Category: Exam Questions

Categories
Exam Questions Harvard

Harvard. General Examinations in Micro- and Macroeconomic Theory, Fall 1992

 

 

The following general examinations for microeconomic and macroeconomic theory (Fall 1992) have been transcribed from a collection of general exams at Harvard from the 1990s provided to Economics in the Rear-view Mirror by Abigail Waggoner Wozniak (Harvard economics Ph.D., 2005). Abigail Wozniak was an associate professor of economics at Notre Dame before being appointed a senior research economist and the first director of the Federal Reserve Bank of Minneapolis’ Opportunity & Inclusive Growth Institute. Economics in the Rear-view Mirror is most grateful for her generosity in sharing this valuable material.

The “Wozniak collection” is over 90 pages long, so it will take some time for all the exams to get transcribed.

Transcriptions are available for:

Spring 1991 General Examinations in Microeconomic Theory and Macroeconomic Theory.

___________________

HARVARD UNIVERSITY
DEPARTMENT OF ECONOMICS

GENERAL EXAMINATION IN MICROECONOMIC THEORY
FALL 1992

Instructions:

  1. You have FOUR
  2. Answer a total of FOUR questions subject to the following constraint:
    There are four sections (I, II, III, IV). You must answer ONE question from each section.
  3. Please use a separate blue book for each question.
  4. Please put only your EXAM NUMBER on the blue book.

 

PART I

  1. Suppose that the consumption set is X=\left\{ x\in \mathbb{R}_{+}^{2}:{{x}_{1}}+{{x}_{2}}\ge 1 \right\} and the utility function is u(x) = x2.
    1. Represent graphically the consumption set and the indifference map.
    2. State and show that the locally cheaper consumption test for demand fails at the price/wealth combination (p, w) = (1, 1, 1).
    3. Show that market demand is not continuous at the above price/wealth combination. Interpret economically.
  2. An individual has Bernoulli utility indicator u and initial wealth w. Let lottery L offer a payoff of G with probability q and a payoff of B with probability 1 – q.
    1. If the individual owns the lottery, what is the minimum price s/he would sell it for?
    2. If s/he does not own it. What is the maximum price s/he would be willing to pay for it?
    3. Are buying and selling prices equal? Give an economic interpretation for your answer. Find conditions on the parameters of the problem under which buying and selling prices are equal.
    4. Let G = 10, B = 5, w = 0 and u(x) = x0.5. Compute the buying and selling prices for this lottery and this utility indicator.

 

PART II

Consider a market with three identical firms. The three firms set quantities as strategies and do so simultaneously. Each firm has marginal cost c, and market price is

p=1-\sum\limits_{i=1}^{3}{{{q}_{i}}}, where qi is firm i’s quantity.

  1. What are the Cournot equilibrium quantities and prices in this model?
  2. Suppose that firms 1 and 2 consider merging to form a single firm, which would have access to the two firms’ technologies. The merged firm, if it forms, would compete as a Cournot duopolist with firm 3. Assuming that the owners of firms 1 and 2 split the merged firm’s profit equally, would they find such a merger advantageous?
  3. Now suppose that firm 1 sets its quantity (as a Stackelberg leader) first and that firms 2 and 3 then follow and set quantities simultaneously. The model is otherwise the same as before. Suppose that firms 1 and 2 contemplate forming a merged firm that would act as a Stackelberg leader vis a vis firm 3. Will the merged firm’s profit be higher or lower than the sum of firm 1’s and 2’s profits in the pre-merger equilibrium? The question should be answered without making any mathematical computations.

 

PART III

Consider the country of Ec, a country with a small open economy. Ec’s economy produces two outputs, x and y, from two immobile factors, capital (K) and labor (L). The prices of x and y, px and py, are determined on the world market and are not affected by anything that happens in Ec. The aggregate production function in Ec for x is fx(K,L) and that for y is fy(K,L). Both of these functions are homogeneous of degree one in (K,L), continuous, differentiable, and have strictly convex upper contour sets. Let the input price of K  in Ec be r and that for L be w(these are prices in Ec, not world prices).

  1. Display the set of efficient production plans in an Edgeworth Box. Argue that the contract curve must lie either all above, all below, or be coincident with the diagonal in the interior of this box.

Now assume that production of x is more capital intensive than is production of y in the sense that for any given ratio of input prices, r/w, the cost minimizing way to produce any given amount of output involves a strictly larger capital-labor ratio, K/L, in the production of x than in the production of y.

  1. What can you say about the shape of the contract curve now? How do the slopes of the isoquants of the two production processes vary at various points on the contract curve?

Now assume that Ec has a perfectly competitive economy.

  1. Show that there is a unique equilibrium input price ratio r/w.
  2. Prove that if the world price of the capital intensive good (px) rises, then the equilibrium input price ratio, r/w, increases.
  3. Prove that if the endowment of labor in Ec increases, the output of good y increases and output of good x

 

PART IV

  1. How is it that, even in a world of linear technologies, different theories of growth and distribution lead to different theories of value, i.e., different theories of relative prices? Doesn’t this violate the non-substitution theorem, which shows that, for a given cost of capital, the technology which minimizes costs will be chosen irrespective of demand? Is the existence of different theories of value compatible with the idea that competition eliminates any difference between price and cost of production? How does utility maximization enter into neoclassical and non-neoclassical theories of value?
  2. Overheard in the corridors of Littauer:
    “I took the best road home yesterday.”
    “How do you know that?”
    “If there had been a better one I would have taken it.”
    Analyze the above dialogue from the point of view of both partisans and critics of revealed preference theory.

 

Source: Department of Economics, Harvard University. Past General Exams Spring 1991-Spring 1999, pp. 72-77. Copy provided to Economics in the Rear-view Mirror by Abigail Wozniak.

___________________

HARVARD UNIVERSITY
DEPARTMENT OF ECONOMICS

GENERAL EXAMINATION IN MACROECONOMIC THEORY
FALL 1992

Instructions:

  1. You have FOUR
  2. Answer a total of SIX questions subject to the following constraint:
    There are four sections (I, II, III, IV). You must answer ONE question from each section.
  3. Please use a separate blue book for each question.
  4. Please put only your EXAM NUMBER on the blue book.

 

PART I

  1. Answer the question, “Does money affect output?” Support your answer with both theoretical arguments and empirical evidence. Discuss the strengths and weaknesses of this evidence. Finally, include a detailed discussion of one theory that supports your position.
  2. The response among pundits to the recent reduction in German interest rates has been overwhelmingly positive. Evaluate this response in light of the Mundell-Flemming model. How does foreign monetary policy affect domestic output in the model? What other channel might American commentators have in mind. Speculate about the cause of this difference and give an opinion as to who is correct.

 

PART II

Problem 1

Consider the following dynamic version of the Mundell-Fleming model:

{{\dot{e}}}/{e}\;={{i}^{*}}-i

i=\alpha y-\beta m

\dot{y}=\gamma \left( d-y \right)

d=\lambda y-\theta e+g

where

e is the exchange rate (measured so that an appreciation of the domestic currency is an increase in e),
i* is the (exogenous) world interest rate,
i is the domestic interest rate,
y is output,
m is (exogenous) real money balances,
d is demand,
g is a measure of (exogenous) fiscal policy,
and \alpha >0,\,\,\beta >0,\,\,\gamma >0,\,\,0<\lambda <1,\,\,\theta >0.

  1. Give an interpretation of each equation.
  2. Write the model using two variables and two laws of motion. Identify the state (non-jumping) variable and the costate (jumping) variable.
  3. Draw the phase diagram, including the steady-state conditions, the implied[?] dynamics, and the saddle-point stable path.
  4. Describe the effects of a sudden, permanent increase in g. Compare the results to the standard (static) Mundell-Fleming model.
  5. Describe the effects of a sudden, permanent increase in Compare the results to the standard (static) Mundell-Fleming model.

 

Problem 2

Suppose that the representative consumer maximizes the following intertemporal utility function:

{{E}_{t}}\sum\limits_{j=0}^{\infty }{{{\left( 1+\rho  \right)}^{j}}U\left( {{C}_{t+j}},{{G}_{t+j}} \right)}

where C is consumption,

G is (exogenous) government spending,

\rho is the subjective rate of discount,

The consumer has random earnings, and she can borrow and lend at the constant real interest rate r.

  1. What is the consumer’s intertemporal first-order condition? Explain.
  2. In this problem, what variable follows a random walk (that is a martingale)? What variable doesn’t? Explain.
  3. Suppose that government spending follows a predictable pattern: in particular, suppose that (for some political reason) G fluctuates as a sine wave. What is the implied pattern of consumption?
  4. Describe the equity-premium puzzle.
  5. Suppose now that government spending is countercyclical (that is, the government increases G when the economy goes into a recession). How might this model help resolve the equity-premium puzzle? What condition would you need for the utility function U(.)?

 

PART III

  1. What implications for the conduct of monetary policy follow from the fact that many of the familiar variables that economists have urged central banks to adopt as their operating targets—for example, prices, or real interest rates, or measures of money other than the monetary base—are inherently endogenous in the sense that a central bank typically cannot set any of these variables directly via its open market operations? Use a specific model of your choice to illustrate what role a variable like the price level or the real interest rate, or a measure of money other than the monetary base, can plausibly play in the monetary policymaking process even when it is clearly endogenous.
  2. “Whether or not debt-financed government spending ‘crowds out’ private capital formation depends on whether or not the economy’s private resources are already fully employed. At less than full employment, deficit spending will crowd out investment even if it raises output (which it may or may not do). By contrast, the mechanisms that cause this decline in investment at less than full employment are not operative when the economy is fully employed.” Do you agree or disagree with this statement? Explain your reasoning as explicitly as possible.

 

PART IV

  1. Suppose that the government wishes to minimize the present value of costs, zt, which are given for period t by {{z}_{t}}=a\cdot {{\left( {{\pi }_{t}} \right)}^{2}}-b\cdot \left( {{\pi }_{t}}-\pi _{t}^{e} \right)+\left( {c}/{2}\; \right){{\left( {{\pi }_{t}}-\pi _{t}^{e} \right)}^{2}}
    where a, b, c, > 0 are constants, {{\pi }_{t}} is the inflation rate for period t, and \pi _{t}^{e} is the inflation rate that people expected at the start of period t.

    1. If the government takes \pi _{t}^{e} as given, then what value of {{\pi }_{t}} minimizes the cost zt for period t?
    2. If the government acts as in part I., and everyone knows it, then what is the full equilibrium under conditions of rational expectations? Explain the costs that are borne in this equilibrium. How are they affected by an increase in the parameter a, which measures the cost of inflation? Explain the results.
    3. If the government can commit to an inflation rate for period t, then what rate should it commit to? Explain how the costs in this situation compare with those from the equilibrium in part 2.
    4. Can the equilibrium described under 2. still apply if the government takes account of costs in future periods as well as for period t?
  2. Consider the neoclassical growth model for a closed economy of Solow, Cass, Koopmans, et al.
    1. If we think of all countries as closed, does this model imply convergence in the sense that poor countries tend to grow faster per capita than rich countries? Discuss in your answer the distinction between absolute convergence—where the poor grow faster than the rich—and conditional convergence—where a poor country grows faster for given values of some exogenous variables.
    2. How do the rates of convergence in this model relate in a general way to the diminishing returns to capital and to the behavior of the saving rate? How would the rate of convergence be affected by allowing for some capital mobility across countries?
    3. If poor countries tend to grow faster per capita than rich countries does it follow that the dispersion of per capita incomes across countries will tend to narrow over time?

 

Source: Department of Economics, Harvard University. Past General Exams Spring 1991-Spring 1999, pp. 78-83. Copy provided to Economics in the Rear-view Mirror by Abigail Wozniak.

Image Source: Harvard Class Album 1946.

Categories
Economic History Exam Questions Harvard Suggested Reading Syllabus

Harvard. European Economic History from the Industrial Revolution. Gay, 1934

 

 

A brief biography of Harvard economic historian and first Dean of the Harvard Business School, Edwin Francis Gay (1867-1946) is found in the earlier post for his course “Recent Economic History” that was also taught at Harvard in the 1934-35 academic year. Below we have the course announcement, enrollment figures, reading list, and final exam for the course on European Economic History from the Industrial Revolution.

______________________________

Course Announcement

Economics 2a 1hf. European Economic History from the Industrial Revolution

Half-course (first half-year). Tu., Th., and (at the pleasure of the instructor) Sat., at 9. Professor Gay.

Source: Announcement of the Courses of Instruction Offered by the Faculty of Arts and Sciences During 1934-35, second edition. Published in Official Register of Harvard University, Vol. XXXI, No. 38 (September 20, 1934), p. 125.

