On some parity conditions encountered frequently in international economics

Interest Rate Parity, Purchasing Power Parity, and the Fisher relation between real and nominal interest are intimately connected consequences of optimal multi-period consumption/investment decisions. These three relations hold in their classic form only under complete certainty. With uncertainty, interest rate parity remains unaltered, but more complex equations involving risk premia obtain for purchasing power parity and the Fisher relation. A more complete market (with commodity futures) simplifies considerably these latter two conditions.     

Exchange-rate flexibility,inflation, and structural change: Israel Under Alternative Regimes

The paper analyses the evolution of the Israeli exchange rate regime from the application of large discrete devaluations interspersed with gradual adjustments of export subsidies and import tariffs, through the adoption of a crawling peg (1975), and culminating in exchange decontrol and a float (1977). The main issues analysed in greater detail are the problem of maintaining an export-biased trade strategy, the role of devaluations in the inflationary process and the effect of alternative exchange rate regimes on expectations and capital-account transactions.     

Confronto fra eventi condizionati di probabilità nulla nell'inferenza statistica Bayesiana

Dopo aver introdotto delle operazioni logiche fra eventicondizionati (che estendono opportunamente quelle usuali fra eventi), si definisce il concetto di iperprobabilità condizionata Si può così dare una interpretazione significativa della pseudodensità condizionata, introdotta da R. Scozzafava nell'inferenza statistica bayesiana.

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By a suitable extension of the usual algebra of events, logical operations forconditional events are introduced. This leads to a definition of conditional iperprobability, which is the natural tool for a sensible interpretation of the concept of conditional pseudodensity, introduced by R. Scozzafava in Bayesian statistical inference.

     

Informatics and society

Colloquium organized by the Mission Informatique of the Ministry of Industry, at the request of President Valery Giscard d'Estaing, entitled Colloque International Informatique et Société, Paris, France, 24–28 September 1979     

Towards a mathematical model of government behaviour

Journal of Economics -     

Active citizen's income, unconditional income and participation under imperfect competition: a welfare analysis

Various types of basic income schemes are considered to compensatethe allocative inefficiencies induced by unemployment benefits.A dynamic general equilibrium model of a unionised economy isdeveloped in which participation to the formal labour marketis endogenous and the budget of the State has to balance. Itis shown that basic income schemes reduce the equilibrium unemploymentrate. Assuming that job-search is costly to monitor, the normativeanalysis suggests that only the active population should beeligible to the basic income. Introducing such an ‘activecitizen’s income’ can be a Pareto-improving reform.     

Motivation Crowding Theory

The Motivation Crowding Effect suggests that external intervention via monetary incentives or punishments may undermine, and under different identifiable conditions strengthen, intrinsic motivation. As of today, the theoretical possibility of motivation crowding has been the main subject of discussion among economists. This study demonstrates that the effect is also of empirical relevance . There exist a large number of studies, offering empirical evidence in support of the existence of crowding–out and crowding–in. The study is based on circumstantial evidence, laboratory studies by both psychologists and economists, as well as field research by econometric studies. The pieces of evidence presented refer to a wide variety of areas of the economy and society and have been collected for many different countries and periods of time. Crowding effects thus are an empirically relevant phenomenon, which can, in specific cases, even dominate the traditional relative price effect.     

Happiness, Economy and Institutions

Institutional factors in the form of direct democracy (via initiatives and referenda) and federal structure (local autonomy) systematically and sizeably raise self-reported individual well-being in a cross-regional econometric analysis. This positive effect can be attributed to political outcomes closer to voters' preferences, as well as to the procedural utility of political participation possibilities. Moreover, the results of previous microeconometric well-being functions for other countries are generally supported. Unemployment has a strongly depressing effect on happiness. A higher income level raises happiness, however, only to a small extent.