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In two papers and in a recent book I have presented theory and evidence which lead to the conclusion that a corporation's share price (or its cost of capital) is not independent of the dividend rate. As you may know, MM (Modigliani and Miller) have the opposite view, and they argued their position at some length in a recent paper.3 Moreover, the tone of their paper made it clear that they saw no reasonable basis on which their conclusion could be questioned. Since they were so sure of their conclusion, it would seem advisable for me to review carefully my thinking on the subject, and this meeting appears to be a good time and place to do so. [ABSTRACT FROM AUTHOR]

This article focuses on the beliefs and practices of Robert Torrens in the field of economics, particularly his views on monetary matters. In the paper of 1826, Torrens' thought was in an intermediate position between its early and final forms. He was still extremely clear about the dangers of convertibility. At the same time he already accepted the need to make the currency fluctuate in response to external pressures as a metallic currency would do, and to provide a better safeguard against over-issue than that provided by the real-bills doctrine. But he did not want a complete parallel between the fluctuations of the paper currency and those of a theoretical metallic one, hence his desire to link the paper to the modal value of gold. Moreover, he still felt that a currency plan should have safeguards against panics, and do more than merely avoid those fluctuations to which a less well-designed scheme of currency would be liable. The 1826 plan would have been an important link in the development of this powerful and original thinker even if it had been short lived. But there is a strong possibility that it stayed with him for some time. This scheme was certainly one to which Torrens devoted considerable care and thought, and it is an interesting link in the development of an important economist.

Presents several abstracts of papers delivered on economic in Melbourne, Australia. 'The Economics of an Offshore Island,' by G.G. Firth; 'Some Aspects of Private Pension Funds and the Capital Market,' by P.J. Rose; 'Long-Run Overseas Trade Prospects for Farm Products,' by R.H. Snape.

The article discusses the article "A Comparison of Three Measures of Socioeconomic Status," by George A. Lundberg and Pearl Friedman. According to the author, "Validity" in the article refers to a covariation of a set of observations obtained in one way and another set of observations obtained in some other way. But, this should be added: the second set of observations, the "validating" data, must refer to the materials with which one is directly concerned. For example, it is commonly asserted that if people wish to validate a sociometric scale they may correlate the results obtained through its use with the results obtained through the use of another sociometric scale. These and kindred problems are immediately brought into sharp focus by a comparison of three measures of socio-economic status. A comparison presupposes some criterion, otherwise it can only resolve itself into a series of statements to the effect that "those things differ in the following respects, which raises the question of "What of it? The Guttman weights were assigned entirely on the basis of the correlation between the item and a status factor which was carefully defined as the factor common to education, occupation, income and participation. If it can be shown that these weights are not valid according to the same assumptions, on another sample, then the weights can be criticized.

Presents several abstracts on economics. 'Organization and Innovation,' by F.J. Willet; 'Economic Theory and Underdeveloped Countries,' by D.H. Whitehead; 'Some Development Problems in Asian Countries,' by A.M. Kerr.

Comments on an article about public pressures and values affecting forest management and timber supply in the United States. Effects of the criticism made by preservationists against industrial forest landowners; Discussion on legislative issues; Problems that log export trade faces.

The author provides a response to an earlier article in this journal that criticized his work in the field of finance. The author comments on Durand's focus on statistical reliability. The author takes issue with Durand's criticism of the value of call deferment, claiming that the statistical sampling error was small. The author acknowledges that the second section of the paper presented a model, which was clearly untested, and argues that Durand cannot visit the same expectations on that model, which lacked data for testing. The author proposes that perhaps Durand's time had been better spent proposing a better solution.

