Simple Utility Functions with Giffen Demand

Simple utility functions with the Giffen property are presented: locally, the demand curve for a good is upward sloping. The utility functions represent continuous, monotone, convex preferences.     

休闲的经济属性

本文从现代经济学标准效用函数中两个最重要的变量之一——闲暇的定义出发,探讨了休闲的伦理性,休闲产品呈逆周期性以及吉芬产品特征的社会、文化、制度、宗教和心理诸因素。以民生为导向的十二五规划无疑为休闲产品和休闲产业的普及化、大众化、非奢侈化开辟了广阔的发展前景和机遇。     

家庭服务业中存在“吉芬行为”吗 ——来自北京市消费者的调查证据

吉芬商品源于英国经济学家罗伯特·吉芬对爱尔兰土豆市场规律的特殊认识,具体表现为商品的价格与其销量呈现正向关系。目前,学界突破了对上述吉芬商品的认识,一些学者用吉芬行为来替代之。迄今为止,学界对吉芬行为的探讨就未中断过,其关键在于缺少现实中存在性的证据。由此,本文基于广义虚拟经济的视角,以北京市消费者的家庭服务雇用行为为例,对吉芬行为存在性进行了探析。结果表明,当额外工作时间比率位于01~03之间时,消费者对家庭服务人员雇用时间会随雇用价格的上涨而增加,即存在着吉芬行为。最后,为了规避家庭服务业中存在的“吉芬陷阱”,本文提出相关政策建议。     

Stabilizing consumer choice: the role of ‘true dynamic stability’ and related concepts in the history of consumer choice theory

Abstract

It is often argued that the inability of Arrow–Debreu general equilibrium theory to produce an adequate proof of the stability of the Walrasian price adjustment mechanism was one of the program's most significant failures. This paper will not question this standard interpretation of the history of general equilibrium theory, but makes the case that characterizing the ‘stability’ question in terms of market stability– in particular the stability of the equilibrium price vector in the Walrasian general equilibrium model – actually helped to stabilize the standard model of consumer choice in general equilibrium theory and elsewhere within microeconomics. The problem of the stability of ‘consumer's equilibrium’ was much discussed early in the twentieth century, and it has recently re-emerged in a different guise as the ‘endowment effects’ and ‘reference dependencies’ of contemporary behavioral economics, and yet it disappeared from mainstream discussion during the period 1950 to 1980. This paper argues that shifting the discussion from the intra-agent stability of the individual consumer to the inter-agent stability of the competitive market contributed – despite its ultimately negative impact on general equilibrium theory – to the long period of stable normal science consumer choice theory enjoyed during the middle of the twentieth century.     

Giffen behavior independent of the wealth level

We demonstrate that a well-behaved utility function can generate Giffen behavior, where “well-behaved” means that its indifference curves are smooth, convex, and closed in a commodity space; the resulting demand function of each good is differentiable with respect to prices and income. Moreover, we show that Giffen behavior is compatible with any level of utility and an arbitrarily low share of income spent on the inferior good. This contrasts sharply with the common view that the Giffen paradox tends to occur when households’ wealth levels are low. Comments from Murray C. Kemp, Binh Tran-Nam, Ngo Van Long, Masao Oda, Noritsugu Nakanishi, and Chiaki Hara have greatly improved the paper. We have also benefited from discussions with Koichi Hamada, Satya Das, Takashi Kamihigashi, Tomoyuki Kamo, Toru Kikuchi, Katsufumi Fukuda, Yu-chin Chen, Fahad Khalil, Takeshi Nakatani, Kazuo Nishimura, Ken-Ichi Shimomura, and Stephen J. Turnovsky. We thank the anonymous referee for his/her helpful comments. Iwasa would like to acknowledge financial support from Research Fellowships of the Japan Society for the Promotion of Science for Young Scientists. Professor Koji Shimomura passed away on February 24, 2007. This paper was completed after his untimely death.     

The structure of the German economy

Exploiting the information contained in an economy’s input-output matrix and using the novel approach developed by Fisher and Marshall (2011), we calculate Rybczynski effects and Stolper–Samuelson effects for Germany in 2007. We show how sectoral output and factor remuneration react to exogenous changes of factor endowments and product prices, respectively. These calculations are implemented using two different models comprising one with labour and capital as the classical production factors and one where we introduce patent stock as an additional factor of production. In the former, we further differentiate between a scenario where all production factors are mobile and one with sector-specific capital. In the latter analysis, we measure the impact of innovation-targeting policy action for sectoral output. Positive Rybczynski effects of patents and high-skilled workers are strongest in knowledge-intensive sectors, while other sectors contract. The introduction of patents as a further production factor has only minor influence on the Rybczynski effects of other factors.     

Marshall and Walras: Incompatible bedfellows?

Abstract

The standard view about the relationship between the Marshallian and the Walrasian approaches is that they are complementary to each other. My aim in this paper is to show that, on the contrary, they constitute alternative sub-research programmes within the wider neoclassical paradigm. I make my point by contrasting the two approaches against the following benchmarks: the purpose of economic theory according to Marshall and Walras; their views as to the role of mathematics; their specific ways of tackling complexity; the conception of equilibrium underpinning their theories; and, finally, their trade organisation assumptions.     

Are wages equal across sectors of production?

