On incentive structures of a socialist economy

This paper considers an incentive structure B_T as an alternative to the incentive structure B_D recently suggested by Domar. Both of these incentive structures induce managers in a planned economy to provide the socially desirable output level while allowing them to set prices. In two aspects B_T is better than B_D. First, B_D works only if demand is elastic at the optimal output level while B_T works whether demand is elastic or inelastic at that level. Second, even when demand is elastic at the optimal level, there are circumstances for which output converges to the optimal level faster under B_T than under B_D.     

MODELLING HABIT PERSISTENCE*

The purpose of this paper is to derive the demand functions corresponding to an intertemporal linear expenditure system in which goods are durable, and in which there are penalty costs for changes in planned stocks. Taste changes over time can be interpreted as changes in the technology converting goods into characteristics.     

INFLATION,SECURITY VALUES,AND RISK PREMIA

The impact of stochastic inflation on the cross-sectional structure of nominal securities yields is examined. The analysis indicates that equilibrium required returns on debt and equity securities are affected differently by inflation and that the “Fisher Effect” is more likely to hold for equity returns than for debt yields. Implications for empirical investigations of portfolio performance and the real interest rate are explored.