Disequilibrium dynamics in a simple macroeconomic model

The dynamic behavior of a simple macroeconomic disequilibrium model is analyzed in which consumers' changes in money holdings constitute the dynamic link between any two periods. It is shown that, under constant government consumption, a constant production function (no investment), and fixed prices and wages, stationary states of Keynesian unemployment are stable whereas those of repressed inflation are globally unstable. Possibilities of unemployment and output cycles are indicated for fixed wages as well as for some very simple class of wage and price adjustment mechanisms.     

MSE-improvement of the least squares estimator by dropping variables

It is well known that dropping variables in regression analysis decreases the variance of the least squares (LS) estimator of the remaining parameters. However, after elimination estimates of these parameters are biased, if the full model is correct. In his recent paper, Boscher (1991) showed that the LS-estimator in the special case of a mean shift model (cf. Cook and Weisberg, 1982) which assumes no “outliers” can be considered in the framework of a linear regression model where some variables are deleted. He derived conditions under which this estimator outperforms the LS-estimator of the full model in terms of the mean squared error (MSE)-matrix criterion. We demonstrate that this approach can be extended to the general set-up of dropping variables. Necessary and sufficient conditions for the MSE-matrix superiority of the LS-estimator in the reduced model over that in the full model are derived. We also provide a uniformly most powerful F-statistic for testing the MSE-improvement.     

The effect of income taxation on the labor supply of married men in Sweden

This paper presents labor supply functions estimated on a sample of prime age Swedish males. The model used takes account of the nonlinear character of individuals' budget sets caused by the progressive income tax. It also allows preferences to vary between individuals. Calculations with the estimated functions, using a partial equilibrium framework, indicate a sizeable effect of the income tax on hours of work. The average expected deadweight loss of the income tax is found to be approximately 20 percent of tax revenue.     

An empirical investigation of monetary effects on private consumption expenditures in Austria

This paper presents an econometric investigation of monetary effects on private consumption expenditures in Austria. It tries to add the empirical aspect to the theoretical problem of the relationship between monetary and real sector of an economy.Patinkins theory of the real balance effect provides the link between theoretical and empirical aspects. Taking into consideration further assumptions on aggregation, dynamics and problems of definition of variables, consumption functions of different aggregation levels are specified. Including effects of interest rates and credits one arrives at a first assessment of monetary effects on private consumption expenditures as found from single equation estimates. Significant credit and wealth effects are obtained. Later, systems of equations are estimated and used to investigate real—monetary sector interaction. They allow also a dynamic analysis.In presenting the sequence of microeconomic foundations, further assumptions and macroeconomic functions and systems built upon, it is thought to clarify the connection to traditional theory of real—monetary sectors relationship. It might also give an idea about the resulting problems for meaningful empirical research in this area.

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Zusammenfassung Diese Arbeit beschäftigt sich mit der ökonometrischen Untersuchung monetärer Effekte auf private Konsumausgaben in Österreich. Es wird damit versucht, dem theoretischen Problem der Beziehungen zwischen monetärem und realem Sektor der Wirtschaft einen empirischen Aspekt, der die österreichischen Verhältnisse betrifft, zur Seite zu stellen. Das Bindeglied zwischen Theorie und Empirie stelltPatinkins Theorie des Realkasseneffektes dar, die unter Zuhilfenahme weiterer Annahmen über Aggregation, Definitionen und Dynamik zur Spezifikation von aggregierten und disaggregierten Konsumfunktionen führt. Ergänzt durch Zins- und Krediteffekte läßt sich an Hand von Einzelgleichungen eine erste Einschätzung monetärer Wirkungen auf den privaten Konsum und seine Komponenten durchführen. Es können signifikante Kredit- und Vermögenseffekte festgestellt werden. In diesem Zusammenhang wird auch die Hypothese überprüft, ob die Grenzneigungen zum Konsum aus dem verfügbaren Realeinkommen und aus dem Realfinanzvermögen gleich sind, wie dies durch die Annahme eines kurzfristigen Planungshorizontes impliziert wird.Um die Interaktion von realem und monetärem Sektor zu analysieren, wird ein Gleichungs-system formuliert und geschätzt. Daraus lassen sich Unterschiede zu Einzelgleichungsergebnissen aufzeigen. Mittels alternativer Spezifikation der Konsumgleichungen und der Gleichung des monetären Sektors können Vermögens-, Kredit- und Zinseffekte auch im dynamischen Zusammenhang untersucht werden.Die Aufeinanderfolge von mikroökonomischen Grundlagen, weiterer Annahmen, makroökonomischen Funktionen und schließlich Systemen, soll den Zusammenhang zur traditionellen Theorie der Beziehungen zwischen Geld- und Realsektor verdeutlichen und auf die daraus entstehenden Probleme für eine adäquate empirische Untersuchung hinweisen.

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A preliminary version of this paper was presented at the Winter Meeting of the Econometric Society at Sindelfingen (January 9–11, 1978). It constitutes a condensed version of a project on Money and Private Consumption conducted at the Institute of Econometrics, TU—Vienna, under Prof.G. Tintner. The author is indebted to Prof. Tintner for helpful comments and to Dipl. Ing.R. Rieder for assisting in the computations and providing computer programs. The project was supported financially by the Jubiläusmfonds of the Austrian National Bank.     

