bluuebunny/crossref_metadata_2025 huggingface dataset:
Logic of Choice and Economic Theory
Authors: Afriat S. N.
Published: October 2003

This book approaches various aspects of economics that have to do with choice, and the opportunity for it, such as individual and social choice, production, optimal programming, and the market. The topics belong mostly to microeconomics, but they also have other connections. The object is to state a view about choice and value and to give an account of the logical apparatus. With this there is a wish to present limited matters fairly completely and unproblematically, and where there is some issue about their nature to consider that also. The book consists of six parts, each containing several chapters.

Parts I–IV deal with generalities about choice, individual or social, and representative economic topics. The remaining parts have more concern with straightforwardly mathematical subjects, which have an application or interpretation for economics but need not be exclusively connected there. Chapters often are fairly self‐contained or belong to sequences that can be taken more or less on their own. The topics are in the main fabric of economic theory, and most students encounter them. A preamble at the start of every chapter tells what it is about; from this and possibly some further scanning, the main ideas should be easily gathered by those who might not be concerned with all details. Expository materials and reworkings of published fragments have been joined with unpublished work from past and recent years. In all there is a view about choice and ‘the optimum’ in economics surely acceptable to some and perhaps what they have always thought but undoubtedly not to everyone.
Introduction
Authors: Afriat S. N.
Published: October 2003

The subject of choice is first introduced, making the point that it is important for economics, but that it is an unsettled subject, even where the issues touched are quite basic. A cause for some general confusion in approaching the subject is ambiguity—not what is meant by choice, but rather how, or where, or why a choice should be perceived in the first place. Other aspects of choice discussed are choice making and choice systems—the simplest idea of which is the range of choice, which comprises all the important variable circumstances, and gives rise to the idea of a choice function. An important part of the subject is where preference gives the model for the government of choice. The second part of the introduction gives an outline of the book, discusses some rules of notation used, and the relative merits of presenting an economic argument in terms of mathematics or by verbal reasoning.
Utility Hypothesis
Authors: Afriat S. N.
Published: October 2003

This is the first of six chapters in Part II about demand and utility cost, a typical area for what is understood as choice theory. It discusses utility hypothesis and the theory of value. Its five sections are: needs of measurement (of utility); common practice and (William) Fleetwood; parallels in theory (as applied to utility construction); revealed preference (as applied to demand functions); and the classical case (of the utility function).
Separable Utility
Authors: Afriat S. N.
Published: October 2003

This is the fourth of six chapters in Part II about demand and utility cost, a typical area for what is understood as choice theory. It discusses separable utility. Its five sections are: models of separability; separability tests (for classical consistency and the more restrictive classical separable consistency); constructions (the definition of mathematical functions that can be constructed on the basis of the solutions to the conditions of separability presented in the previous section); (the) utility dimension (of the separability of a group of goods); and budget separability.
Direct and Indirect Utility
Authors: Afriat S. N.
Published: October 2003

This is the fifth of six chapters in Part II about demand and utility cost, a typical area for what is understood as choice theory. It discusses direct and indirect utility. Its six sections are: purchasing power; the indirect (utility) ‘integrability’ problem; basic relations and properties (of the structure involved with direct and indirect utility, and other features of demand analysis); adjoint of a relation; adjoint of a function; and limit adjoints.
Efficiency and Inefficiency
Authors: Afriat S. N.
Published: October 2003

This is the last of six chapters in Part II about demand and utility cost, a typical area for what is understood as choice theory, and discusses efficiency and inefficiency. Economic theory represents consumers or producers as perfectly efficient, according to various criteria, but in experience, inefficiencies of every kind abound. Models should incorporate this phenomenon, and this chapter investigates some ways of doing that, first for consumers and then for producers. There is also a development of questions about efficiency measurement. The four sections of the chapter are: consumer inefficiency; attainable efficiencies; utility approximation; and production efficiency.
Price and Quantity Levels
Authors: Afriat S. N.
Published: October 2003

This is the first of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. It discusses price and quantity levels. The four sections of the chapter are: price–quantity duality; dual function examples (Cobb–Douglas and Cobb–Douglas, polyhedral and polytope); price and quantity levels; and limits of indeterminacy.
Fisher and Byushgens
Authors: Afriat S. N.
Published: October 2003

This is the third of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. Together with the next two chapters, it discusses theoretical matters arising from the finding of S. S. Byushgens (1925) that Irving Fisher's ‘Ideal Index’ is exact if demand is governed by a homogeneous quadratic utility. The four sections of the chapter are: Byushgens's theorem; the existence question; purchasing power correspondence; and many‐period generalization.
Leontief's Input‐Output
Authors: Afriat S. N.
Published: October 2003

This is the second of six chapters on the logic of price, and reviews the characteristics of Leontief's input–output method. The six sections of the chapter are: Quesnay's tableau économique; the Leontief matrix; production planning; Leontief and Zeno (Zeno's Paradox); productive systems; and a computer demonstration (of Leontief's input–output model).
Sraffa's Prices
Authors: Afriat S. N.
Published: October 2003