The assumption that national labour markets are homogeneous across tradable and non‐tradable goods is common in multisector (open‐economy) macro models and crucial for the prominent Balassa–Samuelson hypothesis. To test it, this study introduces a novel, theory‐based method of distinguishing the tradable and non‐tradable sectors to the Balassa–Samuelson literature and employs modern empirical methods and a large and detailed macro dataset. It finds that both the internal relationship between productivity and wages in the tradable and non‐tradable sectors postulated by the Balassa–Samuelson hypothesis and its external transmission mechanism are rejected.     

Women and Work: A Survey of Textbooks

The third Marshall–Hicks–Allen rule of elasticity of derived demand purports to show that labor demand is less elastic when labor is a smaller share of total costs. As Hicks, Allen, and then Bronfenbrenner showed, this rule is not quite correct, and actually is complicated by an unexpected negative relationship involving labor's share of total costs and the elasticity of substitution. The standard intuitive explanation for the exception to the rule presented by Stigler and referenced in many textbooks describes a situation rather different than the one described in the rule. The author presents an example that illustrates the peculiar negative impact of labor's share operating via the elasticity of substitution and then explains why the unexpected relationship between labor's share of total cost, the elasticity of substitution, and the elasticity of labor demand holds.     

On the Samuelson–Etula Master Function and the capital controversy

Abstract

The paper addresses the ambiguity that surrounds the conception of capital and its role in neoclassical price-and-distribution theory. The difficulties encountered in the various attempts to define the marginal product either of capital or of a capital good are recalled and the conclusion is drawn that neither concept appears theoretically sound. This historical reconstruction is combined with critical discussion of the recent attempt by Paul Samuelson to determine income distribution by means of the “Master Function”, a device previously developed and presented by Samuelson himself with Erkko Etula, and its “non-neoclassical” marginal products. Rather than the existence of a continuum of alternative technical possibilities, this construction assumes the simultaneous use of a discrete number of methods of production for the same commodity. Even though each technique employs the inputs in fixed proportions, the coexistence of various techniques permits the full employment of an arbitrarily given vector of input endowments. As is shown here, however, the coexistence of methods required for the differentiability of the Master Function can take place, if heterogenous capital goods are used in production, neither in the case with stationary relative prices nor in the non-stationary Arrow–Debreu framework.     

Transfers and the Samuelson Rule in Stock Externality Provision—Why Do We Need Them Both?

This paper examines the relationship between the Samuelson rule for efficient provision of stock externality and unilateral transfers for equalization of mitigation costs among the agents. Using a generic model of stock externality provisions, we proved that the revised Samuelson rule that allows transfers is a necessary and sufficient condition for efficient provision of stock externalities. In addition, selection of social welfare weights of the agents plays a key role in directions and magnitudes of the transfers. We discuss the implications of the revised Samuelson rule in economic modeling of climate change, an empirical case of stock externality, through numerical simulations in the RICE model.     

Giffen goods and market making

Summary. This paper shows that information effects per se are not responsible for the Giffen goods anomaly affecting traders demands in multi asset noisy, rational expectations equilibrium markets. The role that information plays in traders strategies also matters. In a market with risk averse, uninformed traders, informed agents have a dual trading motive: speculation and market making. The former entails using prices to assess the effect of error terms; the latter requires employing them to disentangle noise traders demands within aggregate orders. In a correlated environment this complicates the signal extraction problem and may generate upward sloping demand curves. Assuming (i) that competitive, risk neutral market makers price the assets or that (ii) uninformed traders risk tolerance coefficient grows unboundedly, removes the market making component from informed traders demands rendering them well behaved in prices.Received: 30 April 2002, Revised: 3 December 2003, JEL Classification Numbers: G100, G120, G140.Support from the Barcelona Economics Program of CREA and the Ente per gli Studi Monetari e Finanziari Luigi Einaudi, are gratefully acknowledged. I thank Anat Admati, Jordi Caballé, Giacinta Cestone, and Xavier Vives for useful suggestions. The comments provided by the Associate Editor and an anonymous referee greatly improved the papers exposition.     

Samuelson and Davidson on ergodicity: A reformulation

The concept of ergodicity in economics seems to have the qualities of a shibboleth—a word or saying used by adherents of a party, sect, or belief, and usually regarded by others as empty of real meaning. It is in use by both neoclassical economics—after Samuelson (1965 Samuelson, P. A. “Proof That Properly Anticipated Prices Fluctuate Randomly.” Industrial Management Review, 1965, 6 (2), 41–49.[Web of Science ®] , [Google Scholar], p. 43), who used the term in his paper on what later became a foundation of the efficient market hypothesis—and post Keynesian economics—after Davidson, who picked up the term in order to highlight methodological differences. Considering the origin of the concept in statistical physics and its use in the topology of dynamical systems, which most economists are not conversant with, the importance ascribed to ergodicity in economic debate seems mystifying. We deconstruct the meaning of the term in the major contributions of Samuelson and Davidson. We suggest an alternative to (non)ergodicity to discuss the nature of randomness in the real world. While neoclassical theory assumes stochastic randomness, post Keynesians assume nonstochastic randomness, a term developed by the mathematician Kolmogorov (1986 Kolmogorov, A.N. “On the Logical Foundations of Probability Theory.” In K. Ito, and J.V. Prokhorov (eds.), Probability and Mathematical Statistics, Moscow, 1986, pp. 467–471. [Google Scholar], p. 467). We argue that even in an ergodic world there is a problem with the idea that stochastic randomness can be dealt with by the financial system.