______________________________

Course Enrollment

[Economics] 2a 1hf. Professor Gay.—European Economic History since the Industrial Revolution.

Total 50:  3 Graduates, 21 Seniors, 17 Juniors, 8 Sophomores, 1 Other.

Source: Harvard University. Report of the President of Harvard College, 1934-35, p. 81.

______________________________

Assigned and Suggested Readings

ECONOMICS 2a
[pencil insert: 1934-5]

European Economic History from the Industrial Revolution

Hour Test on November 13 [Pencil insert: Extended to Nov. 15] will cover Groups I and II.

I. SOCIAL THOUGHT AND PROGRESS

A. V. Dicey—Law and Public Opinion in England (1908). Lectures 4-7 (Pages 62-258)

J. M. Keynes—The End of Laissez Faire. (1926)

G. Wallas—Life of Francis Place (1918). Chapters 1, 2, 3, 6, 7, 8 (pages 1-92, 157-240)

II. TRANSPORTATION

E. A. Pratt—A History of Inland Transport and Communication in England (1912). Chapters 8-22 (pages 51-311)

J. H. Clapham—Economic Development of France and Germany (1921). Chapters 5, 7, 12 (Pages 104-120, 140-157, 339-375)

III. AGRICULTURE

Lord Ernle—English Farming, Past and Present (3d edition, 1922). Chapters 17, 18

J. H. Clapham—Economic Development of France and Germany (1921). Chapter 9 (pages 195-231)

C. L. Christensen—Agricultural Cooperation in Denmark. Pages 9-54, 81-87

IV. TARIFF POLICY

P. Ashley—Modern Tariff History (1920). Part 1, Part 3 (pages 3-128, 269-355)

J. Morley—Life of Richard Cobden (1881). Chapters 6, 7, 10, 11, 13, 16 (pages 140-172, 209-247, 290-307, 355-389)

V. BANKING

A. Andreades—History of the Bank of England (1909). Vol. 1, part 4; Vol. 2, Introductory chapter and Part 1 (pages 161-294)

H. Feis—Europe The World’s Banker, 1870-1914 (1930). Part I; Part II; Part III, Chapters 12, 13 (pages 3-190-258-313)

VI. READING PERIOD ASSIGNMENT

Choose ONE of the following groups:

INDUSTRIAL DEVELOPMENT

P. Mantoux—The Industrial Revolution in the Eighteenth Century (English translation, 1928)

Part I, Chapter 2
Part II, Chapters 1, 2, 3
Part III, Chapters 1, 2, 3, 4
(pages 93-139-193-317, 349-489)

J. H. Clapham—Economic Development of France and German. Chapters 3, 4 (pages 53-103)

LABOR

S. & B. Webb—History of Trade Unionism (1920 edition). Chapters (in part) 2, 3, 4, 5, 7, 9, 10, 11 (pages 64-112, 153-179, 180-204, 249-298, 358-421, 472-546, 594-611, 634-676, 677-704)

Cambridge Modern History—Volume 12—Chapter 23—Social Movements (by Webb) (pages 730-765

BRITISH INDUSTRY AND CAPITAL

A. Siegfried—England’s Crisis (1933 edition)

L. H. Jenks—The Migration of British Capital to 1875 (1927). Chapters 1, 5, 7, 11. Pages 1-24, 126-157, 193-232, 326-336)

*  *  *  *  *  *  *  *  *

SUGGESTIONS FOR FURTHER READING—NOT ASSIGNED

A. Birnie—Economic History of Europe 1760-1930 (1930)

C. Day—Economic Development in Modern Europe (1933)

J. H. Clapham—An Economic History of Modern Britain—2 vol. 1926-32 [3 vols. 1926-1938]

L. Domeratzsky—The International Cartel Movement (1928)

R. J. S. Hoffman—Great Britain and the German Trade Rivalry 1875-1914 (1933)

P Fitzgerald—Industrial Combination in England (1927)

L. C .A. Knowles—The Economic Development of the British Overseas Empire, 2 vols. (1924-1930)

F. L. Nussbaum—A History of the Economic Institutions of Modern Europe (1933)

H. M. Robertson—Aspects of the Rise of Economic Individualism (1933)

L. C .A. Knowles—Economic Development in the Nineteenth Century (1932)

 

Source: Harvard University Archives. Syllabi, course outlines and reading lists in economics, 1895-2003. Box 2, Folder “Economics 1934-1935”

______________________________

1934-35
HARVARD UNIVERSITY

ECONOMICS 2a1
[Final. 1935.]

Comment briefly on THREE of the statements in part I, and discuss more fully TWO of the questions in Part II.

Part I

  1. “During the period 1785-1802 there was an increase rather than a decrease of the yeomen proper in England.”
    “The Industrial Revolution was responsible for a decrease in the number of yeomen.”
  2. “The solution for the problem of agricultural distress is to be found, as the example of Denmark clearly shows, not in protective tariffs but in coöperative organization.”
  3. “The Bank was right in 1811 in rejecting the main recommendations of the Bullion Committee and in thereby refusing to follow the counsels of doctrinaires.”
  4. “The Trade Union of today is a direct descendant of the old Gild.”
  5. “The fact that the landlords supported the Factory Acts and that the manufacturers agitated for the repeal of the Corn Laws indicates that both of these powerful antagonists desired the welfare of the working class and that this class, as yet unenfranchised, wielded great political power.”

Part II

  1. “It was the increase of population which rendered necessary the Industrial Revolution.” (Lewinski.)
    “The cotton industry by its demand for the labor of women and children was chiefly responsible for the great increase of population in the towns during the generation and a half preceding the Reform Bill.”
    Comment and give your own view concerning the movement of population in Great Britain and its relation to the Industrial Revolution.
  2. “The community as a whole benefits more by falling than by rising prices.” (Layton.)
    Is this statement supported by the experience of England in the nineteenth century?
  3. Show the chief difference (giving reasons therefor) between France and Germany in railroad development and control.
  4. “The manifold connections and activities of British commerce and finance achieved for Great Britain in their freedom a vigorous expansion.” (Feis) Explain and exemplify.
  5. Summarize concisely:
    1. Bullion Report.
    2. New Unionism.
    3. Cobden Chevalier Treaty.
    4. Méline Tariff.
    5. Bank Act of 1844.
    6. Taff Vale Case.

Source: Harvard University Archives. Mid-year examinations, 1852-1943. Box 12. Volume: Examination Papers. Mid-Years, 1934-35.

Image Source: Edwin Francis Gay in Harvard Class Album 1934.

Categories
Exam Questions Harvard

Harvard. Final examination for graduate mathematical economics. Goodwin, 1950-51

 

 

 

The reading list for the one-term course Economics 204b. Mathematical Economics, taught by Richard Goodwin during the first term of 1948-49 was posted earlier.

This same course number, Economics 204b, was later assigned to a Goodwin’s seminar in mathematical economics in 1950-51 (that covered “General interdependence systems: in particular, Leontief linear systems”), so we can assume that much of the reading list for his course Economics 204a in 1950-51  would have been very similar to the earlier list linked above. In any event, here are the exam questions for the 1950-51 course.

_____________________

Course Description

Economics 204a. Mathematical Economics

Half-course (fall term). Tu., Th., 2:30-4. Assistant Professor Goodwin.

Micro-and macro-dynamical economic systems.

Prerequisites: one course in economics and one in college mathematics. Properly qualified undergraduates will be admitted to the course.

Source: Final Announcement of the Courses of Instruction Offered by the Faculty of Arts and Sciences During 1950-51. Published in Official Register of Harvard University, Vol. XLVII, No. 23 (September, 1950), p. 83.

_____________________

HARVARD UNIVERSITY
ECONOMICS 204a
Final. January, 1951

Please use right hand side of page only, leaving the left hand side for scratchwork.

I
Required hour question.

  1. Write an essay on the role of stability in economic science. Include some discussion of various definitions of it, how to measure it, and its use by Walras and by Marshall. Would you be inclined to accept as valid the following type of proposition: we may assume that all or most markets have stable equilibria, for “the plausibility of such a stability hypothesis is suggested by the consideration that positions of unstable equilibrium, even if they exist, are transient, nonpersistent states, and hence on the crudest probability calculation would be observed less frequently than stable states” (Samuelson)?

II
Take any TWO questions, allowing about 40 minutes for each.

  1. State concisely the economic assumptions and derivation of any one macrodynamic model of an inventory cycle. In terms of the model discuss the factors governing the period of its cycle.
  2. Develop briefly a simply macrodynamic model based on ‘fixed’ capital theory. Indicate the important non-linearities and give a graphical discussion of the nature of the solutions and their limit cycle. What are the principal characteristics of the system’s behavior?
  3. Two different economic situations are described by the somewhat similar equations:
    1. \ddot{x}+.12\dot{x}+2.3x=10;
    2. x\left( t+2 \right)+.12x\left( t+1 \right)+2.3x\left( t \right)=10.
      Compare and contrast the behavior implied in the two cases.

 

III
Take any TWO questions, allowing about 20 minutes for each.

  1. If the multiplier mechanism is represented by
    {1}/{v}\;\dot{y}+\left( 1-\alpha \right)y=i\left( t \right)+H ,
    and if
    i\left( t \right)=\kappa \dot{y}+I\cos \omega t,
    Obtain the complete solution for y.
  2. Given a Marshallian type market, specified by
    \begin{array}{l}{{p}_{d}}={{p}_{d}}\left( q \right),\\{{p}_{s}}={{p}_{s}}\left( q \right),\\\text{and}\\\dot{q}=f\left( {{p}_{d}}-{{p}_{x}} \right),\end{array}

    1. State the meaning and use of its phase line, \psi \left( q \right);
    2. Derive the relationship between the slope of \psi \left( q \right) and the slopes of the supply, the demand, and the reaction curves;
    3. Show what conditions on the slopes of the other curves are implied by a stable equilibrium point.
    4. If all curves are linear for small variations, show how the time constant, \tau , depends on the slopes of the supply, the demand, and the reaction curves.
    5. With the help of graphs, discuss the various possible behavior types of a ‘cob-web’ market with general, non-linear supply and demand curves. Explain briefly in words the meaning of your results.

Source:  Harvard University Archives. Final examinations, 1853-2001. Box 17, Bound volume: Papers Printed for Final Examinations. History, History of Religions, …, Economics, …, Military Science, Naval Science. January, 1951.

Image: Harvard Class Album 1951.

Categories
Exam Questions Harvard Suggested Reading Syllabus

Harvard. Economics of Mobilization and War. Syllabus, exam questions. Harris, 1952

 

Just as the Harvard economics department saw it fit to offer a course on the economic aspects of war at the start of the Second World War, there was a course on the economics of mobilization and war at the time of the Korean War taught by Seymour Harris, who had organized the earlier departmental course on war economics in 1940. Enrollment numbers for courses taught during the academic year 1951-52 were not included in the Harvard College Report of the President, so I am unable to include that information in this post. However, we have the course catalogue description, course reading list, and the final examination as transcribed below.

________________

Course Description

Economics 120. Economics of Mobilization and War

Half-course (spring term). Mon., Wed., and (at the pleasure of the instructor) Fri., at 12. Professor Harris.

This course deals with the following problems on both a historical and current basis: the allocation of resources; income policies; the financing problems; the avoidance of inflation; the incidence of inflation; the relevance of controls; international aspects.

Source: Final Announcement of the Courses of Instruction Offered by the Faculty of Arts and Sciences During 1951-52. Official Register of Harvard University, Vol. XLVIII, No. 21 (September 10, 1951) p. 77.