This is the fourth of six chapters on the logic of price and discusses ‘Sraffa's prices’. These represent another understanding about ‘price’ that joins with the centuries‐old discourse about ‘value’ having no obvious connection with market price. However, on the surface are issues to do with the consistency of the arithmetic involved, which can be investigated straightforwardly. The seven sections of the chapter are: production for subsistence; interdependence and stability; production with a surplus; joint production; variable activity; Sraffa and Leontief; and Sraffa and von Neumann.
Von Neumann's Economic Model
Authors: Afriat S. N.
Published: October 2003

This is the last of six chapters on the logic of price, and expands on the features of von Neumann's economic model, or activity system, which was first mentioned in Chapter IV.1. The fourteen sections of the chapter are: activity system; dual system; irreducibility; admissible factors; factor bounds; limit reciprocity; von Neumann factor; stretch algorithm; matrix games; LP solution; Perron–Frobenius and von Neumann; BASIC program; problems; and demonstrations.
Convex Programming
Authors: Afriat S. N.
Published: October 2003

This is the second of five chapters on optimal programming (the typical mathematics of economics) and related issues as related to choice making. It introduces convexity conditions, and shows where they have effect, together with Slater's condition, in assuring the existence of a support to the limit function, so providing Lagrange multipliers, or shadow prices, of resources that have part in the optimality conditions. Then for the case of differentiable functions the Kuhn–Tucker conditions are obtained. The six sections of the chapter are: convexity; programming convexity theorem; Slater's condition; optimality theorem; non‐negative maxima; the Kuhn–Tucker conditions.
Linear Programming
Authors: Afriat S. N.
Published: October 2003

This is the third of five chapters on optimal programming (the typical mathematics of economics) and related issues as related to choice making. It discusses linear programming, which might appear to be a special case of convex programming, but is more substantial, and is really an embodiment of the theory of systems of linear inequalities (as reflected here). This chapter initiates the subject with reference to systems of linear inequalities and natural questions about them, and all LP (linear programming) theorems are encountered simply in pursuing those. Theorems about linear inequalities that have uses directly on their own are also derived (and are illustrated in many places in this book). The eight sections of the chapter are: linear inequalities; separation theorems; theorems of alternatives; polyhedra and polytopes; LP Duality Theorem; the pivot operation; the Simplex Algorithm; and BASIC program.
Estimating Stochastic Production Functions
Authors: McDonald John , Snooks G. D.
Published: October 2003

‘Estimating stochastic production functions’ describes the characteristics and estimation of stochastic production functions used to characterize Domesday production.
John Law: Economic Theorist and Policy-maker
Authors: Murphy Antoin E.
Published: October 2003

Despite his popular reputation as a rake and a gambler, John Law (1671–1729) left a remarkable legacy of economic concepts at a time when economic conceptualization was very much at an embryonic stage. His vision of a monetary and financial system was more of the twenty‐first rather than the eighteenth century. Law believed in an economy of banknotes and credit where specie had no role to play. He was the first economic writer to use concepts such as demand and supply, the demand for and supply of money, the money‐in‐advance requirement, the circular flow of income, and the law of one price. Law was able to implement his economic theory in the form of economic policy during the Mississippi System that he created. This produced Europe's first stock market boom and crash. The collapse of the Mississippi System and closely afterwards the crash of the South Sea Bubble led to a lasting impression of Law as a failure. This book seeks to dispel this view.
Introduction
Authors: Murphy Antoin E.
Published: October 2003

Discusses economists’ assessments of John Law ranging from the highly negative views of Montesquieu, Adam Smith, Karl Marx, and Alfred Marshall to the strongly positive approach of Joseph Schumpeter.
Law's Writings and His Critics
Authors: Murphy Antoin E.
Published: October 2003

Discusses problems associated with using the Harsin edition of Law's Oeuvres, Earl Hamilton's research on John Law, and the book that was never published.
Law's Background
Authors: Murphy Antoin E.
Published: October 2003

John Law was the son of an Edinburgh goldsmith. However, his antipathy towards gold should not be considered as a type of Freudian reaction against his father but as consistent with the evolving transition of goldsmiths into credit‐creating bankers.
Duelling Beaux
Authors: Murphy Antoin E.
Published: October 2003

Discusses Law's duel with Edmund Wilson in Bloomsbury Square, 1694. Some tentative explanations for the duel including the use of the Love‐Letters Between a Certain Late Nobleman and the Famous Mr. Wilson. Law's condemnation to the scaffold and his escape from prison.
The ‘Gambling’ Banker
Authors: Murphy Antoin E.
Published: October 2003

Law was considered as a type of eighteenth‐century bookmaker rather than as a gambler. The chapter discusses his use of mathematical skills that ensured that he won at the gambling tables of Europe.
The Edinburgh Environment in 1705
Authors: Murphy Antoin E.
Published: October 2003

