Tilburg Studies in Economics – serie

It is a pleasure to introduce Dr. Kusehpeta's study of the USSR banking and eredit system with some measure of enthusiasm, for the subjeet is one about which there is, as yet, not mueh literature available in the Western European languages and this study approaehes the subjeet from the view-point of sourees taken from within the Soviet Union itself. No matter how revolutionary the ehange, some ties with the past still remain and it is for this reason that the author has paid initial attention to the banking system of the Tsars and proceeds to de al with the development of the banking system sine e the Revolution of 1917. While history has made the Communist Civil War, the New Eeonomie Poliey and the Khrushehev reforms to be familiar to us, the effeets of these events on the banking and monetary system have, thus far, never been fully researched. Next, the author deals extensively with the existing banking- and eredit system. This subjeet is not easy to understand, beeause we are obliged to beeome familiar with totally different eoeepts than those governing the mixed eeonomic system of the Western World.I, personally , am struek by the sharp separation between the eurreney and the 'deposit' or 'transfer' mone y cireulation.

In monetary theory the paramount problem posed by many eco­ nomists was always whether monetary variables had a certain influence on the real variables in the economy, so that money would not be neutral but influence the economic process. In this way the outcome would differ from that of a barter economy. The outcome of this development was that money could no longer be regarded as an accommodating item like in many out-dated text-books but as an autonomous factor, the influence of which is explicitly ana­ lyzed. When, after the Second World War, the 'real' side of eco­ nomics developed into growth economics, it was quite natural that efforts were made to integrate both lines of thought so that the effect of the rate of increase of money on the rate of growth of real national income could be studied. Dr. Sijben gives the full and thorough story of these efforts in a way that enables economists to compare the different approaches more easily than was possible up to now. More specifically the various models are made comparable by the use of the same sym­ bols for the same variables allover the book. After the introductory chapter Tobin's outside-money model in a neo-classical framework is discussed. What is income in this respect? Tobin argues that real disposable income is real net national income plus the real value of the increase in monetary balances.

It is a pleasure to introduce Dr. Kusehpeta's study of the USSR banking and eredit system with some measure of enthusiasm, for the subjeet is one about which there is, as yet, not mueh literature available in the Western European languages and this study approaehes the subjeet from the view-point of sourees taken from within the Soviet Union itself. No matter how revolutionary the ehange, some ties with the past still remain and it is for this reason that the author has paid initial attention to the banking system of the Tsars and proceeds to de al with the development of the banking system sine e the Revolution of 1917. While history has made the Communist Civil War, the New Eeonomie Poliey and the Khrushehev reforms to be familiar to us, the effeets of these events on the banking and monetary system have, thus far, never been fully researched. Next, the author deals extensively with the existing banking- and eredit system. This subjeet is not easy to understand, beeause we are obliged to beeome familiar with totally different eoeepts than those governing the mixed eeonomic system of the Western World.I, personally , am struek by the sharp separation between the eurreney and the 'deposit' or 'transfer' mone y cireulation.

The use of growth functions for estimating developments in consumer demand is already rather old. In many books on 'mathematics for economists' one can find one or more examples of growth functions, however, usually without any economic considerations as a background. Furthermore there are many econometric contributions on the subject scattered over many books and journals. In this book - the English translation of the author's doctoral thesis - , Dr. W.J. Oomens gives a highly unified treatment of the subject. The book consists of two main parts, preceded by an introduction and concluded by an application. The first main part starts with a discussion of the general notions underlying the theory of the development of demand for new consumer durable goods and next describes the many models known from the literature, using these general notions. Because of the unified treatment the author succeeds in clearly ranking the different models, in presenting the aspects they have in cornmon and in explaining the properties which are different in the models being described. The critical discussion of the existing models leads a.o. to a new model, the 'heterogeneous generalized logistic model', in which environmental variables are inserted into the purchase propensity function as well as into the function for the variable saturation degree.