________________

Course Syllabus and Readings

Spring Term 1951-52
Economics 120
Economics of Mobilization and War

*Books to be bought

I. Introduction (1 week)

Nature of the problem: mobilizations of World War II and the 1950’s
Three models: peacetime economy, mobilization economy, war economy
Real costs and money costs
Prospects for the civilian standard of living

Reading

*1. Harris: Economics of Mobilization and Inflation, Ch. 1 (pp. 3-25)
2. Keynes: How to Pay for the War, Chs. 1, 2 (pp. 1-12)
3. Hart: Defense Without Inflation, Ch. 9 (pp. 165-185)
4. Pigou: The Political Economy of War, Ch. IV (pp. 47-55)

 

II. The Problem in Real Terms: Optimal Division of Resources (3 weeks)

Allocation of resources, manpower, and facilities; changing nature of output
International aspects
Production scheduling; “bottlenecks”
Administration of military procurement

Reading

1. Pigou: The Political Economy of War, Ch. III (pp. 29-47)
2. Harris: Economics of Mobilization and Inflation, Chs. 2-6 (pp. 25-85)
3. Office of Defense Mobilization: Three Keys to Strength (Third Quarterly Report to the President) or subsequent reports.
*4. Chandler and Wallace: Economic Mobilization and Stabilization, Chs. 4, 5 (pp. 91-136)

 

III. The Problem in Money Terms: Adequate Funds Without Runaway Inflation (3 weeks)

Financing the War; the “inflationary gap”
Why is inflation harmful? Uneven incidence of inflation
The Fiscal Policy attack on inflation
The Direct Controls attack on inflation
Interrelatedness of Fiscal Policy and Direct Controls

Reading

1. Keynes: How to Pay for the War, Ch. 2 (above)
2. Pigou: The political Economy of War, Chs. VII, VIII (pp. 72-94)
3. Harris: Economics of Mobilization and Inflation, Chs. 7-10, 18, 19, 22 (pp. 85-119; 197-214; 245-256)
4. Hart: Defense Without Inflation, Chs. 1, 4 (pp. 3-18, 59-77)
5. Galbraith: A Theory of Price Control, Chs. 4, 5, 6, 7, 8 (pp. 28-75)
6. Scitovsky, Shaw and Tarshis: Mobilizing Resources for War, Ch. 2 (pp. 101-144) and pp. 145-149 of Ch. 3
7. Chandler and Wallace: Economic Mobilization and Stabilization, pp. 34-59 and Ch. 26 (pp. 569-592)
8. Harris: Price and Related Controls in the United States, Ch. II (pp. 29-38)

 

IV. Fiscal Policy: Its Implementation and Effects (3 weeks)

Funds for financing mobilization: taxes or loans?
Reducing aggregate demand: taxes, savings, or deferred payment?
Burden of the public debt

Reading

1. Pigou: The Political Economy of War, Chs. VII VIII (above)
2. Harris: Economics of Mobilization and Inflation, Chs. 11-17, Chs. 22-24 (pp. 119-197, 245-286)
Chandler and Wallace: Economic Mobilization and Stabilization, Part III and Ch. 15 (pp. 180-272, 273-315)
4. Keynes: How to Pay for the War, Ch. V (pp. 27-34)

 

V. Direct Controls: Principles and Techniques (3 weeks)

Allocation of resources: priorities
Price control, rationing, wage control, rent control
Costs, prices, subsidies, supplies
International Aspects

Reading

1. Hart: Defense Without Inflation, Ch. 5 (pp. 78-97)
2. Harris: Price and related Controls in the United States, Chs. III-VIII, XI, XII, XVIII, XXI, XXII, XXV, XXVII
3. Galbraith: A Theory of Price Control, Ch. 8 (above)
4. Harris: Economics of Mobilization and Inflation: Ch. 20, 21 (pp. 214-245)

 

VI. Summary and Alternative Policies

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003 (HUC 8522.2.1), Box 5, Folder “Economics, 1951-1952 (1 of 2)”.

________________

Reading Period Assignment

HARVARD UNIVERSITY
Department of Economics
Reading Period Assignments
May 5 – May 24, 1952

Economics 120:

Bureau of the Budget: THE U.S. AT WAR. Chs. 5 through 7, 9 through 12, 15 and 16.

D. N. Chester (Ed.): LESSONS OF THE BRITISH WAR ECONOMY.

Baruch: AMERICAN INDUSTRY IN THE WAR, First Annual Report of the Activities of the Joint Committee on Defense Production. Read 250 pages dealing primarily with stabilization agencies. (Superintendent of Documents)

Joint Committee on the Economic Report: MONETARY POLICY AND MANAGEMENT OF THE PUBLIC DEBT, Part I. Read either pp. 1-194 or 207-492.

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003 (HUC 8522.2.1), Box 5, Folder “Economics, 1951-1952 (1 of 2)”.

________________

Final Examination
May 1952

1951-52
HARVARD UNIVERSITY
ECONOMICS 120

Instructions: Answer both questions in Part I, and any two questions in Part II.

Please write legibly!

Part I

  1. (a) Summarize the “disequilibrium system” and the “pay-as-you-go” approaches to stabilization. What are the advantages and disadvantages of each as applied to the current mobilization period? (20 points)
    (b) Most practicable programs involve some combination of direct and indirect controls. Discuss the theoretical bases for monetary, fiscal, and direct controls, respectively, and explain clearly the theoretical interrelatedness of these measures. (20 points)
  2. Write a critical summary of some phases of your reading period assignment. (10 points)

 

Part II

  1. (a) Indicate briefly—by chart, if you prefer—the organizational hierarchy of the present mobilization and stabilization agencies and summarize briefly the function of each agency. (5 points)
    (b) Summarize the economic issues of the current Steel Case. Include in your answer such points as the WSB recommendations, the criteria for the recommendations, controversial issues, etc. (20 points)
  2. Define or identify and then discuss the significance of five (5) of the following: (5 points each)
    (a) Low end problem
    (b) Formula pricing
    (c) Controlled Materials Plan
    (d) Little Steel Formula
    (e) Differential pricing
    (f) Margin of tolerance and the Inflationary Gap
    (g) Simplification programs
    (h) Priority inflation
    (i) Export controls
  3. Outline the major economic institutions of the ideal “free enterprise” system and indicate what functions they perform. How are these functions carried out in a war economy such as the current one? (25 points)
  4. Discuss the problems which mobilization brings to the following areas:
    (a) Agriculture (5 points)
    (b) National Debt Management (10 points)
    (c) Welfare Expenditures (10 points)

 

Source: Harvard University Archives. Final Examinations, 1853-2001. Box 27. Faculty of Arts and Sciences. Papers Printed for Final Examinations: History, History of Religions, …, Economics, …, Air Sciences, Naval Science. June, 1952.

Image Source:  Seymour Harris in Harvard College, Class Album 1957, p. 67.

Categories
Berkeley Exam Questions

Berkeley. Topics and exam questions for advanced economics. Mitchell, 1906

 

One might consider the following course taught at the University of California in 1906 by assistant professor Wesley Clair Mitchell to be a very early draft of what was to become his legendary course on Types of Economic Theory at Columbia University. Below we have transcriptions of his handwritten outline of topics and final examination questions.

___________________

Course Announcement

45. Advanced Economics. Assistant Professor Mitchell.

This course is designed for students who wish to make a more thorough study of economic theory than can be undertaken in Courses 1 [Introduction to Economics] and 2 [Principles of Economics]. The aim is to work out a tenable system of economics on the basis of an examination of the theories of leading writers, past and present.

2 hrs., first half-year. Tu Th, 9. Prerequisite: Course 2, and at least Senior standing.

Source:  University of California. Announcement of Courses 1906-1907. Berkeley (July, 1906), p. 44.

___________________

Course Topics

Advanced Economics

2 hour course August to December 1906.
continued as reading of Schmoller evening meetings Jan-Apr. 1907.

Different types of economic theory

Concept of the economic man

Preconceptions of economic theorists

Carver’s [or possibly “Cairnes’s”] treatment [?] of wealth.

Schmoller’s Grundriss.

Conclusion: Meaning of and need for evolutionary theory of economics.

 

Source: Columbia University Library Manuscript Collections. Mitchell, W.C. Collection. Box A, 1898-1917, Folder “8/21/06 A519”.

___________________

Handwritten examination questions

Advance Econ (45) Exam. Dec 17, 1906

  1. State and discuss Cairnes’ attitude on economic method.
  2. What influence did hedonism have on development of classical political economy?
  3. What do you regard as the most effective method of treating economics?
  4. How do you explain the shifting of preconceptions in economics from say the Physiocrats to Schmoller or Veblen?

Source:  Columbia University Library Manuscript Collections. Mitchell, W.C. Collection. Box A, 1898-1917, Folder “17/17/06 A”.

Image Source: Thumbnail image from a 1900 picture of Wesley Clair Mitchell at the University of Chicago in Lucy Sprague Mitchell’s Two Lives: The Story of Wesley Clair Mitchell and Myself.

Categories
Exam Questions M.I.T. Suggested Reading Syllabus

M.I.T. First core graduate macroeconomics. Syllabus, readings, exams. Domar and Harris, 1967-68

 

 Four out of the five times that the first term of the macroeconomics sequence at M.I.T. (Theory of Income and Employment) was taught in the second half of the 1960’s, it was taught by Evsey Domar . Earlier posts with materials for Domar’s course include the reading list and final exam for 1960-61, reading list and exams for 1965-66 , the exams for 1968-69, and the course evaluations for 1967/68-1969/70.

Responsible for the course section in 1967-68 was the assistant professor John Rees Harris (b. 1934, d. 2018, 1967 Northwestern Ph.D. in economics) [copy of his c.v. archived 14 February 2019]. Here is link to a video lunchtime talk by Harris at the Boston University conference “Development that Works” (March 11, 2011). The picture is a screen-capture from the video.

______________________

M.I.T.
THE THEORY OF INCOME AND EMPLOYMENT
14.451
1967-68
[first session]

I. ADMINISTRATIVE QUESTIONS

    1. Course number, my and Harris’s name, our office numbers, office hours Tu 2:30-3:30.
    2. Sitting chart. No compulsory attendance.
    3. Reading list. First part only. Required and recommended or optional. Responsible for all required reading, but not for the details. I don’t know them myself. Lectures are the skeleton of the course. Reserve in Dewey. Inform me if some books are absent.
    4. The National Income problem. It is due….
    5. Midterm exam in November. Final exam.
    6. Other administrative problems?

II. THE PURPOSE AND NATURE OF THE COURSE

To fill in the gaps and bring everyone to a common denominator, without pulling anyone down. Hence, some will find it a bit boring. Attendance is not compulsory.

It is an introductory course. Almost everything will be discussed in other courses, except National Income, Index of Industrial Production, etc. Growth and fluctuations; monetary economics, consumption function, investment decisions, etc.

III. COMMENTS ON MACROECONOMICS

At the beginning, was a very hot subject—the most interesting part of economics. Two reasons: (1) it was new: (2) the greatest deficiency was in the macro area. Emphasis in those days was on full employment, not growth. Growth came in after the second world war.

The close connection between macro economics and governmental policies.

Three [sic] aspects:

(1) understanding of macro problems by economists

(2) persuading the public—easy in England, very difficult here.

(3) Forecasts of the future—improvement

(4) The effectiveness of methods—also part of forecasts.

On the whole macro-policy has been very successful, sometimes by design, sometimes by luck. The tax reduction of 1964 was the first one for fiscal policy specifically. Less fear of a deficit—witness the present situation. But the tax rise is still a test.

Next step—economic growth. First models—macro type with one kind of goods, and investment with capital coefficients. Still being used, but they don’t get us far.

Growth is to a considerable extent a micro-problem, or at least a mixture of the two. Much more difficult for the government to legislate. How does one improve efficiency? Evaluation of investment projects, of economic effects of education, etc.

Some exaggeration—but the traditional macro theory suffers from its own success.

 

PART I NATIONAL INCOME AND RELATED ITEMS

First—to state the objectives, such as welfare (whose?), capacity to produce (what?), national prestige, evaluation of policies, curiosity about growth, etc.

How to bring order out of the chaos? Which goods and services, which transactions are to be recorded?

Define the purpose of economic activity:

(1) Welfare of all people (or citizens) of a given area

(2) Welfare of some people only (slaves or relatives excluded). Weights?

(3) Welfare of animals? The old lady and her cat?

The definition of welfare may lead to a definition of activities to be included.

Special activities: warfare (Sparta), capital formation, police protection, etc.

Market vs. non-market goods. Imputed items.

 

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Evsey D. Domar Papers. Box 17, Folder “Macroeconomics. Theory of National Income and Employment”.

_________________________

THEORY OF INCOME AND EMPLOYMENT
14.451
Fall Term 1967-68

E.D. Domar
J.R. Harris

READING LIST

The purpose of this list is to suggest to the student the sources in which the more important topics of the course are discussed from several points of view. His objectives should be the understanding of these topics and not the memorization of opinions and details.

The “optional” reading has been included for those students who wish to pursue some of the subjects in greater detail. Some of the items on the optional list may be more effective in their exposition, at least for some individuals, than those on the required list.

There exists a good (if a bit obsolete) textbook on macroeconomics—Gardner Ackley, Macroeconomic Theory (The Macmillan Company, New York, 1961). Its knowledge is necessary but not sufficient for passing the course. While several copies are on reserve at Dewey, the acquisition of private copies is recommended.

Students may also find it convenient to acquire the following books: Readings in Macroeconomics edited by M.G. Mueller (which contains a number of relevant articles) and possible the three National Income volumes published by the U.S. Department of Commerce and listed in Section I.

I. NATIONAL INCOME AND RELATED ITEMS
(September 19 – October 12)

REQUIRED

Ackley, Chapters 1-4.

Kuznets, S., National Income and Its Composition, Vol. I (New York, 1941), Chap. 1.