Professor Bellante's comments concerning our recent article on policy variables and price level movements offer some interesting, but hardly significant objections to our analysis. However, since a fundamental purpose of our paper was to stimulate further debate and interest in the relationships between policy actions and prices, we welcome the opportunity to continue the discussion. The need for additional work in this area is indicated by the continuation of inflation in 1970 and in 1971, despite a mild recession (the fifth in the postwar period) that was largely induced by intensive monetary and fiscal restraints. The analytical framework for our paper was based on a structural model that posited price level changes as a function of changes in total demand, labor costs, and price expectations. In turn, aggregate demand was linearly related to current-period and prior changes in monetary and fiscal variables and "other factors" stemming predominantly, from the private sector. [ABSTRACT FROM AUTHOR]

The article presents a critique of a study by Edward E. Edwards called "Changing Character of the Real Estate Mortgage Markets" that appears in this issue. Edwards, in his article, implies that mortgage funds are in short supply, which would impact liquidity and capital adequacy that would force savings and loan associations to leave the mortgage market. The author feels that Edwards does not prove that there is such a shortage and does not consider factors like mortgage rates or terms. The author also addresses Edwards' comments about capital requirements and says that his statement that the U.S. Federal Home Loan Bank Board restricting growth rates in capital shortage areas is erroneous.

In this paper we have been concerned with the methodology used to validate models of equity valuation. We have argued that after two decades of empirical research only the crudest sort of generalizations can be made about those factors explaining share price. This in an area that has benefitted from thousands of man-hours of research time, thousands of hours of computer time, and tens of thousands of dollars for related support activity. Few research fields in economics have been so well funded. In view of this continuing outlay of resources it seems prudent to consider strategies that may improve research findings this coming decade relative to the meager results of the past. [ABSTRACT FROM AUTHOR]

The purpose of the present paper is to examine the adequacy of variance as a measure of risk. Despite the abundance of literature on risk and portfolio diversification, virtually all of which uses variance as the measure of risk, there has been little progress on this problem beyond the original contributions. Tobin has pointed out that variance is the appropriate measure of risk if either the probability distribution of returns can be fully described by two parameters (e.g., normal) or the investor utility functions can be approximated by quadratics. Markowitz has suggested the possibility of using the semi-variance as a measure of risk, but for the most part his analysis of risk and portfolio diversification closely parallels that of Tobin. The subsequent literature has in general used variance as a measure of risk without further consideration. Moreover, those studies which have examined the measurement of risk explicitly either have provided only minor modifications to the Tobin-Markowitz analysis or have proposed alternative measures of risk which have been generally ignored. Thus, whether for reasons of convenience, theory or tradition, variance continues to be almost universally used as the measure of risk in portfolio models. The present paper takes a different approach to the problem of using variance as a measure of risk and reaches the conclusion that variance is ambiguous and yields conflicting results when calculated from information generally available to decision makers. If variance is in fact the best measure of risk (and thus appropriate for computing the locus of efficient portfolios and calculating the discount for uncertainty in capital asset prices) the question remains: which variance? In the case of a stock portfolio, the variance in the rate of return for an individual stock may be calculated from price information recorded over a shorter or longer period of time; moreover, observations from the same period of time when aggregated u... [ABSTRACT FROM AUTHOR]

My paper is basically an effort to develop for the U.S., which is assumed to be the key nation of the world economy, an economic adjustment tool other than the interest rate, to be used unilaterally to affect international and domestic economic conditions within the framework of international conventions and day to day working procedures of international business activity. The exercise is undertaken because multilateral economic adjustment procedures available to nations, and particularly to the U.S., are currently inadequate. The unilateral international economic adjustment opportunity considered becomes available to the U.S. when it adopts a value-added, or a similar tax, as a major revenue source of the Federal government. Because of the wide acceptance of the anti-indirect tax arguments in the U.S., it has been considered necessary to devote considerable space at the end of the paper to the development of the pro-indirect tax position. [ABSTRACT FROM AUTHOR]

The article presents a critique of an article by Robert P. Shay called "The Price of New Automobile Financing" and an article by F. Thomas Juster called "Consumer Sensitivity to the Price of Credit," which both appear in this journal. The author points out that neither himself nor Shay can find a better way to find the true credit cost of an installment loan. The problem lies in changes to the price of credit being subject to the credit services available to the consumer. Another point which the author brings up is Shay's assertion that competition is increased among sales finance companies. Juster's paper on consumers' debt goals and their susceptibility to finance rates raises, in the author's mind, the issue of whether or not loans should be given to consumers who have collateral or those who are creditworthy.