In this work the author reports on his research into the way food in­ novations are adopted. He deals particularly with whether food in­ novators can be distinguished, that is to say consumers who, more than other people, adopt new products not by chance but more or less systematically. The book discusses three general themes within this problem: what impels innovators, in what respects and in what characteristics are they different from others, and to what extent can their behaviour be used to fore cast the ultimate succes of an innovation. On the the basis of information from the literature and his own research findings, the author postulates that innovators' behaviour has a number of underlying dimensions. This raises aspects of interest and involvement, innovative versus problem-solving behaviour, monomor­ phic versus polymorphic innovativeness, and also some implications these have regarding operationalisation of the innovators' concept. Al­ though emphasis is put on the direct research implications, the discus­ sion of these aspects nevertheless provides a number of interesting, but more theoretical indications. The traditional image of the innovator found elsewhere in the literature is substantiated and supplemented by the characteristics of innovators disclosed by this research. Besides socio-economic criteria the research comprises a number of behavioural characteristics of in­ novators.

It was R. Frisch, who in his publications 'Correlation and Scatter Analysis in Statistical Variables' (1929) and 'Statistical Confluence Analysis by means of Complete Regression Systems' (1934) first pointed out the complications that arise if one applies regression analysis to variables among which several independent linear relations exist. Should these relationships be exact, then there exist two closely related solutions for this problem, viz. 1. The estimation of 'stable' linear combinations of coefficients, the so-called estimable functions. 2. The dropping of the wen-known condition of unbiasedness of the estimators. This leads to minimum variance minimum bias estimators. This last solution is generalised in this book for the case of a model consisting of several equations. In econometrics however, the relations among variables are nearly always approximately linear so that one cannot apply one of the solutions mentioned above, because in that case the matrices used in these methods are, although ill-conditioned, always of full rank. Approximating these matrices by good-conditioned ones of the desired rank, it is possible to apply these estimation methods. In order to get an insight in the consequences of this approximation a simulation study has been carried out for a two-equation model. Two Stage Least Squares estimators and estimators found with the aid of the above mentioned estimation method have been compared. The results of this study seem to be favourable for this new method.

The introduction of public goods into economic theory has recently received substantial attention from economists. Both the increasing significance of public goods and the deficiencies of the private goods-oriented allocation mechanisms call for a re­ orientation of the classical general equilibrium models such as the one designed by Walras exactly a century ago. Although several approaches to this problem are possible, the duality approach seems to be very fruitful. In this study, Dr. Ruys applies and develops the mathematical theory of polarity to gain a deeper insight into the economic theory of value. He not only uses the duality approach to simplify formal proofs related to public goods, but he also gives an interpretation to the application of polarity operations which goes far, beyond its formal significance. This study is in a way closely related to the publication 'Axiomatic choice models' by Dr. H. N. Weddepohl, which is volume 3 of the Tilburg Studies on Economics.

This book was originally published as a doctoral thesis and was de­ fended by the author at the Tilburg School of Economics in 1969. It has the characteristics of a work on industrial econometrics. On the one hand relevant economical, statistical and mathematical theory is treated and on the other a model for a very actual situation has been created and utilised to solve a practical problem. The selection from current reference material always has a personal tinge of course, and other theoreticians will find some of the author's departures from the theme a little unnecessary. However, if the theory propounded in this book is tested for its relevance in solving practical problems, the selection may be regarded as a success. Thanks to the way in which the case is developed the book is of great practical use. So often in writings on operations research theory is applied to so-called practical examples, which in fact can only be des­ cribed as five finger exercises. It is clear from the early chapters that the author has struggled with this problem but that he has found a solution. And in his concluding remarks he indicates briefly how this case can be incbrporated in a context which goes beyond short-term optimisation. In the description of the preparatory and implementation phases the author shows how a clash between practical implementation and theoretical application can successfully be avoided in this preparatory work.

Dr. Kooyman has made a careful study of the econometric model used around 1963 by the Netherlands Central Planning Bureau, especially of eight of its most import­ ant behavioural equations. The Bureau used coefficients estimated from a pre-war and a post-war time series simultaneously, in order to have a larger number of observations. The author, being aware of the difference in general economic 'climate' in the two periods, tests the assumption of no difference in pre-war and post-war coefficients. In an inventive way he uses a few alternat­ ive approaches. On the basis of his findings he concludes that a new specification of some of the equations is necessary. Since the Dutch model is likely to be the oldest of its type, foreign readers may be interested in reading Dr. Kooyman's text - slightly adapted - in English. J. Tinbergen v Preface The first edition of this book appeared in Dutch as a thesis which was defended at the State University of Groningen in 1971. When working on this publication I received much help from Dr. H. Rijken van Olst and Dr. G. F. W. M. Pikkemaat, professors at the State University of Groningen of, respectively, statistics and econometrics, and mathematical economics. I would like to thank Prof. dr. J. Tinbergen, who aroused my enthusiasm for quantitative economics during my college years at the Netherlands School of Economics: I am much obliged to him for his willingness to write a foreword.