National Income 1954 Edition, A Supplement to the Survey of Current Business, U.S. Department of Commerce (Washington, D.C., 1954), pp. 27-60, 153-58.

U.S. Income and Output, A Supplement to the Survey of Current Business, U.S. Department of Commerce (Washington, D. C., 1958), pp. 50-105.

The National Income and Product Accounts of the United States, 1929-1965. U.S. Department of Commerce (Washington, D.C., 1966). Browse through the statistics tables of the three volumes to find out what is available where.

Bergson, A. The Real National Income of Soviet Russia since 1928, Ch. 3 on “Methods and Procedures”, (Cambridge, Mass., 1961).

Griliches, Z. “Notes on the Measurement of Price and Quality Changes”, in Models of Income Determination, Studies in Income and Wealth, Vol. 28 by the Conference on Research in Income and Wealth, National Bureau of Economic Research, 1964, pp. 381-418.

Leontief, W. W., “Output, Employment, Consumption and Investment,” Quarterly Journal of Economics, Vol. 58 (February, 1944), pp. 290-314.

Leontief, Studies in the Structure of the American Economy (New York, 1953), pp. 27-35.

Dorfman, R., “The Nature and Significance of Input-Output,” Review of Economics and Statistics, Vol. 36 (May, 1954), pp. 121-33.

Domar, E. D., “On the Measurement of Technological Change,” The Economic Journal, Vol. 71 (December, 1961), pp. 709-29. [Read only pp. 709-14, 726-29.]

Board of Governors of the Federal Reserve System, Industrial Production 1959 Revision (Washington, 1960), pp. iii-41. [Look for the method, not for statistical details.]

Domar, E. D., “An Index-Number Tournament,” The Quarterly Journal of Economics, Vol. LXXXI (May, 1967), pp. 169-88.

Sigel, S. J., “A Comparison of the Structures of Three Social Accounting Systems,” National Bureau of Economic Research, Input-Output Analysis: An Appraisal, The Conference on Research in Income and Wealth, Studies in Income and Wealth, Vol. 18 (Princeton, 1955), pp. 253-89.

 

OPTIONAL READINGS:

Jaszi, G., “The Statistical Foundations of the GNP,” Review of Economics and Statistics, Vol. 38 (May, 1956), pp. 205-14.

Lewis, Wilfred, Jr., “The Federal Sector in National Income Models,” and comments by Hickman and Pechman, in Conference on Research in Income and Wealth, Models of Income Determination (Princeton, 1964), Vol. 28, pp. 233-78.

Bailey, M. J., National Income and the Price Level (New York, 1962), pp. 269-300.

Kuznets, S., National Income and Its Composition (New York, 1941).

Ruggles, R. and N., National Income Accounts and Income Analysis (New York, 1956).

Ruggles, “The U.S. National Accounts,” American Economic Review, Vol. 49, (March, 1959), pp. 85-95.

National Bureau of Economic Research, The National Economic Accounts of the United States, Review, Appraisal and Recommendations, General Series 64, (Washington, 1958).

Organization for European Economic Cooperation, A Standardised System of National Accounts, (Paris, 1952).

Gilbert, M. and I. B. Kravis, An International Comparison of National Products and the Purchasing Power of Currencies, A Study of the United States, the United Kingdom, France, Germany and Italy, Organization for European Economic Cooperation (Paris, 1954).

Gilbert, M., Comparative National Products and Price Levels, A Study of Western Europe and the United States, Organization of European Economic Cooperation, (Paris, 1958).

United Nations, Yearbook of National Accounts Statistics, the latest issue.

United Nations, National Income Statistics, the latest issue.

United Nations, World Economic Survey and other Economic Surveys.

Studenski, The Income of Nations. Theory, Measurement, and Analysis: Past and Present (New York, 1958). [A wealth of information, particularly of historical character.]

Nove, A., “The United States National Income A La Russe,” Economica, Vol. 23, 1956.

Bergson, A. The Real National Income of Soviet Russia Since 1928 (Cambridge, Massachusetts, 1961). (The rest of the book).

Kravis, I. B., “Relative Income Shares in Fact and Theory,” American Economic Review, Vol. 49 (December, 1959), pp. 917-49.

Samuelson, P. A., “Evaluation of Real National Income,” Oxford Economic Papers (New Series), 1950, pp. 1-29.

Samuelson, “The Evaluation of ‘Social Income’: Capital Formation and Wealth,” in F. A. Lutz and D. C. Hague, editors, The Theory of Capital (London, 1961).

Leontief, W. W., The Structure of American Economy (New York, 1941).

Leontief, Studies in the Structure of the American Economy (New York, 1953).

Taskier, C. E., Input-Output Bibliography 1955-1960, United Nations (New York, 1961).

Evans, W. D., and M. Hoffenberg, “The Interindustry Relations Study for 1947,” Review of Economics and Statistics, Vol. 34, (May, 1952), pp. 97-142.

Stewart, I. G., “The Practical Uses of Input-Output Analysis,” Scottish Journal of Political Economy, Vol. 5, (February, 1958).

Dosser, D. and A. T. Peacock, “Input-Output Analysis in an Under-Developed Country: A Case Study,” Review of Economic Studies, Vol. 25 (October, 1957).

Input-Output Analysis: An Appraisal, Studies in Income and Wealth by the Conference on research in Income and Wealth, Vol. 18 (Princeton, 1955).

Solow, R. M. “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics, Vol. 39 (August, 1957), pp. 312-20.

Abramovitz, M., “Resources and Output in the United States Since 1870,” American Economic Review, Papers and Proceedings, Vol. 46 (May, 1956), pp. 5-23, reprinted as National Bureau of Economic Research, Occasional Paper 52 (New York, 1956).

Kendrick, J. W., Productivity Trends in the United States (Princeton, 1961).

Denison, E. F., Sources of Economic Growth in the United States and the Alternatives Before Us (New York, 1962).

Abramovitz, M., “Economic Growth in the United States,” American Economic Review, Vol. 52 (September, 1962), pp. 762-82. [This is a review of Denison’s Book.]

Moorsteen, R. H., “On Measuring Productive Potential and Relative Efficiency,” Quarterly Journal of Economics, Vol. 75 (August, 1961), pp. 451-67.

Fabricant, S., The Output of Manufacturing Industries, 1899-1937 (New York, 1940), particularly Chapter 1.

United Nations, Statistical Office, Index Numbers of Industrial Production, St/Stat/ Ser/ F1 (New York, 1950).

Board of Governors of the Federal Reserve System, Flow of Funds in the United States 1939-53 (Washington, D. C., 1955).

Powelson, J. P., National Income and Flow-Of-Funds Analysis (New York, 1960).

Measuring the Nation’s Wealth, National Bureau of Economic Research, Studies in Income and Wealth, Vol. 29 (Washington, D. C., 1964).

 

READING LIST—SECOND INSTALLMENT
II. GENERAL AGGREGATIVE SYSTEMS—FIRST APPROXIMATION
(October 17 – October 31).

REQUIRED:

Ackley, Parts II and III.

Keynes, J. M., The General Theory of Employment, Interest and Money (London and New York, 1936). [Omit the appendixes to Chapters 6 and 19.]

Note: Neither book is arranged in the order of this reading list. Hence these two assignments apply to other sections of it as well.

Wells, P., “Keynes’ Aggregate Supply Function: A Suggested Interpretation,” The Economic Journal, Vol. 70 (September, 1960), pp. 536-42.

Johnson, H. G. and the discussants, “The General Theory After Twenty-five Years,” American Economic Review Papers and Proceedings, Vol. 60 (May, 1961), pp. 1-25.

Klein, L. R., “The Empirical Foundations of Keynesian Economics,” in K. K. Kurihara, ed., Post Keynesian Economics(New Brunswick, N. J., 1954), pp. 277-319.

 

OPTIONAL READINGS:

Lekachman, Robert, Keynes’ General Theory: Reports of Three Decades, (New York and London, 1964).

Patinkin, D., Money, Interest, and Prices, Second Edition, (New York, 1965).

American Economic Association, Readings in Business Cycle Theory (Philadelphia, 1944), Essays 5, 7, 8.

American Economic Association, Readings in the Theory of Income Distribution (Philadelphia, 1946), Essay 24.

Metzler, “Three Lags in the Circular Flow of Income,” in Income, Employment and Public Policy, Essays in Honor of Alvin H. Hansen (New York, 1948), pp. 11-32.

Harris, S. E., The New Economics (New York, 1947), Essays 8-19, 31-33, 38-46.

Lerner, A. P., Economics of Control (New York, 1944), Chapters 21-23, 25.K

Kurihara, K. K., Post Keynesian Economics (New Brunswick, N. J., 1954).

Klein, L. R., The Keynesian Revolution, (New York, 1947), Chapters 3-5.

Ellis, H. S., A Survey of Contemporary Economics, Vol. 1, (Philadelphia, 1948), Chapter 2.

Burns, A. F., “Economic Research and the Keynesian Thinking of Our Times,” in his The Frontiers of Economic Knowledge, (Princeton, 1954), or in the Twenty-Sixth Annual Report of the National Bureau of Economic Research, Inc.(New York, 1946). See also the discussion by Hansen and Burns in the Review of Economic Statistics (November, 1947).

Dillard, D., “The Influence of Keynesian Economics on Contemporary Thought,” American Economic Review, Papers and Proceedings, 1957.

Hutt, W. H., Keynesianism: Retrospect and Prospect (Chicago, 1963).

Friedman, Milton, and G. S. Becker, “A Statistical Illusion on Judging Keynesian Models,” Journal of Political Economy, Vol. 55 (February, 1957), pp. 64-75.

 

III. PRICE FLEXIBILITY AND EMPLOYMENT
(November 2-9)

REQUIRED:

Patinkin, D., Money, Interest, and Prices, Second ed., (New York, 1965), Chapters 9-11.

Pigou, A. C., “The Classical Stationary State,” Economic Journal (December, 1943).

Power, J. H., “Price Expectations, Money Illusion and the Real Balance Effect,” Journal of Political Economy, Vol. 67 (April, 1959).

Mayer, T., “The Empirical Significance of the Real Balance Effect,” Quarterly Journal of Economics, Vol. 73 (May, 1959).

 

OPTIONAL READINGS:

Readings in Monetary Theory, Essay 13.

Schelling, T. C., “The Dynamics of Price Flexibility,” American Economic Review (September, 1949).

Lange, O., Price Flexibility and Employment (Bloomington, Indiana, 1944). [Get the main idea and omit the details.]

Friedman, M., “Lange on Price Flexibility and Employment,” American Economic Review (September, 1946).

Patinkin, D., Money, Interest, and Prices (Evanston, Illinois, 1956).

Hicks, J. R., “A Rehabilitation of ‘Classical Economics’,” Economic Journal, Vol. 47, (June, 1957).

 

IV. The Theory of Interest and the Demand for Money

Required:

Keynes, General Theory, Chapters 13-17.

Hansen, A., Monetary Theory and Fiscal Policy, Chapters 3,4.

Hicks, J. R., Value and Capital, Chapters 11, 12.

Friedman, M., “The Quantity Theory of Money—A Restatement,” Studies in the Quantity Theory of Money.

Patinkin, D., Money, Interest and Prices, 2nd ed., Chapters VIII, XV.

Tobin, J., “Liquidity Preference as Behavior Towards Risk,” The Review of Economic Studies, February 1958, pp. 65-86.

 

Optional:

American Economic Association, Readings in the Theory of Income Distribution (Philadelphia, 1946), Essays 22, 23, 26.

American Economic Association, Readings in Monetary Theory, (New York, 1951), Essays 6, 11, 15.

Friedman, M. and A. J. Schwartz, A Monetary History of the United States 1867-1960 (Princeton, 1963).

Gurley, J. G., and E. S. Shaw, “Financial Aspects of Economic Development,” AER, vol. 65, September 1955, pp. 515-38.

Gurley, J. G., and E. S. Shaw, Money in a Theory of Finance (Washington, 1960).

Hart, A. G., and P. B. Kenen, Money, Debt and Economic Activity, Third Ed., (Englewood Cliffs, N. J., 1961).

Lydall, H., “Income, Assets, and the Demand for Money,” Review of Economics and Statistics, vol. 40, February 1958, pp. 1-14.

Lutz, F. A., “The Interest Rate and Investment in a Dynamic Economy,” AER, December 1945).

Matthews, R. C. O., “Liquidity Preference and the Multiplier,” Economica, vol. 28, February 1961, pp. 37-52.

Patinkin, D., “Liquidity Preference and Loanable Funds: Stock and Flow Analysis,” Economica, Vol. 25, November 1958.

Review of Economics and Statistics Supplement, vol. 45, February 1963, on “The State of Monetary Economics.”

