In this paper we study a one-shot game of R & D between two firms which differ in their incentives to innovate. We analyse this problem when the R & D technology displays smoothly decreasing returns as well as when increasing returns in the form of indivisibilities prevail. In the first case we show that the magnitude of the ratio between the discount rate and the productivity of R & D expenditure may be a critical parameter in ranking firms' probabilities of winning the race. In the second case, we prove that the firm with the higher profit incentive invests in R & D at least as much as the firm with the higher competitive threat. We then apply these results to a homogeneous duopoly under Bertrand or Cournot competition in the product market.

On se propose ici d'explorer la sémantique de l'hypothèse d'anticipations rationnelles telle qu'on la trouve formalisée chez Muth et Lucas. On montre tout d'abord que cette hypothèse appelle une interprétation tantôt comme condition d'équilibre, tantôt comme exigence de rationalité individuelle. On s'interroge ensuite sur la compatibilité de ces deux interprétations, avant de conclure par la négative. Il n'est même pas établi qu'une fois à l'équilibre d'anticipations rationnelles, des agents rationnels ne devraient pas en dévier. L'hypothèse apparaît comme un concept formel de stationnarité en univers stochastique plutôt qu'elle ne décrit la rationalité cognitive des agents. L'argumentation repose sur une analyse des difficultés et paradoxes qui surgissent dans les modèles de révision des croyances (ou d'“apprentissage des anticipations rationnelles”).

This paper is concerned with dynamic factor demand systems. First, for the intertemporal expected profit maximization problem given quadratic adjustment costs, it is shown that interrelations between factor inputs result from specific characteristics of the innovations in the technology – not from substitution or adjustment costs trade-off possibilities. Second, in line with the Lucas critique, the impact of a structural change in the process of the explanatory variables on the factor demand decision rules is analyzed. Third, the non-stationarity of the factor demand series can be accounted for by that of relative factor prices when demand and price series are cointegrated.

The model which allows for structural changes in the processes of the explanatory variables and for cointegration is applied to quarterly data for manufacturing in the Netherlands for the period 1971.1 – 1984. IV.

Granger-causality tests and innovation analyses based on Vector Autoregression models seem to deny any role for monetary factors in generating and shaping business cycle fluctuations. The present paper shows that such empirical support for Real Business Cycle theories is flawed. In particular, it is demonstrated that an extended version of the Lucas paradigm can explain the existing evidence rather accurately, when changes in policy regimes are explicitly modelled.

The finiteness condition of vertical product differentiation models is translated into the taste distribution model first analyzed by Mussa and Rosen. For a utility function linear in quality, the necessary and sufficient condition for finiteness is that the cost function with respect to quality is strictly concave. Furthermore, for these cost functions, in duopoly, higher quality always implies a higher market share at the Nash equilibrium in prices. The n-firm case is briefly discussed, and some implications for marketing strategy of new products are presented.

L'objet de cet article est d'examiner, d'un point de vue tant théorique qu'empirique (dans le cas de la France) l'introduction de l'incertitude affectant les revenus, les prix ou les rendements des actifs financiers, dans le modèle de consommation des ménages tiré de l'hypothèse de cycle de vie. Différentes méthodes, simples ou plus complexes, de construction des moments du second ordre des variables sont essayées.

Under the assumption that prices are proportional to labour values, it is demonstrated that Ricardo's reasoning on the relation between profit and rent in the Principles contains two errors. Both of them point to the neglect of commodity inputs. Curiously, though, they compensate one another, so that Ricardo's conclusion about the tendential fall of the rate of profits as a result of capital accumulation when there is no technical progress remains valid.

This paper presents a disequilibrium model for Switzerland, focusing on the production sector and the associated spillover effects. Firms' decisions on output supply, labor demand and investment are analysed on basis of a vintage approach, involving pressure of demand, profitability and relative prices as determinants. Macro relationships are derived by aggregating over micro markets on which regimes are allowed to differ. In the resulting nonlinear macro structure the response of output and employment to demand-side and supply-side factors varies through the cycle, depending on the regime-mix (measured by survey data). Inventories and unfilled orders act as buffer stocks, modifying the dynamic link between current demand and output.

Cet article étudie un modèle principal-agent dans lequel se pose un problème de double risque moral: ni le comportement de l'agent ni celui du principal sont des variables vérifiables. On montre que si le principal doit fournir un effort qui affecte les intérêts de l'agent, iltrouve alors toujours profitable de déléguer cette tâche à une tierce partie — plutôt que de la prendre en charge lui-même. Cette analyse permet, entre autres choses, de justifier une structure hiérarchique à trois niveaux, même dans des contextes très simples. On discute des inefficacités que l'existence de coalitions entre les différents niveaux de la hiérarchie peut provoquer dans une telle structure. Finalement, on compare la structure hiérarchique proposée à une structure à la Mirrlees.