Discusses the debate in the Scottish Parliament over Law's monetary proposals for the establishment of a land bank along with an aborted duel by two Parliamentarians on the issue.
France 1714–1715
Authors: Murphy Antoin E.
Published: October 2003

Discusses the bankrupt state of the French economy when Louis XIV died. It also discusses the regency of Phillippe duc d’Orléans. The operation of the old financial system and Law's recommendations for changes in 1715.
The Establishment of the General Bank
Authors: Murphy Antoin E.
Published: October 2003

Details the role of the General Bank and its note‐issuing capacity and the conversion of the General Bank into the Royal Bank.
The Establishment of the Company of the West
Authors: Murphy Antoin E.
Published: October 2003

The first issue of shares in 1717 is discussed. This chapter includes a tabular representation of all the Company's share issues between 1717 and 1720.
The Slow Development of the System
Authors: Murphy Antoin E.
Published: October 2003

The opposition by the Parliament and the financiers to Law's proposals presented a strong political bloc that made if difficult for Law to develop his ideas at the policy level.
The Rise and Rise of the Mississippi Company, 1719
Authors: Murphy Antoin E.
Published: October 2003

In 1719, Law was successful in taking over all of the trading companies, the rights to the Mint, and the tax farms. He had created a giant holding company. In August 1719, he proposed taking over the totality of the French national debt. The Company's share price rose from 500 in the Spring to over 10,000 in the Autumn of 1719. Massive financial speculation took place on Rue Quincampoix.
A Specie‐Less France, 1720
Authors: Murphy Antoin E.
Published: October 2003

Because of his success with the Mississippi Company, John Law was appointed Contrôlleur Général des Finances in January, 1720. This meant he was the equivalent of the Prime Minister. Further speculation in the share price of the Mississippi Company took place through the options market. Law's attempts to keep the public using shares or paper money led to the introduction of laws against the use and the holding of gold and silver. Problems with the share price support operation in Feb and Mar, 1720.
The Measures of 21 May 1720
Authors: Murphy Antoin E.
Published: October 2003

The attempt to cool down the System through the reduction of the value of shares and banknotes produced a dramatic loss of confidence in the System, and Law was put under house arrest. The complexities of running the System forced the Regent to bring Law back into power and to exile the Pâris brothers.
The Possibility of a Recall to France
Authors: Murphy Antoin E.
Published: October 2003

The death of the foreign minister, the Abbé Dubois, created the possibility that Law would be recalled by the duke of Orleans. However, the latter's death prevented this return from becoming a reality.
Death in Venice
Authors: Murphy Antoin E.
Published: October 2003

Law's final years in Venice saw him continuing to persuade the French authorities to bring him back to France. He also continued to gamble and to build up an impressive collection of Old Masters’ paintings.
Richard Cantillon: Entrepreneur and Economist
Authors: Murphy Antoin E.
Published: October 2003

This book analyses the career and writings of the enigmatic Irish‐born economist Richard Cantillon, a banker and entrepreneur. Cantillon's work is examined in the context of the stock market speculation generated by John Law's Mississippi System and the South Sea Bubble of 1720. Cantillon was an active trader in this period and made a considerable fortune by correctly anticipating the market crashes of both the Mississippi Company and the South Sea Bubble.

Cantillon's Essai sur la nature du commerce en général (1755) was one of the great analytical works of economics of the eighteenth century. In it, Cantillon showed how to construct a basic model of the macroeconomy and the role of money in such a model. Cantillon was the first to introduce the role of the entrepreneur into economic analysis. He also provided considerable insights into value theory, the circular flow of income, the monetary approach to the balance of payments, and the law of one price. It is contended that his book represents an intellectual refutation of John Law's System. Cantillon's murder in London in 1734 raises some intriguing questions as to what exactly may have happened.
Introduction
Authors: Murphy Antoin E.
Published: October 2003

An overall synopsis of the contents of the book.
Cantillon's Early Career
Authors: Murphy Antoin E.
Published: October 2003

Cantillon's links with the Jacobite banker, Sir Daniel Arthur, are shown. Cantillon's early career is traced showing how he worked for James Brydges, later the Duke of Chandos, the Paymaster General of the Forces Abroad and one of the biggest war profiteers of the eighteenth century. Cantillon acted as a type of accountant for Brydges in Spain towards the end of the War of the Spanish Succession.
Cantillon's Début as a Banker in Paris, 1714–1717
Authors: Murphy Antoin E.
Published: October 2003

Cantillon took over the Parisian‐based banking business of his cousin, the Chevalier Richard Cantillon, during the period 1714–17. One of his early transactions involved discounting a bill of exchange for the former Tory minister Bolingbroke who had fled from London to Paris.
John Law and Richard Cantillon: The First Mississippi Fortune — Phase One
Authors: Murphy Antoin E.
Published: October 2003