Wright, A. L., “The Rate of Interest in a Dynamic Model,” Quarterly Journal of Economics, vol. 72, August 1958, pp. 327-50.

 

Reading List—Third Installment
V. Consumption and Saving

Required:

Clower, R.W., “The Keynesian Counterrevolution: A Theoretical Appraisal,” in Hahn and Brechling (eds.), The Theory of Interest Rates (Macmillan, 1965).

Davidson, P., “A Keynesian View of Patinkin’s Theory of Employment,” E.J., September 1967.

Leijonhufvud, A., “Keynes and the Keynesians: A Suggested Interpretation,” AER, May 1967.

Ackley, Chapters 10, 11, 12.

Keynes, General Theory, Chapters 8, 9, 10.

Hagen, E.,”The Consumption Function: A Review Article,” Review of Economics and Statistics, XXXVII, Feb. 1955, pp. 48-54.

Duesenberry, J. S., Income, Saving, and the Theory of Consumer Behavior, Chapters 3, 4.

Friedman, M., A Theory of the Consumption Function, Chapters 1, 2, 3, 9.

Ando, A. and Modigliani, F., “The ‘Life Cycle’ Hypothesis of Saving,” AER, March 1963, pp. 55-85; March 1964, pp. 111—113.

Farrell, M. J., “The New Theories of the Consumption Function,” E.J., vol. 69, December, 1959, pp. 678-96.

Lintner, J., “The Determinants of Corporate Saving,” Savings in the Modern Economy (W. Heller, ed.), pp. 230-55.

Lintner, J. and discussants, “Distribution of Income of Corporations Among Dividends, Retained Earnings, and Taxes,” AER, vol. 46, May 1956, pp. 97-118.

Friend, I., and Kravis, I.B., “Entrepreneurial Income, Saving and Investment,” AER, vol. 47, June 1957, pp. 269-301.

Lubell, H., “Effects of Redistribution of Income on Consumers’ Expenditures,” AER, vol. 37, March 1947, pp. 157-170.

________, “A Correction,” AER, vol. 37, December 1947, p. 930.

Domar, E. D., Essays in the Theory of Economic Growth (New York, 1957), pp. 154-67, 195-201.

Bronfenbrenner, Yomana and Lee, “A Study in Redistribution and Consumption,” Review of Economics and Statistics, May 1955, pp. 149-59.

Tobin, J., “Asset Holdings and Spending Decisions,” AER May 1952, pp. 109-23.

Crockett, Jean, “Income and Asset Effects on Consumption: Aggregate and Cross Section,” and comments by D. B. Suits, in N.B.E.R., Models of Income Determination, pp. 97-136.

Tobin, J., “On the Predictive Value of Consumer Intentions and Attitudes,” The Review of Economics and Statistics, vol. 41, February 1959, pp. 1-11.

 

Optional

Bailey, M. J., “Saving and the Rate of Interest,” Journal of Political Economy, vol. 45, August 1957, pp. 279-305. Reprinted in Landmarks in Political Economy, edited by E. J. Hamilton, A. Rees, and H.G. Johnson (Chicago, 1962), pp. 583-622.

Brown, B., and F. M. Fisher, “Negro-White Savings Differentials and the Modigliani-Brumberg Hypothesis,” Review of Economics and Statistics, vol. 40, February 1958, pp. 79-81.

Brown, E. C., Solow, R. M., Ando, A., and J. Karekan, “Lags in Fiscal and Monetary Policy,” in Commission on Money and Credit, Stabilization Policies (Englewood Cliffs, 1963), pp. 1-165.

Clark, J.M., “Note on Income Redistribution and Investment,” AER, vol. 37, December 1947, p. 931.

Dennison, E. F., “A Note on Private Saving,” Review of Economics and Statistics, August 1958.

Dobrovolsky, S. P., Corporate Income Retention 1915-43 (New York, 1951). (Omit the details.)

Domar, E.D., Essays in the Theory of Economic Growth (New York 1957), pp. 154-67, 195-201.

Ferber, R., “The Accuracy of Aggregate Savings Functions in the Post-War Years,” Review of Economics and Statistics, vol. 37, May 1955, pp. 134-48.

Friedman, M., and G. Becker, “A Statistical Illusion in Judging Keynesian Models,” JPE, vol. 65, February 1957.

Friend, I., and S. Schor, “Who Saves?,” The Review of Economics and Statistics, vol. 41, May 1959, pp. 213-45.

Goldsmith, R. W., A Study of Saving in the United States, three volumes (Princeton, 1952).

Gordon, M. J., “The Optimum Dividend Rate,” presented at the sixth Annual International Meeting of the Institute of Management Sciences, Paris, September 1959. (On library reserve.)

Heller, W. W., Boddy, F. M., and C. L. Nelson, Savings in the Modern Economy, a Symposium (Minneapolis, 1953).

Katona, G., and E. Mueller, Consumer Expectations 1953-56 (Ann Arbor, Michigan, 1956).

Rees, and Johnson, H. G., (Chicago, 1962), pp. 583-622.

Klein, L. R., “The Friedman-Becker Illusion,” JPE, vol. 66, December 1958.

Klein, L. R., (ed.), Contributions of Survey Methods to Economics (New York, 1954).

Morgan, J. N., Consumer Economics (New York, 1955).

Modigliani, F., and R. Brumberg, “Utility Analysis and the Consumption Function: An Interpretation of Cross-Section Data,” in Kurihara, K. K., (ed.), Post Keynesian Economics (New Brunswick, N. J., 1954), pp. 388-436.

Mincer, J., “Employment and Consumption,” Review of Economics and Statistics, vol. 42, February 1960, pp. 20-26.

Zellner, Arnold, “The Short-Run Consumption Function,” Econometrica, (October, 1957).

 

VI. Investment

 

Required

Ackley, Chapter 17.

Keynes, General Theory, Chapters 11, 12.

White, W. H., “Interest Inelasticity of Investment Demand,” AER, vol. 46, September 1956, pp. 565-587.

Knox, “The Acceleration Principle and the Theory of Investment,” Economica, August 1952, pp. 269-97.

Meyer, J., and E. Kuh, The Investment Decision, Chapters 2, 8, 12.

Eisner, R., “Investment: Fact and Fancy,” Jorgenson, D.W., “Capital Theory and Investment Behavior,” Kuh, E., “Theory and Institutions in the Study of Investment Behavior,”: all three in AER, May 1963, pp. 237-268.

Lovell, M.C., “Determinants of Inventory Investment,” in N.B.E.R., Models of Income Determination, pp. 177-216.

Solomon, E., ed., The Management of Corporate Capital, pp. 48-55, 67-73.

Witte, J. G., “The Microfoundations of the Social Investment Function,” Journal of Political Economy, vol. 71, October 1963, pp. 441-56.

 

Optional

Andrews, P.W.S., “Further Inquiry into the Effects of Rates of Interest,” Oxford Economic Papers, February 1940, pp. 32-73.

Brockie, M.D., and A.L. Grey, “The Marginal Efficiency of Capital and Investment Programming,” Economic Journal, vol. 46, December 1956.

Cunningham, N.J., “Business Investment and the Marginal Cost of Funds,” Metroeconomica, vol. 10, August 1958.

Cunningham, N.J., “Business Investment and the Marginal Cost of Funds,” Part II, Metroeconomica, December 1958.

Duesenberry, J., Business Cycles and Economic Growth (New York, 1958), Chapters 4-7.

Ebersole, J.F., “The Influence of Interest Rates,” Harvard Business Review, vol. 17, 1938, pp. 35-39.

Foss, M.F., “Manufacturers’ Inventory and Sales Expectations—A Progress Report on a New Survey,” Survey of Current Business, August 1961.

Foss, M.F., and V. Natrella, “Ten Years’ Experience with Business Investment Anticipations,” Survey of Current Business, January 1957.

Foss, M.F., “Investment Plans and Realizations—Reasons for Differences in Individual Cases,” Survey of Current Business, June 1957.

Friend, I., and J. Bronfenbrenner, “Business Investment Programs and Their Realization,” Survey of Current Business, December 1950.

Grey, A.L., and M.D. Brockie, “The Rate of Interest, Marginal Efficiency of Capital and Net Investment Programming: A Rejoinder,” Economic Journal, June 1959.

Heller, W.W., “The Anatomy of Investment Decisions,” Harvard Business Review, March 1951, pp. 95-103.

Henderson, H.D., “The Significance of the Rate of Interest,” Oxford Economic Papers, October 1938, pp. 1-13.

Hirschleifer, J., “On the Theory of Optimal Investment Decision,” The Journal of Political Economy, vol. 66, August 1958, pp. 329-352. (An excellent but difficult paper.)

James, E., A Reconsideration of the Theoretical Criteria for Optimum Investment Planning (M.I.T. doctoral dissertation 1961).

Lerner, A.P., “On the Marginal Product of Capital and the Marginal Efficiency of Investment,” Journal of Political Economy, vol. 51, February 1953, pp. 1-14. Reprinted in Landmarks in Political Economy edited by E.J. Hamilton, A. Rees, and H.G. Johnson (Chicago, 1962), pp. 538-58.

Lovell, M.C., “Determinants of Inventory Investment,” in Conference on Research in Income and Wealth, Models of Income Determination (Princeton, 1964), vol. 28, pp. 177-232.

Lutz, F.A., and V., The Theory of Investment of the Firm (Princeton, 1951).

Lydall, H.F., “The Impact of the Credit Squeeze on Small and Medium Sized Manufacturing Firms,” Economic Journal, vol. 47, September 1957.

Meade, J.E., and P.W.S. Andrews, “Summary of Replies to Questions on Effects of Interest Rates,” and “Further Inquiry into the Effects of Rates of Interest,” Oxford Economic Papers, No. 1, 1938 and No. 3, 1940.

N.B.E.R., The Quality and Economic Significance of Anticipations Data, A Conference of the Universities—National Bureau Committee for Economic Research (Princeton, 1960).

Penrose, E.T., The Theory of the Growth of the Firm (Oxford, 1959).

Penrose, E.T., “Limits to the Growth and Size of Firms,” AER Papers and Proceedings, vol. 45, May 1955, pp. 531-43.

Pitchford, J.D. and A.J. Hagger, “A Note on the Marginal Efficiency of Capital,” Economic Journal, vol. 48, September 1958, pp. 597-600.

Robinson, J., The Accumulation of Capital (London, 1956). (Wish we had time for it.)

Sayers, R.S., “Business Men and the Terms of Borrowing,” Oxford Economic Papers, February 1940, pp. 23-31.

Spiro, A., “Empirical Research and the Rate of Interest,” Review of Economics and Statistics, vol. 40, February 1958.

Lintner, J., “Corporation Finance: Risk and Investment,” in N.B.E.R., Determinants of Investment Behavior (Robert Ferber editor), pp. 215-54.

Jorgenson, D.W., “The Theory of Investment Behavior,” in N.B.E.R., Determinants of Investment Behavior, pp. 129-55.

Miller, M.H. and F. Modigliani, “Estimates of the Cost of Capital Relevant for Investment Decisions under Uncertainty,” in N.B.E.R., Determinants of Investment Behavior, pp. 179-214.

Miller, M.H. and F. Modigliani, “Reply,” in N.B.E.R., Determinants of Investment Behavior, pp. 260-70.

Lovell, M.C., “Sales Anticipations, Planned Inventory Investment, and Realizations,” in N.B.E.R., Determinants of Investment Behavior, pp. 537-80.

 

Reading List—Fourth Installment
VII. Multiplier and Accelerator

Required

Kahn, R.F., “The Relation of Home Investment to Unemployment,” Economic Journal, 1931. Republished in Hansen and Clemence, Readings in Business Cycles and National Income (New York, 1953), Essay 15.

Readings in Business Cycle Theory, Essays 9-12.

Haavelmo, T., “Multiplier Effects of a Balanced Budget,” Econometrica, 1945, reprinted in Readings in Fiscal Policy, pp. 335-343.

Salant, William A., “Taxes, Income Determination, and the Balanced Budget Theorem,” The Review of Economics and Statistics, May 1957. Reprinted in Gordon and Klein (eds.) A.E.A. Readings in Business Cycles (1965).

Tsiang, S.C., “Accelerator, Theory of the Firm, and the Business Cycle,” Quarterly Journal of Economics, vol. 65, 1951.

 

Optional

Tinbergen, “Statistical Evidence on the Acceleration Principle,” Economica, vol. 5, 1938.

Eisner, R., “Capital Expenditures, Profits, and the Acceleration Principle,” and comments by G.H. Hickman, in Conference on Research in Income and Wealth, Models of Income Determination, (Princeton, 1964), vol. 28, pp. 137-176.

