this paper we demonstrate how an infintesimal unsterilized foreign exchange intervention may cause a very large discrete change in the exchange rate we analyze an example in which there is a target zone policy in place but the actual width of the target zone is not known by participants in the foreign exchange market in this case intervention both affects fundamentals and conveys information about policy the exchange rate jumps in response to intervention with the size of the jump related to the uncertainty about the true band width also in this model the relationship between the exchange rate and the fundamental depends upon both the history of the path of the exchange rate and whether or not intervention has occured

an empirically oriented demand system with improved regularity properties while the almost ideal demand system has received increasing attention in empirical studies of consumer demand the fact that the underlying piglog cost function is not globally regular has often led to violation of negative semidefiniteness in the estimated slutsky matrix this paper suggests a modification to the piglog class of preferences termed mpiglog which preserves regularity in a wider region of expenditure price space in an empirical section the almost ideal demand system special case of piglog is compared with the analogous special case of mpiglog which the authors term maids the comparison demonstrates the improved regularity features of maids

a divisia system approach to modelling monetary aggregates abstract a complete system of divisia partial adjustment asset equations based on the augmented price expectations baumol tobin inventory and transactions postulates is used to study the dynamic behaviour of monetary aggregates and their components in australia during 1969 iii to 1983 iv the system provides a new and useful approach to modelling demand for money functions for effective monetary policy controls and targetting

empirical evidence of paradoxes of voting in dutch elections in this paper we analyze four national elections held in 1982 1986 1989 and 1994 in the netherlands on the occurrence of the condorcet paradox in addition we investigate these elections on the occurrence of three so called majority plurality paradoxes the first paradox states that a party having a majority over another party may receive less seats the second states that a condorcet winner may not receive the largest number of seats and even may not receive a seat at all the third says that the majority relation may be the reverse of the ranking of parties in terms of numbers of seats

separability and capital aggregation in sectoral models of us production separability plays a fundamental role in applied studies of production inasmuch as it provides for consistent aggregation and allows multi stage estimation of models with many inputs this paper examines whether two types of capital structures and equipment are weakly separable from labour and energy and materials in sectoral models of us production and provides an assessment of the effects of maintaining capital separability the study focuses on the elasticity of substitution as a measure of input association and associated standard errors and confidence intervals based on bootstrapping elasticity estimates and tests indicate that capital separability is generally inconsistent with data representing sectoral us production elasticity sign however appears robust to capital aggregation and performs especially well as an indicator of input association

an approach to empirical studies of voting paradoxes an update and extension by tradition public choice theorists have pointed out many paradoxes of collective choice the phenomenon of cyclical majorities and the more general issue of political equilibrium have proven to be fertile searching grounds one class of paradoxes derives from the intransitivity of social orderings implied by the cycle as riker 1982 notes this property of majority rule is most perplexing and paradoxical to those who hold populist beliefs that voting reflects a fair and meaningful amalgamation of individual preferences and must therefore reflect the will of the people if voting in general elections and committees is interpreted this way then the existence of voting cycles and the implied intransitivity or more generally the impossibility of any rule for making social choices assuring transitive sometimes equated with rational outcomes shakes the foundations of populist principles of political philosophy another paradox of cyclical majorities and simulations of voting games in general concerns the stability of political equilibria the body of theory regarding this issue is skillfully summarized by shepsle and weingast 1982 and can be reduced to a simple proposition with sufficient assumptions regarding the states of participants knowledge and the manipulability of

new indices of money supply and the flexible laurent demand system the article begins by surveying the existing results on the new divisia monetary aggregates charts display the differences in behavior between the divisia aggregates and the federal reserve s official simple sum monetary aggregates the article then compares system wide fit for the simple sum and divisia monetary aggregates when used as data in the joint estimation of a system of demand equations the demand system is derived from a new laurent expansion approximation to the reciprocal indirect utility function the laurent expansion provides a better behaved remainder term than that of the more commonly used taylor series the results favor the divisia aggregates

the sensitivity of the true cost of living to price induced and income induced changes in aggregate consumers tastes this article examines the sensitivity of the cost of living to some aspects of price changes and income changes that cannot be detected by laspeyres indexes like the cpi u or cpi w effects of price induced and income induced changes in consumers tastes on the cost of living in the united states from 1947 to 1981 are estimated and found to be generally substantial

the lifetime of a unilateral target zone some extended results abstract in dumas and svensson journal of international economics 36 1994 467 the lifetime of a krugman quarterly journal of economics 106 1991 669 682 type target zone model is found to be extremely long this paper shows that the lifetime of the identical target zone regime can be much lower when real disturbances occur in particular the mean lifetime is found to be very low when real disturbances occur and the real exchange rate elasticity of the demand for domestic goods is very low it is also shown that allowing for monetary disturbances to have real effects has very little effect on the lifetime the results indicate the conditions under which real disturbances might trigger currency crises

the translog utility function and the demand for money in the united states in recent years considerable effort has been directed towards establishing the nature of the relationship between money and nearmonies but with mixed success the approaches vary from multi interest rate single equation studies to the careful simultaneous equations studies summarized and amended by feige and pearce 1977 and extended recently by donovan 1978 offenbacher 1979 and barnett 1980 the empirical results also vary with numerous studies favoring only one interest rate see the surveys in fisher 1978 1983 some claiming that a variety of entities are close substitutes for money e g chetty 1969 and others showing that weak substitution or even complementarity may be the result of the measurement of elasticities of substitution between money and a number of other assets e g feige and pearce 1977 offenbacher 1979 and barnett 1980 the debate seems to have overshadowed a second and equally intriguing issue which centers on the establishment of an acceptable definition of money the basic idea of this study is to take an approach that takes account of the different degrees of moneyness possessed by the various monetary assets this paper produces quantitative estimates of the degree of substitutability of other monetary assets for money in the context of a flexible functional form model with a

functional monetary aggregates monetary policy and business cycles abstract in this paper we take the economic approach to monetary aggregation in the context of highly disaggregated demand systems encompassing the full range of monetary assets in the united states we estimate the effectively globally regular minflex laurent ml and normalized quadratic nq flexible functional forms we produce the ml and nq functional monetary aggregates consistent with neoclassical microeconomic theory also addressing the issue of optimal monetary aggregation we highlight the influence of measurement on statistical inference by investigating whether the ml and nq functional monetary aggregates are of importance in resolving paradoxes associated with the measurement of money in doing so we also provide a comparison between the functional monetary aggregates and the fed s broad sum m2 aggregate and the center for financial stability broad divisia m3 and divisia m4 aggregates our detailed statistical analysis favors the functional monetary aggregates

cycles and instability in politics evidence from the 2009 danish municipal elections social choice theory predicts that political processes are prone to instability or outright chaos yet the evidence that actual politics is dominated by the phenomena identified in the literature is somewhat anecdotal and widely contested in order to systematically assess the degree to which politics is affected by cyclicality or chaos as predicted by social choice theorists we study the outcome of the 2009 municipal elections in denmark this yields a total of 97 cases which allows for a systematic assessment of the frequency of cycling through a large n study evidence of four cyclical results is presented

judge don t vote this article explains why 1 the traditional model of the theory of social choice misrepresents reality 2 it cannot lead to acceptable methods of ranking and electing in any case and 3 a more realistic model leads inevitably to one method of ranking and electing majority judgment that best meets the traditional criteria of what constitutes a good method