This article presents a list of books published in this issue of the journal, including "A Program for Federal Tax Revision," by Harvey E. Brazer, "Estimated Distribution of Minnesota Taxes and Public Expenditure Benefits," by O.H. Brownlee, and "Industrial Development," by Murray D. Bryce.

Comments on an article about the treatment of serial correlation in the regression residuals of estimated economic relationships. Information on the test of the acceptability of the common assumption that the observed serial correlation was caused by the errors of the regression equation; Use of the estimated regression coefficient.

The article discusses the paper on measurement as scientific method in economies by Leland B. Yeager, Professor emeritus of economics at Auburn University. Yeager does not cite enough from the works of any individual to justify convicting that person of such a restricted understanding of scientific method as the phrase "science is measurement" seems to imply. Not only is measurement alone far from the whole or even the significant portion of scientific method, but also measurement plus mathematics must be denied the right to claim that position. In the first portion of his paper Yeager discusses various applications of scientific method in the physical sciences and points out that numerous uniformities of relationships among various quantitative measurements have been found. Yeager understands that the degree of accuracy with which those uniformities of relationships have been measured has covered a wide range. When Yeager goes on to assert that the essential function of measurement in the natural sciences is largely replaced in economics by direct empirical knowledge of the most generally applicable principles and concepts, he is describing economics as it has been and not as it may be.

Protection and real profits. This paper introduces the element of profits into the Stolper and Samuelson analysis of protection. Profits may arise in the short run when some factors are not movable and even in long-run equilibrium in cases discussed in the paper. It is shown that, in the short run, protection is likely to increase profits in the protected industry, while real wages will not necessarily rise even if the protected industry is lab our-intensive. In the long run, no general proposition emerges. However conditions are presented in which protection will increase rents in the protected industry even in the long run. [ABSTRACT FROM AUTHOR]

This article provides an alternative analysis of the economic theory of clubs presented by J. M. Buchanan. This article begins by describing the salient feature of Buchanan's analysis, that is the explicit specification of the numbers of individuals consuming collective goods. This feature is the most important innovation of Buchanan's analysis. It is followed by discussing how Buchanan derived his Pareto-optimality conditions. The next part of the paper will present the alternative to Buchanan's analysis. This analysis shows that once the conventional equality for private goods and conditions are satisfied, a Pareto optimum has been achieved, assuming that the second-order conditions are also satisfied. These conditions, however, do not imply Buchanan's condition. Then, the paper will turn to the geometry of both analysis. Here it will be shown that Buchanan's analysis generated a intersecting total benefit and total cost curves while the analysis proposed here elicited parallel total benefit and total cost curves. Finally, the paper considers a complication to both analysis--the number of clubs. It is noted that the both analysis assume implicitly that the number of clubs for each collective good is unity, or, at least, they do not include an explicit analysis of the number of clubs itself. To show the implication of this matter, an example is illustrated.

The article presents information on several articles and books relating to economics, sociology and forestry. The article provides information on major journals that published articles on rural life more or less regularly. Every year the Congress national des Sode'te's savantes includes many papers on rural history, subsequently published in its transactions. Those for the 89th and 90th congresses, held in Lyons in 1964 and in Nice in 1965, have appeared; those for the 91st congress, held at Rennes in 1966, are still awaited. In 1967, there have been two articles on economic thought which, significantly, were written by foreigners and deal with the second half of the eighteenth century. One of them is a contemporary text by Chydenius, who was a Swedish forerunner of Adam Smith. Some articles on social history touch on the interests of the economic historian, including Albert Soboul's on "Description et mesure en histoire sociale." As always, some French historians have published work on foreign history.