Peston, M.H., “Generalizing the Balanced Budget Multiplier,” and “Comment” by W.A. Salant, The Review of Economics and Statistics (August, 1958).

Bowen, W.G., “The Balanced-Budget Multiplier: A Suggestion for a More General Formulation,” The Review of Economics and Statistics, May 1957.

Goodwin, R.M., “The Multiplier” in Seymour E. Harris, ed., The New Economics (New York, 1947), pp. 482-99.

Chenery, H.B., “Overcapacity and the Acceleration Principle,” Econometrica, vol. 20, January 1952, pp. 1-28.

Caff, J.T., “A Generalization of the Multiplier-Accelerator Model,” The Economic Journal, vol. 69, March 1961, pp. 36-52.

Kuznets, S., “Relation Between Capital Goods and Finished Products in the Business Cycle,” in Economic Essays in Honor of Wesley Clair Mitchell, (New York, 1935).

Knox, A.D. “The Acceleration Principle and the Theory of Investment: A Survey,” Economica, vol. 19, 1952.

Harrod, R.F., Towards a Dynamic Economics (London, 1948).

Hicks, J.R., A Contribution to the Theory of the Trade Cycle (Oxford, 1950).

Goodwin, R.M., “Problems of Trend and Cycle,” Yorkshire Bulletin, vol. 5, August 1953.

Ott, A.E., “The Relation Between the Accelerator and the Capital Output Ratio,” Review of Economic Studies, vol. 25, June 1958.

Minsky, H., “Monetary Systems and Accelerator Models,” American Economic Review, vol. 47, 1957.

Friedman, M. and D. Meiselman, “The Relative Stability of Monetary Velocity and the Investment Multiplier in the United States, 1897-1958,” Stabilization Policies, Commission on Money and Credit (New Jersey, 1963), pp. 165-268.

Hester, D.D., “Keynes and the Quantity Theory: A Comment on the Friedman-Meiselman CMC Paper,” the reply by Friedman and Meiselman, and the rejoinder by Hester, The Review of Economics and Statistics, vol. XLVI, November 1964, pp. 364-377.

 

VIII. Employment and Inflation

Required

Ackley, Chap. XVI.

Bronfenbrenner, M. and F.D. Holzman, “Survey of Inflation Theory,” American Economic Review, LIII (Sept., 1963), pp. 593-661.

Higher Unemployment Rates, 1957-60, “Structural Transformation or Inadequate Demand,” Subcommittee on Economic Statistics of the Joint Economic Committee, Washington, 1961.

Hines, G.G., “Trade Unions and Wage Inflation in the United Kingdom,” R.E. Studies (October 1964).

Killingsworth, C.L., “Automation, Jobs and Manpower,” from Nation’s Manpower Revolution, Hearings before the Subcommittee on Employment and Manpower of the Committee on Labor and Public Welfare, 88th Congress, 1stsession, Washington, D.C., part 5, pp. 1461-1480.

Lipsey, Richard, “The Relation Between Unemployment and the Rate of Change in Money Wage Rates in the United Kingdom, 1862-1957: A Further Analysis,” Economica N.S. 27 (Feb. 1960). Reprinted in Klein and Gordon (eds.), Readings in Business Cycle Theory (1965).

Perry, George L., Unemployment, Money Wage Rates and Inflation (1966).

Phillips, “The Relation Between Unemployment and the Rate of Change of Money Wage Rates,” Economica (Nov., 1958), pp. 283-99.

Samuelson, P.A. and R. Solow, “Analytical Aspects of Anti-Inflation Policy,” American Economic Review (May 1960), pp. 177-94.

Solow, R.M., “The Case Against the Case Against the Guidelines,” in G. Schultz (ed.), Guidelines (1966).

 

Optional

Smithies, A., “The Behavior of Money National Income Under Inflationary Conditions,” Readings in Fiscal Policy, pp. 121-36.

Machlup, F., “Another View of Cost-Push and Demand-.Pull Inflation,” Review of Economics and Statistics, XLII, (May 1960), pp. 125-39.

Galbraith, J.K., “Market Structure and Stabilization Policy,” Review of Economics and Statistics (May 1957), pp. 124-33.

Hicks, J.R., “Economic Foundations of Wage Policy,” Economic Journal, (Sept. 1955), pp. 389-404.

Morton, W.A., “Trade Unionism, Full Employment and Inflation,” American Economic Review, (March 1950), pp. 13-39.

Slichter, S., “Do Wage-Fixing Agreements Have an Inflationary Bias,” American Economic Review, (May 1954), pp. 332-46.

Berman, B., “Alternative Measures of Structural Unemployment,” Employment Policy and the Labor Market, A.M. Ross, ed.

Joint Economic Committee, Higher Unemployment Rates, 1957-60, U.S. 87th Congress.

Galloway, “Labor Mobility, Resource Allocation and Structural Unemployment,” American Economic Review (Sept. 1963), pp. 694-716.

Gordon, R.A., “Has Structural Unemployment Worsened,” Industrial Relations (May 1964), pp. 53-77.

 

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Evsey D. Domar Papers. Box 15, Folder “Macroeconomics. Old Reading Lists”.

______________________

The Theory of Income and Employment
14.451
E. D. Domar [and] J. R. Harris

Midterm Examination
November 30, 1967

(One hour and fifteen minutes)

Please answer all questions. Use a separate book for each question.

  1. (25%) After the discovery that an hour of dancing a day increases a person’s efficiency, a hitherto unemployed dancing teacher was hired (to teach dancing to their employees or themselves) by the following units, one at a time;
    1. A beginning sculptor
    2. The Ford Foundation
    3. Sears, Roebuck & and Co.
    4. The Town of Concord
    5. The Head of the Mafia
    6. The Embassy of South Vietnam in Washington

Disregarding any indirect effects (such as the multiplier), indicate and explain how national income and product and the relevant subdivisions in money and in real terms are affected by this act on the assumption that (1) dancing is really effective, and (2) that it is not. Your reasoning is at least as important as your answer.

  1. (20%) “The Federal Reserve-type index is a poor numerator for the measurement of the Residual (Total Factor Productivity), or of any other productivity.”
    Comment fully.
  2. A visitor to M.I.T. has suggested recently that if the Federal Reserve Board buys bonds in the open market in periods of unemployment, then real output, prices and the interest rate—all three—will increase.
    Are these predictions consistent with those of Patinkin and Keynes? How would their predictions and your own results (you may or may not agree with those sages) be changed under conditions of full employment? Explain fully. (35%)
  3. (20%) A Russian economist once stated that Keynes’ variables were as follows:
Independent variables Dependent variables
1. Propensity to consume 1. Savings
2. Marginal efficiency of capital 2. Investment
3. Rate of interest 3. Level of employment
4. Liquidity preference

Comment. Be specific

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Evsey D. Domar Papers. Box 17, Folder “Macroeconomics. Examinations (1 of 3)”.

______________________

THE THEORY OF INCOME AND EMPLOYMENT
14.451
E. D. Domar [and] J. R. Harris

FINAL EXAMINATION
January 23, 1968

Three Hours

PLEASE ANSWER ALL QUESTIONS. THEY CARRY EQUAL WEIGHTS. USE A SEPARATE BOOK FOR EACH QUESTION.

  1. (A) National Product is defined by the U.S. Department of Commerce as the sum of all final goods (and services), each multiplied by its price.

(B) National Income is defined by it as the sum of all net incomes of certain recipients.

Discuss the following questions:

    1. What is a final good (or service) in (A)? What is the reason for this definition?
    2. What is the rationale for multiplying each good (or service) by its price? What assumptions are implied in this procedure? Are they realistic?
    3. Whose net incomes are aggregated? Why? What is a net income? What assumptions does this procedure imply? Are they realistic?
    4. Could you suggest changes or improvements in the above procedures? Justify them.

 

    1. “A high ratio of depreciation to investment is a sign of old age.”
    2. Why is a special definition of money required in the “Price Flexibility and Employment” problems? What is the definition? What assumptions does it rest on?
    3. “If the Balanced-Budget Multiplier is correct, isn’t Say’s Law also correct?

 

  1. Assume that this country is being threatened by inflation and discuss the pros and cons of the following measures allegedly directed against it. Whenever you can, indicate the positions which several economists whose theories were discussed in the course would take on these measures:
    1. (i) A temporary Federal sales tax on all goods and services, or
      (ii) a permanent tax of the same kind.
    2. (i) A redistribution of income from wages to profits, or
      (ii) a more equal distribution of income.
    3. Setting the rate of growth of labor productivity in each industry as the limit for the rate of increase of wages in that industry.
    4. (i) Remitting domestic taxes on American exports, or
      (ii) a reduction in import duties.
    5. A tax on all capital goods.

 

    1. Define and discuss the applicability to investment decisions of the marginal efficiency of investment (also called marginal efficiency of capital, or the internal rate of return) and the discounted present value. Can they give different ranking of investment projects? Why? Which measure would you use?
    2. What major modifications of investment criteria would be required if the investment was done by the U.S. Government in times of unemployment?
    3. Same, if the investment was done by the government of some underdeveloped country?

 

  1. Attempts to estimate the parameters of an aggregate consumption function for the U.S. have yielded the following results:
    1. Cross-section and short-term series analyses estimate a marginal propensity to consume somewhere in the range of .55-.70, this magnitude being lower than the average propensity to consume.
    2. Long-run time series analyses estimate a marginal propensity to consume equal to the average propensity of about .88.

Compare and contrast the assumptions, rationale and implications of the “Previous Peak Income”, “Permanent Income”, and “Lifetime Cycle” hypotheses, each of which purports to reconcile the above observations.

 

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Evsey D. Domar Papers. Box 17, Folder “Macroeconomics. Final Exams (2 of 3)”.

Image Source: Evsey D. Domar at the MIT Museum legacy website.

Categories
Exam Questions Harvard Suggested Reading Syllabus

Harvard. Locational Economics. Readings and Exams. Isard, 1952-53

Image Source:  Walter Isard, ca. 1960. From David Boyce presentation: Leon Moses and Walter Isard: Collaborators, Rivals or Antagonists.

___________________

Harvard Ph.D. (1943)

WALTER ISARD, A.B. (Temple Univ.) 1939, A.M. (Harvard Univ.) 1941.
Subject, Economics. Special Field, Economic Fluctuations and Forecasting.
Thesis, “The Economic Dynamics of Transport Technology.”

Source: Harvard University. Report of the President of Harvard College, 1942-43, p. 105.

___________________

Tentative Schedule of Topics

Economics 235—Problems of Location of Economic Activities
Fall Term—M.W.F. at 9 A.M.

  1. Realistic Theory
    1. Introduction
    2. Transport Orientation
    3. Labor Orientation
    4. Other Orientation
    5. Agglomeration
    6. Competing Market and Supply Areas, Theory of Space Pricing (Basing Point included)
    7. Agricultural Location Theory (with reference to an aggregate)
    8. The General Equilibrium Framework (The Total Picture of a Space-Economy—The Interaction of the Industrial and Agricultural Sectors)
  2. Empirical Analysis with Special Reference to Regional Development
    1. Case Studies
      1. Iron and Steel Industry
      2. Glass Industry
      3. Aluminum Industry
    2. Trends—Past and Near Future
      1. General Historical Background
      2. Changes in Resource Utilization and in the Pull of Materials, Markets, and Labor Locations
      3. Industrial Concentration and Dispersion
      4. Urban-Metropolitan Development Processes
      5. Regional Industrialization Processes
  3. The Far Future: Technique in Predictive Analysis
    1. Implications of Atomic Energy
    2. Implications of Aircraft and other Innovations

Summary

[Note:  A.1 through A.5 above—“With reference to the individual firm and the industry as well as to groups of industries]

*  * *  *  * *  *  * *  *  *

Economics 235a—Economics of Location and Regional Development: Principles

Fall Term—M.W.F. at 9 A.M.