Cantillon's financial career was closely linked with that of John Law (1671–1729). Law wished to solve France's twin crises, the shortage of money and the high level of state indebtedness, through the establishment of a bank issuing paper money and a trading company to take over the national debt. Cantillon bought into the shares of the Mississippi Company at an early stage and made his first fortune by buying and selling its shares.
Lady Mary Herbert and Joseph Gage: Two of the Great Speculators of the Age
Authors: Murphy Antoin E.
Published: October 2003

Describes Cantillon's involvement with two of the biggest speculators of the period, Lady Mary Herbert, daughter of the Duke of Powis, and Joseph Edward Gage. Both of them borrowed from Cantillon to speculate in Mississippi shares.
The Rich Mississippian and His Wife Mary Anne
Authors: Murphy Antoin E.
Published: October 2003

Cantillon was listed by the 1722 Visa in France as a Mississippian millionaire. Around this time, he married Mary Anne O’Mahony, a friend of people such as Lady Wortley Montagu and Montesquieu.
The Publication of the Essai in 1755
Authors: Murphy Antoin E.
Published: October 2003

The intellectual and publishing background to the publication of the Essai are discussed. The book was published by Guillyn in Paris and probably at the instigation of Vincent de Gournay and his group. The book would have a significant influence on the French ‘économistes’
Contracts With Eviction in Infinitely Repeated Principal–Agent Relationships
Authors: Dutta Bhaskar , Ray Debraj , Sengupta Kunal
Published: October 2003

In this chapter, the authors use a model of an infinitely repeated principal‐agent relationship where they explore the conditions under which labour contracts with threats of sacking or contract termination will be equilibrium outcomes.
Production Relations in Semi‐Arid African Agriculture
Authors: Binswanger Hans , McIntire John , Udry Chris
Published: October 2003

In this chapter, the authors depart from the presumption of densely populated economies and start from an isolated, land‐abundant, semi‐arid economy; they study its special institutional features and show how they change with changes in demographic factors and opportunities of external trade.
Rural Credit Markets: The Structure of Interest Rates, Exploitation, and Efficiency
Authors: Basu Kaushik
Published: October 2003

In this chapter, the author models alternative structures in the informal credit market as devices for extracting surplus from the borrowers, and show how extremely exploitative moneylenders may have some superficial resemblance to markets with perfectly competitive moneylenders.
Some Aspects of Linked Product and Credit Market Contracts Among Risk‐Neutral Agents
Authors: Bell Clive , Srinivasan T. N.
Published: October 2003

The authors explore, in a principal‐agent model of interlinking of production credit and crop marketing, the terms of equilibrium contracts under risk neutrality; in particular, they examine the situation in which one of the two relevant instruments—the rate of commission on crop sale and the rate of interest on credit—is redundant.
Peasants' Risk Aversion and the Choice of Marketing Intermediaries and Contracts: A Bargaining Theory of Equilibrium Marketing Contracts
Authors: Zusman Pinhas
Published: October 2003

This chapter looks upon the nexus of contracts in the village marketing system as a bilateral bargaining game and explores the properties of the equilibrium set of contracts.
Agricultural Producer Co‐Operatives
Authors: Putterman Louis
Published: October 2003

Addresses the issues of work incentives under agricultural producer cooperatives, decision on the membership size, and the process of voluntary choice of this institutional form by potential cooperators.
Agrarian Structure, Technological Innovations, and the State
Authors: de Janvry Alain , Sadoulet Elisabeth , Fafchamps Marcel
Published: October 2003

In this chapter, the authors dwell upon the influence of the structure of asset ownership and of political lobbying for the nature of the public research budget on the rate and bias of technological change in agriculture.
The Socialist System
Authors: Kornai Janos
Published: October 2003

This book presents a comprehensive analysis of socialist economics. It addresses the reasons for the early successes of socialist systems, and the reasons for their gradual breakdown. There are twenty‐eight chapters, of which the first two (in Part One of the book) are introductory. The remaining chapters are arranged in two further parts. Part Two, (chapters 3–15), deals with classical socialism, defined as the political structure and economy that developed in the Soviet Union under Stalin and in China under Mao Zedong, and emerged in the smaller countries of Eastern Europe and in several Asian, African, and Latin American countries. Part Three, (chapters 16–24), deals with the processes of reform, such as the changes started in Hungary under Kádár in 1968 or in the Soviet Union under Gorbachev in 1985, which were designed to renew the socialist system. The final, political conclusion is that Stalinist classical socialism is repressive and inefficient, but nevertheless constitutes a coherent system which slackens and contradicts itself when it starts to reform; hence reform is doomed to fail. An appendix provides a bibliography on the post‐socialist transition.
The Antecedents and Prototypes of the System
Authors: Kornai János
Published: October 2003

This chapter begins with an outline of the Marxian image of socialism, and of the three socialist‐system prototypes: the revolutionary‐transitional system (the transition from capitalism to socialism), the classical system (or classical socialism), and the reform system (or reform socialism). This is followed by short analyses of the system before the socialist revolution, and of the revolutionary transition towards the classical system.
Investment and Growth
Authors: Kornai János
Published: October 2003