Five themes have been developed in this paper. First, the gunslinger behavior of financial managers has not been characteristic of the profession overall. In the area in which financial excesses were supposed to have been greatest, conglomerate mergers, empirical evidence demonstrates that on the average a useful economic function was performed. Second, the finance function in its most meaningful definition is effective interaction with the operating and planning activities in the firm. The newer emphasis on the systems approach is incomplete in characterizing the finance function as "designing the metasystem." The correct emphasis of a systems approach is recognizing the interactions of the many parts of a firm to achieve overall optimization. Third, the new theory of finance provides an improved framework for understanding the role of the instruments and institutions of finance. It extends and illuminates economic theory as well. The various branches of finance are unified in the new theory. Fourth, because world economic developments have introduced new instabilities. anticipating and adjusting to changes in the financial environment are of increased importance. The international dimension has become integral to managerial finance. Fifth, the closed systems approach of finance must move to recognize even broader environments in an open systems framework. The objective function to be maximized has become multi-valued, including social criteria. The principles of finance are increasingly recognized to be applicable to a wider range of purposive organizations other than business firms: these include health care delivery, education, mental hospitals, religious institutions, prisons, and protest organizations of various kinds. Finally, the financial managerial expertise is increasingly required for application to broader social problems. Some may disagree, asserting that these are temporary fads. But the underlying forces seem to be fundamental and will incr... [ABSTRACT FROM AUTHOR]

In this paper we have shown that a necessary condition for the existence of financial intermediaries is the existence of imperfect divisibility of primary securities. In turn, a necessary condition for imperfect divisibility is the presence of transactions costs broadly conceived. Under such conditions, there is no unambiguous measure of the risk of an asset since that risk must be measured relative to a specific portfolio. But with imperfect divisibility, attainable portfolios vary with an investor's scale of wealth. Our purpose, however, has not been to demonstrate that by relaxing the assumptions of the conventional model, we can get different conclusions. That would be a rather empty exercise. Rather, we have tried to show that just as the theory of perfect competition is useful as a benchmark in the analysis of industrial organization, so the conventional model can be used as the starting point for an analysis of the implications of real world 'imperfections.' [ABSTRACT FROM AUTHOR]

This paper presents an analysis of a special form of resource allocation, corporate philanthropic contributions. Historically, economists have tended to ignore private philanthropic behavior and to regard it as economically irrational. Corporate philanthropy is especially subject to the question of rationality. The conceptual issue raised, however, suggests that much insight might be gained into the nature both of corporations and of philanthropic contributions through an exploration of the matter involved. [ABSTRACT FROM AUTHOR]

This paper presents a partial-equilibrium theory of member-bank borrowing from the U.S. Federal Reserve System. This theory, which derives from the work of several economists, portrays bank borrowing as primarily a short-run phenomenon. Faced with an immediate need for additional reserves, banks must weigh the costs of reserve adjustment against the disutility of increased debt to the Federal Reserve. The formulation adopted allows to parameterize the central forces of various competing theories, namely, those of banker profit, need, and reluctance, and of Federal Reserve surveillance. [ABSTRACT FROM AUTHOR]

The total volume of commercial bank deposits in the country is determined largely by the Federal Reserve System in accordance with the needs and objectives of the economy. The distribution of these deposits among individual banks and areas, however, is determined by market forces. The purpose of this study is to identify and measure the relevant structural and economic variables associated with deposit growth by state. The analysis is organized within the framework of the demand for money. The emphasis of the study is empirical; the results should, in part, replicate the findings of earlier demand for money studies. The first part of the paper identifies briefly the factors typically associated with differential deposit growth. The second part specifies these variables in a model, estimates the parameters and describes the findings. [ABSTRACT FROM AUTHOR]

The article presents response of Leland B. Yeager, Professor emeritus of economics at Auburn University to the critical analysis of his paper related to measurement as scientific method in economies published in the journal "American Journal of Economics and Sociology." The progress in physical science is toward increasing precision in numerical results that can be obtained repeatedly by workers in different countries and at different times. No satisfactory numerical expression for the intensity of that preference has been devised. The distinction hinges not on the precision with which numbers may be measured but on the general validity of numerical formulation. The criteria or standards governing acceptance of assertions as warranted are broadly the same in economics as in all science, namely, ability of the observations and logic supporting the assertions to stand up under repeated check by qualified students. Much introspective knowledge underlying economic theory does meet the tests of warranted assertibility since human beings can communicate with one another and compare their introspections and since human beings reveal themselves as broadly alike in certain basic respects describable in terms of desires and motives and purposive actions.