Readings

  1. Introduction
    Required reading

    1. Alfred Weber’s Theory of Location of Industries (ed. by C. J. Friedrich), Introduction and Chap. I
    2. A.P. Usher, A Dynamic Analysis of the Location of Economic Activity, section 1

Supplementary reading

    1. T. Palander, Beiträge zur Standortstheorie, Chaps. I, II, V
    2. H. Schumacher, “Location of Industry,” Encyclopaedia of Social Sciences, Vol. V, pp. 585-92
    3. S.R. Dennison, Location of Industry and Depressed Areas, Chaps. I, II
    4. F. M. Hoover, The Location of Economic Activity, Chap. I

 

  1. Transport Orientation
    Required reading

    1. Alfred Weber’s Theory of Location of Industries, Chaps. II, III
    2. E.M. Hoover, Location Theory and the Shoe and Leather Industries, Chaps. I, II, and pp. 34-42
    3. William H. Dean, Jr., The Theory of the Geographic Location of Economic Activities (Selections), Chap. II
    4. A.P. Usher, A Dynamic Analysis of the Location of Economic Activity, section 4

Supplementary reading

    1. National Resources Planning Board, Industrial Location and National Resources, Chaps. 6, 9, 10
    2. T. Palander, Beiträge zur Standortstheorie, Chaps. VI-IX, XII
    3. E.M. Hoover, The Location of Economic Activity, Chaps. 2, 3, 4 (for an elementary presentation)
    4. A. Lösch, Die räumliche Ordnung der Wirtschaft, Part I (for general theoretical reading)
    5. E. Niederhauser, Die Standortstheorie Alfred Webers (for general theoretical reading)
    6. O. Englander, “Kritisches und Positives zu einer allgemeinen reinen Lehre vom Standort,” Zeitschrift für Volkswirtschaft und Sozialpolitik, Vol. V (New Series), 1926, secs. I and II
    7. S.R. Dennison, Location of Industry and Depressed Areas, Chap. III

 

  1. Labor and Other Orientation
    Required reading

    1. Alfred Weber’s Theory of Location of Industries, Chap. IV
    2. E.M. Hoover, Location Theory and the Shoe and Leather Industries, Chaps. IV, V
    3. A.P. Usher, A Dynamic Analysis of the Location of Economic Activity, section 10

Supplementary reading

    1. E.M. Hoover, The Location of Economic Activity, Chaps. V and VII (elementary presentation)
    2. National Resources Planning Board, Industrial Location and National Resources, Chaps. 7, 8, 11, 12, 13
    3. O. Englander, “Kritisches und Positives zu einer allgemeinen reinen Lehre vom Standort,” Zeitschrift für Volkswirtschaft und Sozialpolitik, Vol. V (New Series), 1926, sec. III
    4. H. Ritschl, “Reine und historische Dynamik des Standortes der Erzeugungszweige,” Schmollers Jahrbuch, Vol. 51, 1927, secs. I-III
    5. S.R. Dennison, Location of Industry and Depressed Areas, Chaps. IV, V
  1. Agglomeration
    Required reading

    1. Alfred Weber’s Theory of Location of Industries, Chaps. V, VI
    2. E.M. Hoover, Location Theory and the Shoe and Leather Industries, Chap VI
    3. William H. Dean, Jr., The Theory of the Geographic Location of Economic Activities (Selections), Chap. V

Supplementary reading

    1. National Resources Planning Board, Industrial Location and National Resources, Chaps. 14, 15, 16, 17
    2. O. Englander, “Kritisches und Positives zu einer allgemeinen reinen Lehre vom Standort,” Zeitschrift für Volkswirtschaft und Sozialpolitik, Vol. V (New Series), 1926, sec. IV.
    3. E.A.G. Robinson, The Structure of Competitive Industry

 

  1. Market and Supply Areas
    Required reading

    1. A. Lösch, “The Nature of Economic Regions,” Southern Economic Journal, Vol. V, 1938, pp. 71-78
    2. E.M. Hoover, Location Theory and the Shoe and Leather Industries, pp. 42-59
    3. C.D. and W.P. Hyson, “the Economic Law of Market Areas,” Quarterly Journal of Economics, May 1950

Supplementary reading

    1. A. Lösch, Die räumliche Ordnung der Wirtschaft, Part II
    2. T. Palander, Beiträge zur Standortstheorie, Chap. XIV
    3. H. Hotelling, “Stability in Competition,” Economic Journal, Vol. 39, March 1929, pp. 41-57
    4. E. Chamberlin, The Theory of Monopolistic Competition, 3rded., especially Appendix C, “Pure Spatial Competition”
    5. A.P. Lerner and H.W. Singer, “Some Notes on Duopoly and Spatial Competition,” Journal of Political Economy, Vol. 45, 1937, pp. 145-86
    6. A. Robinson, “A Problem in the Theory of Industrial Location,” Economic Journal, Vol. 51, June-Sept. 1941, pp. 270-75
    7. E.M. Hoover, “Spatial Price Discrimination,” The Review of Economic Studies, Vol. IV, No. 3, pp. 182-91
    8. A. Smithies, “Monopolistic Price Policy in a Spatial Market,” Econometrica, Vol. 9, 1941, pp. 63-73
    9. _____, “Optimum Location in Spatial Competition,” Journal of Political Economy, Vol. 44, June 1941, pp. 423-39
    10. H. Moller, “Grundlagen einer Theorie der regionalen Preisdifferenzierung,” Weltwirtschaftliches Archiv, Bd. 58, 1943, pp. 335-90
    11. G. Ackley, “Spatial Competition in a Discontinuous Market,” Quarterly Journal of Economics, Vol. 56, Feb. 1942, pp. 212-30
    12. S. Enke, “Space and Value,” Quarterly Journal of Economics, Vol. LVI, Aug. 1942, pp. 627-37
    13. T.N.E.C. Monograph No. 42
    14. F. Machlup, The Basing Point System, Chaps. 4, 5, 6, 7
    15. S. Enke, Equilibrium among Spatially Separated Markets: Solution by Electric Analogue,” Econometrica, January 1951

 

  1. Agricultural Location Theory
    Required reading

    1. Theodor Brinckmann’s Economics of the Farm Business, pp. 1-27, 61-63, 66, 73, 78-111, 142-63

Supplementary reading

    1. J.D. Black et al., Farm Management, Chap. XVI
    2. Theodor Brinckmann’s Economics of the Farm Business, pp. 27-61, 111-163
    3. T. Palander, Beiträge zur Standortstheorie, Chaps. III, IV
    4. A. Lösch, Die räumliche Ordnung der Wirtschaft, Chap. 5
    5. F. Aereboe, Allgemeine landwirtschaftliche Betriebslehre, Parts III, V
    6. J.H. von Thünen, Der isolierte Staat in Beziehung auf Landwirtschaft und Nationalökonomie

 

  1. The General Equilibrium Framework
    Required reading

    1. A. Predöhl, “The Theory of Location in Relation to General Economics,” Journal of Political Economy, Vol. 36, June 1928
    2. B. Ohlin, Interregional and International Trade, Preface
    3. Alfred Weber’s Theory of Location of Industries, Chap. VII
    4. Isard, “The General Theory of Location and Space Economy,” Quarterly Journal of Economics, November 1949
    5. _____, “Distance Inputs and the Space-Economy: Part I, The Conceptual Framework; Part II, The Locational Equilibrium of the Firm,” Quarterly Journal of Economics, May and August, 1951

Supplementary reading

    1. H. Weigmann, “Ideen zu einer Theorie der Raumwirtschaft,” Weltwirtschaftliches Archiv, Vol. 34, 1931, pp. 1-40
    2. ______, “Standortstheorie und Raumwirtschaft,” in Johann Heinrich von Thünen zum 150. Geburtstag (ed. By W. Seedorf and H. G. Seraphim)
    3. A. Predöhl, “Das Standortsproblem in der Wirtschaftstheorie,” Weltwirtschaftliches Archiv, Bd. XXI, 1925
    4. B. Ohlin, Interregional and International Trade, Chaps. VIII-XII
    5. T. Palander, Beiträge zur Standortstheorie, Chaps. X and XI
    6. O. Englander, “Kritisches und Positives zu einer allgemeinen reinen Lehre vom Standort,” Zeitschrift für Volkswirtschaft und Sozialpolitik, Vol. V (New Series), 1926, sec. V-VIII
    7. L. Miksch, “Zur Theorie des räumlichen Gleichgewichts,” Weltwirtschaftliches Archiv, Bd. 66, 1951
    8. A. Predöhl, Aussenwirtschaft, 1949

 

  1. Regional and Interregional Input-Output Analysis
    Required reading

    1. W.W. Leontief, “Interregional Theory,” Littauer reading room
    2. Isard, “Some Empirical Results and Problems of Regional Input-Output Analysis,” Littauer reading room
    3. ________, “Interregional and Regional Input-Output Analysis: A Model of a Space-Economy,” Review of Economics and Statistics, November 1951

Suggested reading

    1. W. Leontief, Structure of American Economy 1919-1929
    2. W. Leontief, “Output, Employment, Consumption and Investment,” The Quarterly Journal of Economics, Vol. LVIII, February 1944
    3. W. Leontief, “Exports, Imports, Domestic Output, and Employment,” The Quarterly Journal of Economics, Vol. LX, February 1946
    4. W. Leontief, “Wages, Profit and Prices,” The Quarterly Journal of Economics, Vol. LXI, November 1946
    5. Cornfield, Evans, and Hoffenberg, “Full Employment Patterns 1950,” Monthly Labor Review, February 1947
    6. Cornfield, Evans, and Hoffenberg, “Structure of the American Economy Under Full Employment Conditions,” Monthly Labor Review, March 1947
    7. M. Hoffenberg, “Employment Resulting from U.S. Exports,” Monthly Labor Review, December 1947
    8. W. Leontief et al., “Input-Output Analysis and its Use in Peace and War Economies,” Papers and Proceedings of the American Economic Association, May 1949

 

  1. Empirical Regularities and Distance
    Required reading

    1. John Q. Stewart, “Empirical Mathematical Rules Concerning the Distribution and Equilibrium of Population,” Geographical Review, July 1947
    2. John Q. Stewart, “Demographic Gravitation: Evidence and Applications,” Sociometry, February—May 1948
    3. G.K. Zipf, Human Behavior and the Principle of Least Effort, Chap. 9

Supplementary reading

    1. G.K. Zipf, National Unity and Disunity
    2. J.Q. Stewart, “Potential of Population and its Relationship to Marketing,” in Theory in Marketing, ed. by R. Cox and W. Alderson
    3. H.W. Singer, “The ‘Courbe des Populations’. A Parallel to Pareto’s Law,” Economic Journal, June 1936
    4. S.A. Stouffer, “Intervening Opportunities: A Theory Relating Mobility and Distance,” American Sociological Review, December 1940
    5. M.L. Bright and D.S. Thomas, “Interstate Migration and Intervening Opportunities,” American Sociological Review, December, 1941
    6. E.C. Isbell, “Internal Migration in Sweden and Intervening Opportunities,” American Sociological Review, December 1944

 

  1. Reading Period Assignment
    1. G.E. McLaughlin and S. Robock, Why Industry Moves South, pp. 1-102

 

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003, Box 5, Folder “Economics, 1952-1953 (2 of 2).

___________________

Final Examination January, 1953

1952-53
HARVARD UNIVERSITY
ECONOMICS 235a

Answer questions 1 and 2, and any two others.

  1. Define and briefly discuss the following concepts:

(a) locational weight
(b) rent surface
(c) demographic gravitation
(d) market orientation

  1. Design a regional input-output model. Discuss in full the limitations of such a model for projection purposes.
  2. Present Hoover’s analysis for determining the location of marketing and other intermediary establishments.
  3. Outline and evaluate Brinkmann’s theory of agricultural location.
  4. Discuss some ways in which linear programming (activity analysis) techniques may be useful in regional analysis.

Source: Harvard University Archives. Final Exams—Social Sciences—January 1953 (HUC 7000.28), Vol. 96. Papers Printed for Final Examinations. History, History of Religions, …, Economics, …, Military Sciences, Naval Science. January, 1953.

___________________

Harvard University
Department of Economics
Spring Term 1952-53

Economics 235b—Economics of Location and Regional Development: Problems

  1. Case Studies of Industries
    Required Reading

    1. Isard, “Some Locational Factors in the Iron and Steel Industry Since the Early Nineteenth Century,” Journal of Political Economy, Vol. 56, June 1948
    2. Isard and Cumberland, “New England as a Possible Location for an Integrated Iron and Steel Works,” Economic Geography, vol. 26, October 1950
    3. F. Machlup, The Basing-Point System, pp. 3-17, 25-30
    4. T.R. Smith, The Cotton Textile Industry of Fall River, Mass., Chs. II, III, IV.
    5. E.M. Hoover, Location Theory and the Shoe and Leather Industries, Chs. VII, VIII, IX and XVI

Supplementary Reading

    1. E.M. Hoover, Location Theory and the Shoe and Leather Industries, Chs. X-XIV
    2. Isard and Capron, “The Future Locational Pattern of the Iron and Steel Industry in the United States,” Journal of Political Economy, Vol. 57, March 1949
    3. U.S. Department of Commerce, Transportation Factors in the Location of the Cast Iron Pipe Industry, Economic Series, No. 63 (by J.C. Nelson and R.C. Smith)
    4. L. Dechesne, La Localisation des Diverses Productions
    5. E.W. Zimmerman, World Resources and Industries, Parts II, III
    6. C.S. Goodman, The Location of Fashion Industries, Michigan Business Studies, Vol. X, No. 2
    7. F. Machlup, The Basing-Point System, Chs. 4, 5, 6, 7
    8. T.N.E.C. Monograph No. 42
    9. A.Smithies, “Aspects of the Basing-Point System,” American Economic Review, December 1942
    10. United Nations, Department of Economic Affairs, World Iron Ore Resources and Their Utilization
    11. W.G. Cunningham, The Aircraft Industry: A Study in Industrial Location, Los Angeles, 1951
    12. J.V. Krutilla, The Structure of Costs and Regional Advantage in Primary Aluminum Production, Doctoral Dissertation, 1952, Harvard University Archives.
    13. J.H. Cumberland, The Locational Structure of the East Coast Steel Industry, Doctoral Dissertation, 1951, Harvard University Archives.

