Economic Analysis in Talmudic Literature: Some Ancient Studies of Value

A bstract . The Talmudic Sages displayed a remarkable understanding of economic laws and practices. A knowledge of this understanding would be useful for the development of western economic thought. Especially is this true of the insight these Jewish scholars won into the nature of value , one of the most controversial economic concepts today. The Talmud —a compilation of studies, disputations and interpretations from Palestinian and Babylonian academies from the 3rd century B.C.E. to the 5th century C.E.—contains a complex system of value concepts in which economic aspects are part of a larger set of ethical and legal doctrines. This includes "ideal" and "market value," the value of human life and its link to man's productive capacity, the derivation of present value from calculations of expected income flow from the person's labor, the nucleus of the concept of "human capital," of "free labor" as against "slave labor," subjective and objective value with the latter made subjective and the former objective, psychic value and marginal utility. The most intriguing doctrine is that of a "valueless value"; the Talmudic sages attempted the quantification of a negative value couched in positive and psycho-economic terms, an idea which, it is held, has no parallel in western economic thought. This idea, it is argued, has significance for modern welfare economics; it is a distinct category in which the valueless subject is given a positive numerical value (1) (2).     

Modeling exchange rate dependence dynamics at different time horizons

Despite an extensive body of research, the best way to model the dependence of exchange rates remains an open question. In this paper we present a new approach which employs a flexible time-varying copula model. It allows the conditional correlation between exchange rates to be both time-varying and modeled independently from the marginal distributions. We introduce a dynamic specification for the correlation using the Fisher transformation. Applied to Euro/US dollar and Japanese Yen/US dollar, our results reveal a significantly time-varying correlation, dependent on the past return realizations. We find that a time-varying copula with the proposed correlation specification gives better results than alternative dynamic benchmark models. The dynamic copula model outperforms at six different time horizons, ranging from hourly to daily, confirming the model specification.