Classical Economics and the Problem of Exhaustible Resources

In this paper we discuss in terms of the simple model of exhaustible resources proposed by Bidard and Erreygers some of their propositions. The concept of ‘real rate of profit’ introduced by them is shown to be of no analytical use. It is stressed that the mathematical properties of the economic system under consideration are independent of the numeraire adopted. The classical treatment of exhaustible resources in terms of differential rent is shown to be correct under well‐defined conditions. It is argued that it is complementary to, rather than incompatible with, the approach which emphasizes that in conditions of free competition the rate of profit obtained by conserving the resource equals that in production processes.     

Housing, consumption and monetary policy: How different are the US and the euro area?

This paper provides a systematic empirical analysis of the role of the housing market in the macroeconomy in the US and the euro area. First, it establishes some stylised facts concerning key variables in the housing market on the two sides of the Atlantic, such as real house prices, residential investment and mortgage debt. It then presents evidence from Structural Vector Autoregressions (SVAR) by focusing on the effects of monetary policy, credit supply and housing demand shocks on the housing market and the broader economy. The analysis shows that similarities outweigh differences as far as the housing market is concerned. The empirical evidence suggests a stronger role for housing in the transmission of monetary policy shocks in the US. The evidence is less clear-cut for housing demand shocks. Finally, credit supply shocks seem to matter more in the euro area.     

Exhaustible Resources in a Dynamic Input–Output Model with ‘Classical’ Features

This paper discusses the problem of exhaustible resources in a dynamic input–output model with ‘classical’ features. Both the quantity side and the price and distribution side are discussed. The argument is developed using the simplifying assump- tions that there is no technical progress and that no new deposits of the exhaustible resources are discovered. To avoid the ' end-of-world’ scenario, it is assumed that there is a ‘backstop technology’: this implies that exhaustible resources are useful but not necessary in the production and reproduction of commodities. A necessary and sufficient condition for the existence of paths of prices, quantities produced, and stocks of resources converging to the ultralong-period position is determined, provided that the backstop technology exhibits some appropriate properties. In addition, an algorithm to determine these paths is suggested. A numerical example illustrates the findings.     

Ricardo on Agricultural Improvements: a Note

This note discusses the numerical examples of land saving and capital saving agricultural improvements Ricardo provided in the chapter on the rent of land in the Principles. Especially his illustration of the second kind of improvements met with fierce criticism. It is argued that Ricardo was not wrong in any substantive sense and that he could only be criticized for having changed the definition of rent as regards the timing of its payment from post to ante factum.     

Solutions to linear equations depending on a parameter

An analysis of the relationships between the solutions of a system of linear equations depending on a parameter is provided. The results are applied to an economic problem concerning prices: According to the classical formalisation, the prices of production depend on the technique and a parameter, the rate of profit, representing distribution.

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Riassunto Si fornisce un'analisi delle relazioni fra le soluzioni di un sistema di equazioni lineari che dipendono da un parametro. I risultati ottenuti sono poi applicati a un problema economico riguardante i prezzi: In base alla formalizzazione classica, i prezzi di produzione dipendono dalla tecnica e da un parametro, il tasso di profitto, che rappresenta la distribuzione.

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Neri Salvadori thanks the MURST (the Italian Ministry of the University and Technological and Scientific Research) for financial support.     

Existence of optimal strategies in linear multisector models

In this paper, we give a sufficient and almost necessary condition for the existence of optimal strategies in linear multisector models when time is continuous, consumption is limited to one commodity, the instantaneous utility is of the CES type, and available technology allows a positive growth rate.JEL Classification Numbers: C62, O41 We thank an anonymous referee of this journal for careful scrutiny and very useful suggestions