Implementation of college admission rules

Summary We consider both Nash and strong Nash implementation of various matching rules for college admissions problems. We show that all such rules are supersolutions of the stable rule. Among these rules the lower bound stable rule is implementable in both senses. The upper bound Pareto and individually rational rule is strong Nash implementable yet it is not Nash implementable. Two corollaries of interest are the stable rule is the minimal (Nash or strong Nash) implementable solution that is Pareto optimal and individually rational, and the stable rule is the minimal (Nash or strong Nash) implementable extension of any of its subsolutions.We wish to thank Professor William Thomson for his efforts in supervision as well as his useful suggestions. We are grateful to the participants in his reading class, workshops at Bilkent University, University of Rochester, and in particular Jeffrey Banks, Stephen Ching, Bhaskar Dutta, Rangarajan Sundaram and an anonymous referee for their helpful comments.     

On the fundamental thought behind voting rules

The theme is Arrow's requirement in his theorem of 1951 on methods for group choice, that the choice be independent of irrelevant alternatives. The attention is drawn to (1) his own explanation of this requirement in 1972, which is a quite different understanding than has been discussed in the voluminous literature on the theorem, (2) that Arrow, in fact, in 1985 showed an understanding for how irrelevant alternatives might in a meaningful way influence the group choice, (3) that admittedly the border-line between irrelevant and relevant alternatives in Arrow's original statement is arbitrary, and (4) that Arrow, if he had observed the final thought in the origin of the group theory by Borda, which he admittedly did not, might have realized that Borda's method stringently estimates the relevance of each alternative for the result.The author expresses his surprise that a theoretical conclusion based on an arbitrary fundament has been admired so long.     

German rail vehicle construction in the context of market globalisation

Conclusion In the guise of ABB Daimler-Benz Transportation and Siemens, Germany has two powerful systems suppliers in a good position to keep pace with other systems suppliers on global markets. As in the air-travel industry it is conceivable that developments are moving towards a uniform rail technology. Although the buy national principle still dominates procurement practices, and national egos still dominate the development of rail systems (ICE, TGV), growing competition from Japan could force Europe to develop a European system. This would significantly increase the chances of European industry in bidding for international contracts. For this reason the EU should not relent in its efforts to standardise European rail systems.     

Erklärungsansätze für vertragswidriges Verhalten Versicherungsnehmern aus Sicht der ökonomischen Theorie

The two main purposes of this paper are an introduction to the economic analysis of insurance fraud and furthermore a derivation of factors that determine fraudulent behavior of policyholders on insurance markets. Consequently, we analyze the strategic decision problems of insurance companies and the policyholders and identify some factors that can help to reduce fraudulent behavior. In this context we evaluate two derived starting points for the combat against insurance fraud: fraud detection systems and a consequent charge policy of detected defrauders. We illustrate that both points can help to reduce the cost of fraud. Furthermore, we enhance our earlier analysis with respect to the empirical fact that some individuals care about fairness or — in the insurance fraud context — the legitimacy of their actions. Surprisingly, in some market situations these concerns of some policyholders do not lead to a lower fraud probability. Finally, we discuss how and to what extent insurance companies can influence such ethical concerns of policyholders. On that score, we distinguish insurance specific and insurance unspecific factors and their impact on the consumers attitudes towards insurance fraud.     

Langlebigkeit und Altern: Gene oder Umwelt?

Aging is defined as loss of homeostasis which affects all metabolic systems, including DNA. Interspecies comparisons and lessons from the human genetic instability syndromes suggest a correlation between DNA-homeostasis and maximum lifespan, whereas average lifespan depends mainly on environmental factors. Current demographic data suggest a maximum lifespan in humans of 110–115. The average life expectancy at birth has reached 80 years in the wealthy nations and may exceed, at least in females, 90 years by the year 2050. Genetic and biological reasons, but also lifestyle factors, account for the greater longevity of women. Attempt to define a ?longevity“ genotype so far have not been met with success, but carriers of the ApoE4-Allele appear to have a disadvantage. Unlike the situation in model organisms, aging and longevity in humans seem to be influenced by numerous genes and environmental interactions. Most people do not die of old age but of age-related diseases which are frequent because of lack of natural selection against genetic defects that cause late-onset diseases. Moreover, genes causing late-onset diseases show evidence of antagonistic pleiotropy, rendering these genes resistant to removal from our genome. Likewise, thermoinstability of DNA and generation of reactive oxygen species during oxidative phosphorylation are two endogenous sources of genomic instability that limit our lifespan and cannot be overcome without fundamentally altering the biological make-up of our species. Genomic instability causes cancer and accelerates the aging process, as evidenced by the human caretaker gene syndromes which typically show progeroid features. From a genetic point of view, cancer and aging may be moderately delayed and / or mitigated by lifestyle and medical / environmental interventions, but given the constraints of our biological make-up, they cannot be eradicated.