This chapter addresses long‐term economic planning under the classical socialist system. The first two sections describe the motives of the participants and the centralized institutional framework of the investment process. The remaining sections examine the structure and dynamics of economic growth—investment in relation to consumption, priorities in the allocation of investments, relations between production factors and output, growth cycles, the measurement of aggregate output, and the forced growth that is characteristic of the socialist system.
Employment and Wages
Authors: Kornai János
Published: October 2003

A survey is made of the allocation of labour under classical socialism. This looks at the characteristics of labour allocation in the short and long term, and the behaviour of those taking part in short‐term labour allocation and their relations to each other. The different sections of the chapter discuss the road to full employment; the development of chronic labour shortage; direct bureaucratic control of employment and wages; employer–employee relations in the factory; and bureaucratic and market influences on wages.
Shortage and Inflation: The Phenomena
Authors: Kornai János
Published: October 2003

Shortage is explained basically in terms of the inherent characteristics of the classical socialist system. The examination concentrates on the system's constant, lasting features, with factors influencing short‐term fluctuations in shortage phenomena covered, at most, in passing. Attention is trained on parts of the phenomena that distinguish socialism from other systems (primarily capitalism), and the focus in the analysis of production is mainly on the publicly owned sector. The different sections of the chapter are shortage phenomena and the shortage economy; the process of demand adjustment; horizontal and vertical shortage; shortage and surplus; market regimes: the buyer's and seller's market; normal shortage and normal surplus; and open, declared, and hidden inflation.
Self‐Management
Authors: Kornai János
Published: October 2003

The introduction of self‐management into firms in public ownership is an important tendency during the process of reform of classical socialism, although it is less radical than the intrusion of the private sector. Its basic principle is that the head of the firm is chosen by the workers rather than appointed from above as in a state‐owned firm; the workforce also disposes over the residual income after costs and taxes. The chapter discusses self‐management as an intellectual and political trend; political relations in self‐management—whether it is voluntarily initiated or imposed from above (as in the case of Yugoslavia, which is described); the economic effects of self‐management; relations between manager and workers; and ethical coordination.
Concluding Remarks
Authors: Kornai János
Published: October 2003

The final chapter provides a summary and appraisal of the reform process of classical socialism, and takes a further look forward at the transformation that supersedes the system. The four sections of the chapter are the depth and radicalism of the changes, and the main line of causality; the incoherence of the tendencies to reform; reforms and public sentiment; and preview: the socialist system's legacy and postsocialism.
International Economic Organization: Banking, Finance, and Trade in Europe Between the Wars
Authors: Feinstein Charles H. , Temin Peter , Toniolo Gianni
Published: October 2003

Provides an overview of inter‐war international economic relations, with particular emphasis on the causes of the Great Depression of 1929–33. Four explanations for the failure of inter‐war policy and performance are identified and discussed. These are (1) the problems of structural imbalance arising from the disruptive effects of the First World War, and from post‐war changes in technology and in patterns of demand; (2) the inability of the UK and the unwillingness of the US to provide the central bank leadership necessary for the successful operation of the restored gold standard; (3) the grip on policy‐makers of outmoded political and financial ideologies, evident in the insistence on substantial payments of reparations and in the attachment to the gold standard; and (4) the absence of international cooperation between the major powers and their reluctance to abide by the ‘rules of the game’ under the gold standard.
Method in the Madness? Banking Crises Between the Wars, an International Comparison
Authors: Jonker Joost , van Zanden Jan Luiten
Published: October 2003

This investigation of the banking crises experienced in 12 European industrial countries and the USA attempts to establish a common pattern and to identify explanations for the timing and occurrence of the crises. The authors find that all crises occurred during years of deflation, but not every deflationary shock led to a run on the banks. In their view, the reasons why banks in some countries were vulnerable to such shocks, and others were not, are closely related to the differing degrees of inflation experienced during and just after the First World War. The conclusion drawn from the study is that the poor quality of the banks’ assets and the reduction in the liquidity associated with the increased commitments to industry were a leading cause of banking crises, but that nevertheless this lending had been a rational policy for the banks in countries that had suffered rapid inflation during and after the war.
German and British Monetary Policy, 1919–1932
Authors: Balderston Theo
Published: October 2003

Balderston contrasts the exchange rate and monetary policies in Germany with those in Britain. He examines the economic and political determinants of the monetary and fiscal policies adopted in the two countries in the 1920s, and their contrasting attitudes to the defence of the currency under the gold standard. He concludes that although the failure of central banks to cooperate hastened the collapse of the gold standard, it was in each case the uncertainty of market expectations with respect to the currencies that was of primary importance. Given this uncertainty, the level of support needed to maintain confidence in the two parities would have been much larger than in earlier gold standard crises (such as 1890 or 1907), and was probably not feasible.
Off Gold and Back Again: Finnish and Swedish Monetary Policies1914–1925
Authors: Haavisto Tarmo , Jonung Lars
Published: October 2003