The article presents a list of books received, including "Resource and Output Trends in the United States since 1870," by Moses Abramovitz, "Comparative Economic Development," by Ralph H. Blodgett and Donald L. Kemmerer, and "An Introduction to Education in American Society," by Raymond E. Callahan.

The article presents a list of reference materials and papers on economics, agriculture, business and finance which were published in various journals. Some of the papers in the list include, "Gino Luzzatto," by various authors, published in the journal "Muova Rivista Storica, XLIX," are two issues dedicated to the memory of Gino Luzzatto, recalling his scholarly work and his high standing as a man and a teacher, "Ricordo di Yves Renouard," by F. Melis, published in the journal "Economia e Storia, XII," "Yves Renouard, uno storico amico dell' Italia," by A. Sapori, published in the journal "Mouva Rivista Storica, XLIX," is a commemoration and a bibliography of Yves Renouard, "I beni comunali e Forganizzazione del villaggio neli' Italia superiore fino al Mille," by G.P. Bognetti, published in the journal "Rivista Storica Italiana, LXXVII," describes the institutions of the early Middle Ages on lands of collective property and the passage to lands of communal property in the eleventh century.

Presents news briefs on Canadian Economics Association as of August 1970. Annual report of the managing editors of the' Canadian Journal of Economics'; List of papers that were presented at the 1970 meeting of the Canadian Economics Association.

Analyzes the Walrasian tattonnment (WA) which describes the economic system controlled by an auctioneer and the rule by which he recalculates prices. Out-of-equilibrium cost function; Effect of the cost of adjustment of a firm reacting to a change in an exogenous parameter; Optimal characteristics of the WA price adjustment equation.

Presents news briefs concerning the Canadian Economics Association as of October 1969. Minutes of the annual meeting on June 4-6, 1969; Report of the managing editors of the 'Canadian Journal of Economics'; Papers presented in the meeting.

The paper contends that family interaction can fruitfully be analyzed by means of an exchange model. A set of hypotheses about the parent-child relationship is deduced from several basic propositions involving resources and power. [ABSTRACT FROM AUTHOR]

Copyright of Rural Sociology is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This research paper attempts to explore the fiscal relationships underlying the provision of elementary and secondary public education by introducing a simultaneous equation model. The model is constructed under the assumption of maximization of community welfare. It is essentially a demand and supply equation system for public expenditures on education. The equation system consists of an expenditure revenue function. Economic, socioeconomic, and institutional variables are included in the model. One section in the paper describes what is necessarily an attempt to estimate empirically the general model outlined in the paper. The formulation used here is limited by the fact that the marginal rates of return and marginal cost of funds for education are difficult, if not impossible, to observe. These two variables determine the slope of demand and supply curves respectively. This paper is mainly concerned with factors affecting the position of demand and supply curves rather than the slope of the curves themselves.

The article is in memory of Philip Andrews, with whom the author has worked in the journal, "Oxford Economic Papers." Philip's enthusiasm was unflagging and his energy inexhaustible. He was always full of ideas about the ways in which the policy should evolve and, at the same time, he was ready to devote unlimited effort to the exacting labor of producing the journal without secretarial assistance. Philip had a strong sense of continuity. He was anxious to ensure that the lines of research, both empirical and theoretical, with which he had been associated should be carried forward and he became the leading member of the Oxford Economists' Research Group. Philip read widely, far beyond the field of economics, both in philosophy and in general literature. Moreover, if he was, in one sense, a genuine revolutionary in his own subject, he was also a traditionalist in that he looked back with regret to the works of an earlier generation when the subject was less narrowly confined within a barrier of conventional assumptions and less exclusively concerned with the manipulation of equations.