The principle of effective demand decomposes in two distinct propositions, one pertaining to the analysis of actual, the other to the analysis of equilibrium states. The authors suggest that Keynes' apparatus of aggregate supply and demand decomposes correspondingly in two pairs of aggregate functions. They thus extend to the supply side a duality which had already been noticed on the demand side. Such an extension leads to a reconsideration of the debate between two conflicting views of the aggregate supply function which originated in Patinkin's contributions. The authors' argument emphasizes the role of aggregation over optimizing producers, and the status of intermediate goods and imperfect competition.

The efficiency of demand management policies is considered in a two-sector model of a small and open economy with centralized wage bargaining. Differences in labour demand between sectors are shown to have qualitative implications for the responsiveness of wages to changes in output prices. Wage increases induced by increased demand in one sector may, thus, crowd out activity in other sectors, and this has important consequences for the effects of demand management policies on internal and external goals. An often proposed and practised policy of switching demand from tradeables to non-tradeables to ensure internal and external balance is extensively discussed.

Cet article analyse l’effet sur l’emploi d’une baisse des cotisations patronales à la Sécurité Sociale. Selon la version belge du modèle macrosectoriel HERMES, cet effet est assez faible, en particulier si on le compare à des résultats issus du modèle de déséquilibre conçu au sein du European Unemployment Program. L’article décrit le modèle HERMES et présente une simulation des effets de la baisse de cotisations patronales. Trois sources d’explication sont avancées pour expliquer le désaccord entre le modèle macrosectoriel HERMES et le modèle macroéconomique de déséquilibre: (1) le caractère keynésien prédominant d’HERMES par opposition à l’approche de déséquilibre, (2) les équations d’exportation et (3) les effets de substitution entre le capital et le travail.

On analyse l'effet sur les risques pris par les banques et la structure de leur actif de l'imposition d'un rapport minimal entre leurs fonds propres et les actifs qu'elles détiennent. Ces effets dépendent en particulier de la représentation du comportement des banques: comme une firme subissant un risque de faillite ou comme un agent économique réalisant un choix optimal de portefeuille. Ils résultent aussi de la nature de la règle de capitalisation, différenciée ou non, et du mode de rémunération des dépôts bancaires.

The taxation of income is usually criticized for the efficiency loss that results from distorting the intertemporal consumption decision. This argument is rejected in a world where the return to savings is random. It is shown that a distorting marginal tax on uncertain interest income serves as partial insurance and that this effect outweighs the efficiency loss, if only the first marginal dollar in tax revenue is valued less elastically than the last dollar spent on private consumption. A consumption tax — even one with intertemporally differentiated rates — would not provide insurance under these circumstances. The explicit consideration of uncertainty thus gives support to taxes that allow differentiation between the safe withdrawal of savings and the random return thereon.

This research empirically examines the relationship between economic development and the progression of economic thought. It is based on three propositions: 1) economic development progresses by long waves, 2) long waves induce a cyclical pattern of general entrepreneurial and managerial socio-economic behavior, and 3) economists pursue alternating periods of revolutionary and normal economic science as part of the general socio-economic pattern of behavior. The general hypothesis of this study is that prosperity periods induce economic thought concerned with maintaining the status quo (Kuhnian normal science) and depressionary periods induce the development of new theories (Kuhnian revolutionary science). The specific hypothesis is that long waves generate a cyclical pattern in the average age of journal article citations. This hypothesis is supported when tested with a random sampling of articles published in the American Economic Review from 1911 to 1987.

Cet article fournit une synthèse des principaux résultats contenus dans ma thèse de doctorat consacrée à l'efficience informationnelle du marché boursier. Il s'intéresse non seulement à la vérification empirique de l'hypothèse d'efficience informationnelle du marché, mais aborde également un nombre limité de questions se rapportant aux implications théoriques de cette hypothèse au niveau des modèles de comportement du prix des actions et de gestion professionnelle de portefeuilles.

Methods for nonparametric estimation and comparison of cross section Engel curves are presented and applied to U.K. expenditure data. Real Engel curves (with quantity demanded and real total expenditure on the axes) vary over time, but their shapes are generally quite stable. Mean normalized Engel curves are defined and are found not to vary greatly over time. Consequences of such invariance for the testing of microeconomic demand models are investigated.

L’objet premier du papier est de présenter les principales hypothèses économiques nécessaires à l’élaboration des processus “Itô” de diffusion en temps continu décrivant l’évolution du rendement des actifs financiers. Le papier discute le degré de généralité de ces hypothèses et fournit également une dérivation utile du lemme d’Itô. Dans le contexte de l’efficience du marché financier, il est démontré qu’un processus Itô ne répond pas de façon générale aux propriétés de la martingale ou du “random walk” pas plus qu’il n’implique que les rendements soient nécessairement normalement distribués.

The efficiency-wage-hours model allows for efficiency effects from both wages and working hours. It is shown that it is essential for static-comparative results to distinguish between working hours per worker and the number of workers in an efficiency-wage-hours model contrary to the basic efficiency-wage model. The wage rate and working hours increase with increasing non-wage labour costs while the employment level decreases. This yields the possibility to influence these variables by means of government action. There does not only exist an efficiency wage but also an efficiency working time. Both are invariant with respect to changes in productivity.