Sweden went back to gold at the pre‐war parity, whereas Finland returned at the existing rate, accepting the depreciation of the markka that had occurred over the war and early post‐war years. The authors use a quantity‐theory framework to investigate the results of the divergent exchange rate and monetary policies followed by the two countries. The Swedish economy was forced to undergo a severe contraction, while Finland escaped the need for such an adjustment at the cost of a higher rate of inflation, and enjoyed a post‐war boom on the basis of its devalued currency. However, this was not the result of a deliberate choice on the part of the Finnish authorities: it was rather that the central bank lacked the resources needed to support the markka.
Banking in Germany, 1918–1939
Authors: Hardach Gerd
Published: October 2003

The focus of this chapter is not on the short‐term fluctuations experienced by the German banks during the inter‐war period, but on the structural change that ultimately resulted in the formation of a national banking system. The banking system of the early twentieth century was not a rational construct, but had evolved over the previous hundred years and consisted of a mixture of quite different financial intermediaries defined by a combination of legal provisions, ownership, economic philosophy, and business structure. Post‐war hyperinflation was followed by financial reconstruction, but the system collapsed in the banking crisis of 1931 and was reorganized under the Banking Law of 1934 as a monopolistic structure under strict government surveillance. The resulting system fitted the Nazi regime of armament and autarky, but was not an adequate model for the expanding world economy created after World War II.
Italian Banking, 1919–1936
Authors: Toniolo Gianni
Published: October 2003

Examines the evolution of the Italian banking industry, with particular reference to the behaviour of the mixed (universal) banks, and to the relief operations that culminated in extensive state involvement in industry. The process began with the banking crisis of 1921–22, when the State used the Bank of Italy to rescue both—a major bank and a large industrial concern. In the 1920s, the banks acquired industrial stocks on a massive scale, and many ended with risky and illiquid portfolios. When industrial demand collapsed in 1931, there was the potential for a major banking crisis, and this was only averted by substantial secret loans and last‐resort credits to the banks from the State and the Bank of Italy. State ownership of the industrial concerns was formally recognized by the creation in 1933 of IRI (Istituto per la Ricostruzione Industriale), and the banking system was reorganized under the Banking Act of 1936.
Banking in France in the Inter‐War Period
Authors: Lescure Michel
Published: October 2003

The inter‐war years were a period of decay for the French banks. Their problems began during the inflationary years of the First World War and continued until the stabilization of the franc in 1926. There was a sharp fall in the total assets of the banking system relative to the national income and in the real value of their capital funds, and also a reduction in the share of their resources devoted to loans and credits to enterprises. There was a limited recovery at the end of the 1920s, but then a succession of crises, first in 1930 and 1931 and then again in 1934. The crises were relatively mild but particularly affected the universal banks, and the smaller regional and personal banks, rather than the large joint‐stock banks and the specialized banks.
From Imperial to Regional Banking: The Austrian Banking System, 1918–1938
Authors: Weber Fritz
Published: October 2003

The central theme of this study of the Austrian banking system is the problem created by the impact on the large Viennese banks of the break‐up of the Austro‐Hungarian Empire. These banks were unwilling to accept the loss of their traditional spheres of influence. Instead of reorganizing their activity on the basis of a small national Austrian business, they attempted to maintain their previous position in Czechoslovakia and other newly independent states. The failure of this strategy and the steady accumulation of losses led eventually to the collapse of the Boden‐Credit‐Anstalt in 1929. Further repercussions followed in the spring of 1931, when the position of the Austrian Creditanstalt, the country's leading bank, became untenable and it was forced to ask for state support. The policy of contraction that the Austrian banks had been unwilling to accept at the beginning of the 1920s was thus forced upon them by the end of the decade, with major consequences for both the banking system and the Austrian currency.
Budgetary Policy, Money Supply, and Banking in Bulgaria Between the Wars
Authors: Berov Ljuben
Published: October 2003

The first stage in the financial history of Bulgaria after the First World War was a period of hyperinflation and currency depreciation, associated with large budget deficits and rapid expansion of the money supply. This continued until 1923, when the situation was brought under a degree of control by a coup d’etat and restrictions on public expenditure. The economic crisis of 1929–33 saw a sharp fall in prices and a further change in the general direction of policy from a broadly free market to intensive state intervention. This included state controls on the prices of grain and some industrial products, the creation of state monopoly enterprises, and intervention in the exchange regime and in foreign trade. The inter‐war periods also saw the emergence of a central bank with responsibility for the note issue.
Commercial Banking in Britain Between the Wars
Authors: Capie Forrest
Published: October 2003

Britain had a highly developed financial sector and the salient features of banking in the inter‐war period included an experienced central bank and a small number of large, financially stable, commercial banks. Their structure was based on large branch networks rather than unit banks and this, together with the absence of universal banks, proved extremely stable in the face of the world economic depression. The British banking system did not experience the shocks that caused crises in many other countries, and it is probable that its stability provided protection for the real economy.
Banking, Public Finance, and the Economy: Greece, 1919–1933
Authors: Dertilis George B. , Costis Constantine
Published: October 2003