This study stems from a long association with Yugoslavia: two years at the World Bank and a further two and a half years with the International Investment Corporation for Yugoslavia S.A. in London when I was invol­ ved in the financing of joint ventures between Yugoslav and foreign enter­ prises - part of the subject matter of this study. I believe that anyone dealing with Yugoslavia has found it difficult to escape the spell of this fascinating country. There is its history, rich in struggles and achievements, its cultural heritage, the beauty of its land­ scapes and, last but not least, the character and qualities of its people. But while anyone of these features (to which others could easily be added) may have its special appeal depending on one's personal inclinations, it is undoubtedly Yugoslavia's socio-economic system that arouses universal interest. For some it represents the only system that eventually can ensure a just society, while for others its theoretical foundations are utopian and its practical implementation an incoherent muddle. The debate in the West about the merits of Yugoslav socialism will continue for a long time, and if at this stage a personal comment is called for then it must be that I have been struck by two things: modesty and courage. The Yugoslavs are surprisingly modest about the achievements oftheir system. There is no missionary zeal to export their social philosophy.

During the last decade, the econometric study of investment behaviour has developed from the descriptive construction of empirical investment equations, as first performed by J. Tinbergen in his well-known 19- publication: 'A Method and its Application to Investment Activity', to the empirical testing of increasingly explicit theories of production behaviour. It was principally D. Jorgenson who gave a great push to this intensified interest in micro-economic investment, with his famous 1965-paper: 'Anticipation and Investment Behaviour', in which he formulated a pure neoclassical model of investment behaviour under the conditions of a (simple) homogeneous production technology and perfectly competi­ tive markets. But, although the scope of the familiar flexible accelerator model was considerably extended by the introduction of relative factor prices, the resulting investment relationship generally remained one of the most ill-estimated equations in econometric models. The very rigid assumptions of pure neoclassical models might have caused these bad results. More­ over, the required ex post measure for aggregate capital stock is very deficient for most economies. Hence, it should be interesting to formulate investment models subject to less rigid restrictions on production and market behaviour and, preferably, not containing any measure of aggre­ gate capital stock.

In the 'sixties, the reproduction model was often the subject of analysis and discussion in economic literat­ ure. Discussion was by criticism of the neo-classical concept of capital as well as by a renewed interest in the labour theory of value. Criticism of the use of a homogeneous concept of capital resulted in the re­ switching debate as it is called, where the positing of problems is limited, and the results are ultimately meagre. The renewed interest in the labour theory of value opened interesting perspectives, at least if one rejects the rather fruitless debate on Marx's transform­ ation problem, as it is called. The main question then is: are the prices determined objectively or do factors of demand also play an essential role? This book by Dr. van Schaik deals with this famous theme. The various models with single and joint reproduction are classified and analysed with great surveyability. The consistent distinction between quantity and price systems, the appropriate use of the matrix notation and the careful definition of concepts, guarantee the accessibility to a difficult matter. Models of Leontief, the Austrian School, Burmeister-Dobell and others appear as special cases of the more general Von Neumann-Sraffa structure. In view of the often fragmentary handling of jOint production in economic literature and of the concept of fixed capital which is linked to it, Dr. van Schaik's book fulfils a long-felt want.

Every day people frequently have to make a choice. For practical and scientific reasons therefore it is interesting to know what choices they make and how they arrive at them. An approach to this question can be made via psychology. However, it is also possible to approach it on a more formal basis. In this book Dr. Wedde­ pohl describes the logical structure of an individual's rational choice. It is this formal, logical approach to the decision problem that makes the book interesting reading matter for all those who are engaged in the study of individual choice. The introduction apart this study may be divided into two parts. The first part, consisting of chapters II and III, deals with choice theory on a very abstract level. In chapter II some mathematical concepts are presented and in chapter III two related choice models are treated, the first one based on preferences, the second one on choice functions. The second part consists of chapters IV, V and VI and covers consumer choice theory. After the pre­ sentation of the mathematical tools, two models that are extensions of the models of chapter III are dealt with. In the discussion of consumer choice theory the concept of duality plays an important role and it is found that duality is closely related to the notion of favourability introduced in chap­ ter II I. Mr. Weddepohl's study forms an introduction to a larger research project to develop the theory of collective choice.