This essay reviews the literature on the role of the financial factors in the Depression, and draws some lessons that have more general relevance for the study of the Depression and for macroeconomics. I argue that much of the recent progress that has been made in understanding some of the most important and puzzling aspects of financial-real links in the Depression followed a paradigm shift in economics.
We consider a production/distribution network represented by a general directed acyclic network. Each node is associated with a specific "product" or item at a given location and/or production stage. An arc (i, j) indicates that item i is used to "produce" item j. External demands may occur at any of the network's nodes. These demands occur continuously at item specific constant rates. Components may be assembled in any given proportions.
This paper assesses policies of mass privatization in Germany, Czechoslovakia, Hungary and Poland. A central concern stemming from the analysis is that, in view of the fiscal crisis facing economies in transition, it is crucial for governments to try to maximize the proceeds from the sale of state assets. Because of the low initial level of private wealth, it is important, in this respect, to let potential buyers borrow from the government or issue claims on future revenues (obtained with the privatized assets) to the government in order to pay for the privatized firms.
Alternative ways of conducting inference and measurement for long-horizon forecasting are explored with an application to dividend yields as predictors of stock returns. Monte Carlo analysis indicates that the Hansen and Hodrick (1980) procedure is biased at long horizons, but the alternatives perform better. These include an estimator derived under the null hypothesis as in Richardson and Smith (1991), a reformulation of the regression as in Jegadeesh (1990), and a vector autoregression (VAR) as in Campbell and Shiller (1988), Kandel and Stambaugh (1988), and Campbell (1991).
This paper offers a new theory of limit pricing. Incumbents from different markets or regions "compete" against one another, with each attempting to price in a manner that deflects entry into the others' markets. An entrant is imperfectly informed as to the incumbents' respective investments in cost reduction and seeks to enter markets in which incumbents have high costs. In a focal equilibrium, the entrant uses a simple "comparison strategy," in which it enters only the highest-priced markets, and incumbents engage in limit-pricing behavior.
We consider inventory systems with several distinct items. Demands occur at constant, item specific rates. The items are interdependent because of jointly incurred fixed procurement costs: The joint cost structure reflects general economies of scale, merely assuming a monotonicity and concavity (submodularity) property. Under a power-of-two policy each item is replenished with constant reorder intervals which are power-of-two multiples of some fixed or variable base planning period.
The reorder point/reorder quantity policies, also referred to as (r, Q) policies, are widely used in industry and extensively studied in the literature. However, for a period of almost 30 years there has been no efficient algorithm for computing optimal control parameteres for such policies. In this paper, we present a surprisingly simple and efficient algorithm for the determination of an optimal (r*, Q*) policy. The computational complexity of the algorithm is linear in Q*.