On the uniqueness of the solution to a large linear assignment problem

The core of a linear assignment problem contains a continuum of allocations. A model is presented where this core shrinks to a unique solution of the limit problem as the number of agents grows.     

“Lock-in” vs. “critical masses” — Industrial change under network externalities

Where increasing returns to adoption play a role in the diffusion of a new technology, technological “lock-in” is now often claimed to occur. However, this result, and the modeling approach that produces it, are problematic. Further innovations could never have a chance of disseminating, if “lock-in” had occurred in the diffusion process of earlier innovations. Yet, in reality, industrial change does not come to a halt. The paper offers a discussion of the apparent paradox. From an alternative modeling approach conditions are derived under which a newly introduced technology can successfully disseminate in the market despite existing network externalities.     

Central Bank and Commercial Banks' Liquidity Management – What is the Relationship?

The paper explores the relation between individual banks' liquidity management in the euro area and the ECB's management of the aggregate current accounts held by banks with the Eurosystem. It is argued that, in the case of the euro area with its large, remunerated reserve requirements that have to be fulfilled only on average over a one-month period, the banks' demand for working balances to serve as a buffer against market imperfections is always below reserve requirements. It is therefore normally sufficient for the ECB when steering short-term interest rates to control aggregate liquidity in a way that the aggregate banking system is in a position to fulfil adequately its reserve requirements. In particular, the ECB normally does not need to take care of any factors that affect temporarily the demand for working balances, such as the level and uncertainties of interbank payment flows. However, two exceptions are noteworthy and are discussed in the paper: the banks' balance sheet management activities implying a regular end of month peak of the EONIA rate; and the liquidity situation in the case of substantive market tensions as in the days following the terrorist attacks of 11 September 2001. The need of the ECB's liquidity management to address the associated deviations from a model of perfect markets is discussed.     

New tendencies in the cooperation policy of the GDR

Until the early seventies the German Democratic Republic (GDR), in line with the CSSR and Bulgaria, was least disposed among CMEA countries to engage in cooperation activities with the West. One of the major reasons for the reserve shown by the GDR in this respect was probably that linkage through cooperation agreements of the GDR-owned production and distribution potential to Western partners was deemed to involve too great a political and economic risk. Since the political recognition in 1972 and 1973 however a reversal of views could be observed which is justified by GDR circles with a series of new trends in the world economy and in world politics.     

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