Dynamic effects of externalities,optimal saving and economic growth

Conclusion Recognizing the fact that provision of mixed public goods can result in both consumption externalities of the Samuelsonian variety as well as production externalities we set out to extend the earlier results of Rao and Kalpagam (1977) on the effect of public goods on economic growth. In so doing, we considered three standard specifications of production externalities and enlarged the concept of consumption displacement. Our basic conclusion is that the results of our earlier paper remain valid under the more general conditions set out in this paper.     

Implicit social preferences in the Norwegian system of indirect taxation

The revelation of implicit social preferences is a fresh field of econometrics. In this paper the theoretical setting is a model of optimal indirect taxation. A parametric preference function is specified, which makes it possible to separate and quantify three different effects. First, it provides a condensed quantitative measure of the degree of income inequality aversion. Second, a set of parameters evaluate external social costs induced by the consumption of certain commodities. Finally, the function allows estimation of implicit equivalent income scales. The authors consider the results as a source of information about an important part of Norwegian tax policy.     

Some fallacies in futures research

Can we study the future “rationally” and “scientifically”? This paper examines the methods now in use and finds the assumptions shaky, the tools faulty, and the implications dangerous. With data as the driver, analysis the watchword, quantification the rule, and model-building the prime preoccupation, futurology rests heavily on two key pillars, the information base and cost/benefit calculations. Because these are shown to rest on quicksand, the elaborate methodological structure based on them totters precariously.     

Forecasting and random processes

On the simple model of a (univariate) random process some general problems of “random logic” are discussed. New random approaches to explorative, normative and systematic (normex) forecasting are developed, and some applications are suggested.     

On the theory of macroeconomic quasi-equilibria

Conclusion It has been shown that for the Classical System a quasi-equilibrium cannot exist, unless we make the ad hoc assumption of inflexible nominal wages⁸. The equilibrium in the classical regime corresponds to the general competitive equilibrium, and of course the validity of Walras' Law cannot be questioned. At the same time, however, it has been shown that to extend these conclusions to the Keynesian system as well is not justified. The Keynesian system has, in general, a quasi-equilibrium. The model constructed in this paper and the resulting conclusions are significant because the model: (a) Incorporates the Keynesian notion of effective demand, which includes the demand for capital goods (investment) as being performed by a group of people distinct from the consumers (and so, answering Negishi's point, there is a prince in Hamlet!), (b) Unlike other models (like the recent paper by Glustoff), it does not rely on nominal wage rigidity to explain unemployment, but instead, again answering Negishi's remark, it explains rather than postulates why real wages do not adjust in the presence of unemployment so as to eliminate it. (c) It verifies the validity of Clower's proposition that in the Keynesian System Walras' Law holds only in equilibrium. (d) It reconsiles Bent Hansen's original quasi-equilibrium model with the Keynesian proposition of an unemployment equilibrium, against the apparent view of Hansen that to do that would require the assumption of a Phillips curve, a view also shared by Arrow and Hahn, and many others.An earlier version of this paper was presented in the December 1974 meeting of the Econometric Society in San Francisco. The author wishes to thank Prof. R. Clower, Prof. B. Hansen, Prof. S. Black, and Dr. G. Winckler for their valuable comments, but he obviously claims any errors for himself.     

THE DETERMINANTS OF THE INTER-INDUSTRY PATTERN OF DIVERSIFICATION BY U.K. MANUFACTURING ENTERPRISES*

Evidence of the diversity of output of larger U.K. manufacturing enterprises’in 1958, 1963 and 1968 is provided in the Reports on the Census of Production. The Censuses show that between 1958 and 1968 diversification was a significant and general trend in manufacturing industries and an important element in the growth of firms during the period. Moreover diversification seems to be part of a longer term trend in U.K. industry and part of the typical development pattern of the large firm. A theory of the firm's diversification decision is proposed and from this theory predictions are made of the structural features both of a firm's primary industry and of outside industries which are likely to encourage diversification from the one industry to the other. The power of the model in explaining the pattern of diversification between SIC manufacturing orders in the period 1963–68 is weak, due in part to the wide variety of factors influencing diversification and to the aggregated form of the data. Nevertheless, the results show the importance of research and development effort in encouraging diversification and the stimulus to diversification given by profitability and risk in firms’primary industries and high rates of output growth in outside industries. While the findings offer no clear conclusions regarding the impact of diversification upon economic performance, the results are consistent with the propositions that (i) diversification encourages technical progress in industry and (ii) diversification increases the efficiency with which resources are allocated between industries.     

Critical factors in technological innovation and their policy implications

This paper explores the critical factors which affect the innovation proccess. Some ways in which some of these factors can be influenced by appropriate policy measures are discussed. In particular, the role of the federal government in promoting innovation is discussed.The role of the government in stimulating and nurturing the innovation process is a controversial one. Proponents of the free enterprise system, many of whom are spokespersons for various industries, have persistently pointed out the deleterious effects of regulation and control on the innovation process. By contrast, advocates of an activist government role are often able to cite the protection of the common welfare as a primary need for government intervention. In truth, the “government” is a patchwork of many governments, operating through many agencies and affecting firms and individuals at several levels and leverage points. The same regulation that has deleterious effects on Industry A may be a stimulus for innovation in Industry B. Even in Industry A, the regulation may act as a force in directing efforts toward certain types of R&D programs that would not otherwise be undertaken.In this paper we examine the specific instances where innovation projects, both product or process types, were affected by government regulation. We also briefly review the critical factors which affect the innovation process and how various governments in industrialized countries have taken actions to influence these factors. Finally, we examine some general guidelines for policymaking purposes.