Three chronic economic problems afflicted Greece during the inter‐war period: the deficit on the trade account, high public expenditure combined with comparatively low revenues, and a heavy public debt that contributed to more or less permanent monetary problems. The banking system that operated in this environment was characterized by a high degree of monopoly and a low degree of specialization, and was dominated by the large and powerful National Bank of Greece. The National Bank had virtually exclusive rights for currency issue, but it did not accept the obligations of a proper central bank in respect of the discount‐rate policy, open‐market operations, and the need to play a stabilizing role in the economy. However, it did on occasion act as lender‐of‐last‐resort, and this was of considerable benefit to the banking sector.
Spanish Banking in the Inter‐War Period
Authors: Martín‐Aceña Pablo
Published: October 2003

During the inter‐war years, the Spanish financial system evolved from unit to branch banking, with an increase in the size and sphere of influence of the big banks, and a higher degree of concentration. The system became more diverse and also more involved in the financing of industry. The Bank of Spain was forced to accept its role as the central bank and to function more as a lender‐of‐last‐resort than as an independent institution, though it did so reluctantly and its performance was not always adequate. The relationship between the banks and the state expanded, with the mixed banks playing a crucial role in the financing of the public deficit. Overall, the system in Spain showed greater stability than many others in Europe.
Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data
Authors: Banerjee Anindya , Dolado Juan J. , Galbraith John W. , Hendry David
Published: October 2003

This book considers the econometric analysis of both stationary and non‐stationary processes, which may be linked by equilibrium relationships. It provides a wide‐ranging account of the main tools, techniques, models, concepts, and distributions involved in the modelling of integrated processes (i.e. those that accumulate the effects of past shocks). Since the focus is on equilibrium concepts, including co‐integration and error‐correction, the analysis begins with a discussion of the application of these concepts to stationary empirical models. Later chapters show how integrated processes can be reduced to this case by suitable transformations that take advantage of co‐integrating (equilibrium) relationships. The concepts of co‐integration and error‐correction models are shown to be fundamental in this modelling strategy. Practical modelling advice and empirical illustrations are provided.

Knowledge of econometrics, statistics, and matrix algebra at the level of a final‐year undergraduate or first‐year graduate course in econometrics is sufficient for most of the book. Other mathematical tools are described as they arise.
Co‐Integration
Authors: Banerjee Anindya , Dolado Juan J. , Galbraith John W. , Hendry David F.
Published: October 2003

The key concept of co‐integration of integrated time series is defined, and several examples are presented. An important theorem due to Granger on alternative representations of a system of co‐integrated variables is stated and its proof is sketched. The chapter then discusses the Engle–Granger two‐step procedure for estimating the parameters characterizing the co‐integrating relationship.
Co‐Integration in Systems of Equations
Authors: Banerjee Anindya , Dolado Juan J. , Galbraith John W. , Hendry David F.
Published: October 2003

Co‐integration in systems of equations is analysed. Linear co‐integrated systems are expressed in error‐correction form and maximum likelihood estimation and inference for co‐integrating vectors are discussed, focusing on the approach proposed by Johansen (1988). Methods of finding the co‐integrating rank are considered and circumstances in which dynamic single‐equation methods will be equivalent to systems methods are demonstrated. The analysis is again illustrated by a number of applications and evidence from simulation experiments. Forecasting in co‐integrated systems is noted.
The Life of Adam Smith
Authors: Ross Ian Simpson
Published: October 2003

Adam Smith (1723–90) was a Scottish moral philosopher, famous for writing the Wealth of Nations (WN: 1776), widely regarded as one of the foundation works of free‐market economics. He also contributed notably to ethics with his Theory of Moral Sentiments (TMS: 1759, 6th edn. 1790). The Introduction summarizes the biography, which depicts the personality and experience behind these books; their origin in studies at Glasgow and Oxford; then his teaching at Edinburgh and Glasgow; and their matrix in the cultural ferment of the Scottish Enlightenment, with its attention both to moral and natural science. The era of economic growth of Britain and political revolution in America and France is sketched in the background. Smith's legacy for legislators that the establishment of perfect justice, liberty, and equality is the ‘very simple secret,’ which secures prosperity for all, is presented as an ethical as well as economic ideal.
Kirkcaldy
Authors: Ross Ian Simpson
Published: October 2003

Adam Smith was baptized on 5 June 1723 in the Fife seaport of Kirkcaldy, where his father, who died on 9 January 1723, had served as Comptroller of Customs. Father Adam Smith studied the liberal arts in Aberdeen, took legal training in Edinburgh qualifying him for estate management, and became secretary to a Campbell magnate. He hesitated about taking up a Customs post in Kirkcaldy, because his income there depended on volume of trade, which was falling off. However, he handled his money well, and married the daughter of a substantial Fife laird. His Will specified that his widow, Margaret Douglas, would get help in raising young Adam from guardians associated with intellectual and economic improvement in Scotland.
The Never to Be Forgotten Hutcheson
Authors: Ross Ian Simpson
Published: October 2003