The theoretical analysis set forth in Section I shows that while the capital controls programs initially improve the balance of payments, this initial effect can be reversed after a time. The dynamic simulations over the period 1965:2- 1970:4 presented in Section II suggest the estimate of the control's effect in the initial year is an improvement of approximately $4.5 billion in the liquidity balance. Also, the effects are estimated to diminish gradually and continuously to an annual rate of some $2.8 billion after 5 years. [ABSTRACT FROM AUTHOR]

The author comments on the article "A Simultaneous Equation Approach to Financial Planning." He states that in terms of mathematical connotations, "Simultaneous Equation" is an overstatement and that it is pretentious to call a series of equations "simultaneous" because they are accounting identities. He suggests that the authors should have compared their pro forma model with other models in more details. He states that other pro forma models allow for greater flexibility and have users specify several categories of cost separately a function of variables and fixed values.

This article presents a discussion of a paper that examined the economic status of blacks in the U.S. The authors addresses how both past and current discrimination negatively impacts the economic status of blacks and the distribution of wealth in the black community. The author shows how discrimination impacts level of education, which in turn impacts occupation, which inevitably impacts level of income. The author notes that greater analysis is needed in order to understand the interdependence of discrimination and the distribution of the explanatory variables associated with discrimination.

This article investigates the nature of catastrophe reinsurance coverage of fire insurance companies in the U.S. Reinsuring is when an insurance company takes out a policy on the risk of paying out a larger sum than they can afford. The ways in which insurance executives determine the catastrophe reinsurance required by their companies are also investigated. A questionnaire was submitted to over thirty insurance company executive, asking the ways in which they calculated the amount of reinsurance coverage needed by their company.

This paper has two objectives. First, we prove certain general theorems which reveal the close relationship between two sets of results in the recent discussion of the conditions (formulated in terms of restricted preferences) for "consistent" majority decisions. The first set of these results is concerned with sufficient (and sometimes with necessary) conditions for transitive majority decisions over a triple of alternatives (a) for the case where individual weak preference relations are orderings[2] and the number of individuals concerned over the triple (that is, not indifferent between all the three alternatives) is odd (Arrow, 1963; Black, 1958; Inada, 1964, 1969; Majumdar, 1969; Sen, 1966; Vickrey, 1960; Ward, 1965) and (b) for the case where individual weak preference relations are reflexive, connected and quasi-transitive[3] but not necessarily transitive (from now on such a weak preference relation will be called a Q-type weak preference relation), and the number of concerned individuals having transitive preferences is odd (Fishburn, 1970a; Batra and Pattanaik, 1972). The second set of these results is concerned with sufficient (and sometimes with necessary) conditions for quasi-transitive majority decisions for the case where individual weak preference relations are orderings (Pattanaik, 1968; Sen, 1969; Sen and Pattanaik, 1969) and also for the case where individual weak preference relations are of Q-type (Fishburn, 1970a, b; Inada, 1970; Pattanaik, 1970). We prove three theorems which show the tight relation that exists between conditions established by results of the former type and those established by results of the latter type.
Our second objective is to use the theorems mentioned above together with a theorem (on quasi-transitive majority decisions with Q-type individual preferences) proved by Inada (1970) and Fishburn (1970b) to complete a line of enquiry initiated by Fishburn (1970a). Fishburn established sufficient conditions for... [ABSTRACT FROM AUTHOR]

In a previous paper (1973) I derive the Pareto optimality conditions for clubs (i.e. public goods in which membership affects preferences). In Section I of this paper I compare these optimality conditions with the equilibrium conditions, assuming club members maximize net benefit per person. The equilibrium size of a club is smaller than the optimal size: the optimal tax/subsidy to achieve Pareto optimality is derived accordingly in Section II. The rate of subsidy increases at a decreasing rate over the relevant range. In Section III a complication due to the difficulty of attracting sufficient members is discussed. This difficulty arises because, given equal cost-sharing by all members, the benefit derived by the marginal member cannot fall short of the average cost (per person). The optimal tax/subsidy derived in Section II proves to be still applicable; the equilibrium club size is usually but no longer necessarily smaller than the optimal size. [ABSTRACT FROM AUTHOR]