Partial vs. general equilibrium analysis and choice of functional form: Implications for policy modeling

In formulating empirically tractable, economywide models, researchers are often forced to employ “convenient” functional forms. These forms embody restrictive maintained hypotheses. Alternatively, flexible functional forms may be utilized in a partial equilibrium setting. Estimation and incorporation of flexible functions into computable general equilibrium models is considerably more demanding of research resources. Assuming that shortcuts will continue to be necessary for researchers attempting to respond to current policy problems, this paper compares these two alternatives. Specifically, a general equilibrium model for New York State is employed to evaluate the relative performances of flexible partial equilibrium models and their more restrictive, general equilibrium counterpart. In the particular application considered, the former approach is found to dominate the latter.     

On the Relative Strengths of Altruism and Fairness

Some researchers have attributed deviations from selfish behavior to fairness. Violations of fairness theories, however, are observed in experimental dictator games with transfer rates greater than 1 (a transfer of x from the dictator yields an income of tx for the beneficiary, where x < tx): the dictator’s final income is less than the beneficiary’s. We theoretically propose that dictator giving also involves altruism, further supporting our claim with empirical evidence from four separate samples of dictator game experiments. Our nonlinear specification allows the relative measurement of the independent motives in dictator behavior.     

The Social Impact of Industrial and Resource Development on Local Communities: A Survey of Residents' Views

This paper describes the results of two surveys of public attitudes, perceptions, and expectations regarding large-scale energy development projects in the Latrobe Valley, Victoria. A baseline survey was conducted in 1974, before plans for a massive increase in planned energy generation for the Valley had begun to be instituted (projected to inject 440MW per year additional capacity to the year 1989, compared with an average annual increase of 52MW per year which characterized the period from 1921 to 1974 (State Electricity Commission of Victoria 1981)) and before construction commenced in 1977, on the first of two 2000MW power stations, located at Loy Yang, six kilometres from the town of Traralgon in the Latrobe Valley, Victoria. A subsequent survey was undertaken in 1981, with construction well-advanced on the first two 500MW units. The community studies represent part of a major project concerned with impact assessment of new industrial and resource projects in settled (as distinct from isolated) regions of Australia.     

Decision problems under uncertainty based on entropy functionals

This essay intends to define the role of entropy, in particular, the role of the maximum entropy criterion with respect to decision analysis and information economics. By considering the average opportunity loss interpretation, the basic hypothesis for Shannon's derivation can be derived from properties of decision problems. Using the representation Bayes Boundary it is possible to show that selecting a single probability from a set by the Maximum Entropy Criterion corresponds to a minimax criterion for decision-making. Since problems of randomly accessing and storing information as well as communicating information can often be stated in terms of coding problems, this result might be used to develop strategies for minimizing retrieval time or communication costs.     

Sources of growth and cyclical stability for Nevada counties: Transfer payments and property income

The growing relative number, the improved economic well-being, and the migration of elderly retirees is not only reshaping the social and economic structure of many areas, it is also modifying both long-term and short-run patterns of economic growth. Transfer payments and property incomes, two of the most important source of elderly income, have been among the leading sources of national income growth over the past several decades. Unlike most labor-related industry sources of earnings, the level of transfer payments and property incomes received by the residents of the region is not directly dependent upon local economic activity. Consequently, as transfer payments and property incomes of elderly retirees become increasingly important sources of income and purchasing power within a region, they also can alter regional short-run cyclical patterns of income growth. This article examines the pattern of growth of transfer payments and property incomes in the context of national economic cycles, and explores the implication of those findings on metropolitan and nonmetropolitan Nevada economies.