Smith's university studies at Glasgow are described: in Greek, introducing him to the Stoic philosopher Epictetus; Aristotelian logic and metaphysics, including Locke's empiricism; and Euclidian geometry and Newtonian physics, which had seminal lessons for him in methodology. Above all, the inspiration of the teaching of Francis Hutcheson is assessed, who seized Smith's imagination with his teaching of ethics and economics as part of his jurisprudence course. Hutcheson's development of moral sense and benevolence theory is highlighted, as providing a kind of moral Newtonianism, offering answers in ‘new light’ or liberal theology to the ‘old light’ Calvinist stress on human depravity, and in moral philosophy to the egoistic theory of Hobbes and Mandeville. Clearly, Smith received great intellectual stimulation at Glasgow, and his ability was recognized with the award of a scholarship to Oxford in 1740.
Oxford
Authors: Ross Ian Simpson
Published: October 2003

Smith's experience at Balliol College was disappointing, since the dons he encountered were not interested in teaching, and their easy enjoyment of sinecures as Fellows did not encourage that competition for students, and therefore revenue, prevalent among the Glasgow professors, which kept them abreast of their subjects and in touch with the advances of Enlightenment thought, especially the New Philosophy of Locke and the New Science of Newton. Smith read widely on his own, in politics and modern languages, but with no one to supervise him, he seems to have overdone study and suffered a kind of nervous breakdown. He may have started reading Hume at this time, and been punished for doing so; certainly the religious orthodoxy of Balliol and the Jacobitism there, perhaps inflamed by the ’45 Rising’, must have repelled him, and he is reported to have left Oxford in 1746 ‘in disgust.’
Lectures on the History of Philosophy and Law
Authors: Ross Ian Simpson
Published: October 2003

The strong Scottish Enlightenment interest in science created a market in Edinburgh for information about this subject, and Smith responded by providing a course that included the history of astronomy. A key part was a theory of theorizing or system building, with a system identified as an ‘imaginary machine’ invented to provide a coherent pattern of cause and effect in phenomena. His major works presented systems on this model in ethics and economics. WN's free‐enterprise system was foreshadowed in a third course given at Edinburgh on jurisprudence, in which Smith traced the development of law, and argued that humanity could evolve from barbarism to opulence, through enjoying peace, moderate taxes, also minimal justice, and reliance on the natural course of things.
Publishing Scholar and Administrator
Authors: Ross Ian Simpson
Published: October 2003

Smith understood that as a professor he was required to publish his work and help administer his University. While his reputation for absent‐mindedness grew, his Glasgow colleagues benefited from his sound practical bent and entrusted him with a wide range of university management issues. As for publishing, he began by contributing to the two numbers of the first Edinburgh Review: commenting on Johnson's Dictionary in 1755; and in 1756, on d’Alembert's Encyclopédie, also on Rousseau's Discourse on Inequality, whose argument about self‐love as an economic driving force he took up in TMS and WN. Following the publication of TMS in 1759, Smith concentrated more on political economy, also began work on the long process of the composition of WN, adding to his system lessons learned from a banking crisis in Scotland as his professorship came to an end in 1764.
Inquirer into the Wealth of Nations
Authors: Ross Ian Simpson
Published: October 2003

Returning to London in November 1766, Smith spent the next six months as an adviser to Buccleuch, and engaged in government research projects on taxation and management of the Sinking Fund intended to reduce public debt. Other assignments were inquiries into Pacific exploration and the history of Roman colonies as a guide, perhaps, to problems in North America. Buccleuch married in May 1767 and Smith spent the next seven years in Kirkcaldy, struggling with bouts of ill health and the perplexing task of composing WN to his satisfaction. Correspondence of this period reveals that Smith was absorbing new information about grain prices and values of silver, with a view to improving his economic system, through refining its self‐correcting feature governed by the price mechanism, in which rents, wages, and profits are detailed as the factors of production.
The American Crisis and The Wealth of Nations
Authors: Ross Ian Simpson
Published: October 2003

From 1773 until 1776, Smith remained in London ‐adding finishing touches to WN, whose publication was timed to seize Parliament's attention, and influence Members to support a peaceful resolution of the conflict with the American colonies. North America offered a major point of application for free‐market theory, and if Smith could win supporters, there was some hope of ending the cycle of violence induced by efforts to preserve the old colonial system involving economic restraints and prohibitions. Smith advocated the creation of an Atlantic union, which would accommodate economic dynamism, develop new political institutions, and allow a place for the revolutionary spirit to be exercised. He foresaw that the pace of American economic growth would inevitably guarantee that leadership would pass from Britain to the former colonies. On an entirely different front at this period, Smith, in commenting on a proposal for reform in university medical education, revealed the strength of his endorsement of competition and detestation of monopolies of any kind.