 

  1. Trends—Past and Near Future
    a. General Historical Background
    Required Reading

    1. W.H. Dean, The Theory of the Geographic Location of Economic Activities(Selections), Introduction and Ch. III
    2. Isard, “Transport Development and Building Cycles,” Quarterly Journal of Economics, Volume 52, November 1942

Supplementary Reading

    1. G. McLaughlin, Growth of American Manufacturing Areas, Part I
    2. A.P. Usher, A Dynamic Analysis of the Location of Economic Activity, Ch. II to end
    3. A. Weber, “Industrielle Standortstheorie,” Grundriss der Sozialökonomik, Abt. VI, pp. 55-82.
    4. H. Ritschl, “Reine und historische Dynamik des Standortes der Erzeugungszweige,” Schmollers Jahrbuch, Vol. 51, 1927, secs. IV and V
    5. E.M. Hoover, The Location of Economic Activity, Chs. 9 and 10
    6. R.G. Hawtrey, The Economic Problem, Chs. IX and X
    7. C. Goodrich, Migration and Economic Opportunity, Chs. VI, VIII
    8. A.P. Usher, “The Steam and Steel Complex and International Relations,” in Technology and International Relations (ed. by W.F. Ogburn)
    9. P.E.P., Report on the Location of Industry in Great Britain, Chs. II and IV
    10. W.H. Dean, The Theory of the Geographic Location of Economic Activities, Doctoral Dissertation, Harvard University 1938, Chs. IV-VIII
    11. M.P. Fogarty, Prospects of the Industrial Areas of Great Britain, Ch. II
    12. R. Lester, “Trends in southern Wage Differentials Since 1890,” Southern Economic Journal, April 1945
    13. G. Ellis, “Why New Manufacturing Establishments Located in New England,” Monthly Review of the Federal Reserve Bank of Boston, Volume 31, April 1949

 

  1. Industrial Concentration and Dispersion
    Required Reading

    1. S.P. Florence, Investment, Location and Size of Plant, Chs. III, IV, VI
    2. Shenfield and Florence, “The Economies and Diseconomies of Industrial Concentration: The Wartime Experience of Coventry,” Review of Economic Studies, Vol. XII, No. 32, 1944-45
    3. C. Goodrich, Migration and Economic Opportunity, pp. 314-92

Supplementary Reading

    1. S.P. Florence, Investment, Location and Size of Plant, Chs. I, II, V
    2. National Industrial Conference Board, Decentralization in Industry, Studies in Business Policy, No. 30
    3. J. Steindl, Small and Big Business, Oxford Institute of Statistics, Monograph No. 1
    4. D. Creamer, Is Industry Decentralizing
    5. National Resources Planning Board, Industrial Location and National Resources, Chaps. 4 and 5
    6. A.J. Wright, “Recent Changes in Concentration of Manufacturing,” Annals of the Association of American Geographers, Vol. 35, December 1945
    7. U.S. Bureau of the Census, Location of Manufactures, 1889-1929: A Study of the Tendencies Toward Concentration and Toward Dispersion.
    8. U.S. Dept. of Commerce, Business Information Service, Concentration of Industry Report, December 1949
    9. Survey of Current Business, December 1949, “State Estimates of the Business Population.”

 

  1. Urban-Metropolitan Development Processes
    Required Reading

    1. A.E. Hawley, Human Ecology, pp. 80-91, 234-87, 348-432
    2. D.E. Bogue, The Structure of the Metropolitan Community, Part I
    3. R.E. Dickinson, City Region and Regionalism (Page through and observe figures carefully. Read text only when necessary to understand the implications of these figures).

Supplementary Reading

    1. W. Christaller, Die zentralen Orte in Süddeutschland
    2. E. Ullman “A Theory of Location for Cities” American Journal of Sociology, Vol. 46, May 1941, pp. 853-64
    3. U.S. Federal Housing Administration, The Structure and Growth of Residential Neighborhoods in American Cities
    4. Isard and Whitney, “Metropolitan Site Selection,”Social Forces, Vol. 27, March 1949
    5. P.E.P., Report on the Location of Industry in Great Britain, Chap. VI
    6. R.D. McKenzie, The Metropolitan Community, Parts II, III,, IV
    7. N.S.B. Gras, “The Rise of the Metropolitan Community” in the Urban Community (ed. by E.W. Burgess)
    8. R. Park et al., The City, Chaps. I, II, III
    9. E. de S. Brunner and J.H. Kolb, Rural Social Trends, Chaps. IV, V, VI
    10. R.E. Dickinson, “The Scope and Status of Urban Geography: An Assessment,” Land Economics, Vol. XXIV, August 1948, pp. 221-38
    11. Griffith Taylor, Urban Geography
    12. D.E. Bogue, The Structure of the Metropolitan Community, Parts II and III
    13. P.K. Hatt and A.J. Reiss, Reader in Urban Sociology, Parts 1-4

 

  1. Regional Industrialization Processes
    Required Reading

    1. Pei-kang Chang, Agriculture and Industrialization, pp. 23-36, 46-55, 66-112
    2. A.W. Lewis, “The Industrialization of the British West Indies,” Caribbean Economic Review, Vol. II, No. 1, May 1950
    3. A.P. Usher, A Dynamic Analysis of the Location of Economic Activity, Sections 7, 8, and 9

Supplementary Reading

    1. Pei-kang Chang, Agriculture and Industrialization, Chaps. IV, V, VI
    2. K. Mandelbaum, The Industrialization of Backward Areas
    3. Colin Clark, The Conditions of Economic Progress, Chaps. V-XV
    4. Colin Clark, The Economics of 1960
    5. League of Nations, Industrialization and Foreign Trade, Chaps. III and IV
    6. A.J. Brown, Industrialization and Trade
    7. S.R. Dennison, The Location of Industry and Depressed Areas, Part II
    8. G. McLaughlin, Growth of American Manufacturing Areas, Part II
    9. D.M. Phelps, Migration of Industry to South America
    10. P.E.P, Report on the Location of Industry in Great Britain, Chaps. I, V, VIII, IX, X
    11. B. Barfod, Local Economic Effects of a Large-Scale Industrial Undertaking
    12. Harold H. Hutcheson, “Problems of the Underdeveloped Countries,” (Parts I and II), Foreign Policy Reports, September 15 and October 1, 1948, Vol. XXIV, Nos. 9 and 10
    13. L.H. Bean, “International Industrialization and Per Capita Income,” Studies in Income and Wealth (National Bureau of Economic Research 1946), Vol. 8, pp. 119-44
    14. Ernst Pelzer, “Industrialization of Young Countries and the Change in the International Division of Labor,” Social Research, September 1940, pp. 299-325
    15. N.S. Buchanan, “Deliberate Industrialization for Higher Incomes,” Economic Journal Volume 56, December 1946
    16. E. Staley, World Economic Development (I.L.O.)
    17. Great Britain Ministry of Works and Planning, Report of the Committee on Land Utilisation in Rural Areas (Scott Report), Parts I, II
    18. Great Britain, Royal Commission on the Distribution of the Industrial Population, Report (Barlow Report)
    19. T.R. Sharma, Location of Industries in India (2nd Edition), Chaps. XI-XV
    20. H. Perloff, Puerto Rico’s Economic Future
    21. W.A. Lewis, “Industrial Development in Puerto Rico,” Caribbean Economic Review, Vol. I, No. 1, December 1949
    22. S.S. Balzak et al., Economic Geography of the U.S.S.R.
    23. E.M. Hoover & J.L. Fisher, “Research in Regional Economic Growth,” in Problems in the Study of Economic Growth, National Bureau of Economic Research
    24. P. Neff et al., Production Cost Trends in Selected Industrial Areas
    25. R. Vining, articles on regional cyclical behavior, Econometrica, July 1945, January 1946, and July 1946; and Papers and Proceedings, American Economic Review, May 1949
    26. Interstate Commerce Commission, Dockets Nos. 29885 and 29886, pp. 55-165, Testimony of R. Vining
    27. Survey Research Center, Industrial Mobility in Michigan
    28. Hildebrand and Mace, “The Employment Multiplier in an Expanding Industrial Market: Los Angeles County, 1940-47,” Review of Economics and Statistics, August, 1950
    29. C. Clark, “The Distribution of Labour Between Industries and Between Locations,” Land Economics, May 1950

 

  1. Regional Implications of Aircraft and Atomic Power
    Required Reading and Reading Period Assignment

    1. Isard and Whitney, Atomic Power: An Economic and Social Analysis, entire book
    2. C. and W. Isard, “Some Economic Implications of Aircraft,” Quarterly Journal of Economics, Vol. 59, February 1945

Supplementary Reading

    1. National Resources Planning Board, Technological Trends and National Policy, Parts I, II
    2. W. F. Ogburn, “The Process of Adjustment to New Inventions,” in Technology and International Relations (ed. by W.F. Ogburn)
    3. H. Hart, “Technology and Growth of Political Areas,” in Technology and International Relations(ed. by W.F. Ogburn)
    4. A. J. Brown, Applied Economics, Chapter VII
    5. Isard and Lansing, “Comparisons of Power Cost for Atomic and Conventional Steam Stations,” Review of Economic Statistics, Vol. XXXI, August 1949
    6. Isard, “Some Economic Implications of Atomic Energy,” Quarterly Journal of Economics, Vol. LXII, February 1948
    7. W.F. Ogburn, Social Effects of Aviation, Parts I, II, III
    8. National Resources Planning Board, Transportation and National Policy, Part II, Section I, “Air Transport.”
    9. S. Schurr and J. Marschak, Economic Aspects of Atomic Power
    10. Isard and Whitney, “Atomic Power and Regional Development,” Bulletin of Atomic Scientists, Vol. VIII, April 1952

 

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003, Box 5, Folder “Economics, 1952-1953 (2 of 2).

___________________

Final Examination May, 1953

1952-53
HARVARD UNIVERSITY
ECONOMICS 235b

Answer question 1 and three others.

  1. Define and discuss briefly the following concepts:

(a) location quotient
(b) freight absorption
(c) income potential

  1. Evaluate the economic feasibility of a plan based on the concepts of “small man, small plant, and small town with diversified industry.”
  2. Discuss the thesis that the concept of a nodal or metropolitan region is increasing in significance for regional analysis.
  3. What are the various forces determining the location pattern of the iron and steel industry? How do they interact under several different sets of circumstances? Illustrate with diagrams.
  4. “If private enterprise is to engage in the production of both fissionable material and power for commercial use, the location in New England of a nuclear energy installation operated by private enterprise would tend to minimize the subsidy required of the federal government.” Evaluate this statement.

 

Source: Harvard University Archives. Final Exams—Social Sciences—June 1953 (HUC 7000.28), Vol. 99. Papers Printed for Final Examinations. History, History of Religions, …, Economics, …, Air Sciences, Naval Science. June, 1953.

Image Source:  Walter Isard, ca. 1960. From David Boyce presentation: Leon Moses and Walter Isard: Collaborators, Rivals or Antagonists.

Categories
Cambridge Exam Questions Germany

Cambridge. Exam question from a Ricardo quote translated into German, 1922

by Thomas Phillips, oil on canvas, circa 1821

 

 

The last post began with the exam question below taken from the 1922 Cambridge Economics Tripos.

Meanwhile at the Facebook outpost of Economics in the Rear-view Mirror Ross Emmett asked quite naturally “Who is the quote from?” Charles Robert McCann Jr did a Google books search on the quote and came up with a link to page 234 in Volume 5 of the series Ausgewählte Lesestücke zum Studium der politischen Ökonomie edited by Karl Diehl and Paul Mombert and published in 1912.

I was able to track down a pdf copy of the Diehl and Mombert volume at the University of Mannheim (see link below).  The quote actually comes from a Ricardo letter to Malthus quoted by Marshall in his Principles. The examination bastards board must have wanted to double-disguise the quote’s Ricardian/Marshallian origins, presuming the examinees would have been intimately familiar with Marshall’s Principles. Or perhaps this was merely a gratuitous test of German reading skills? Anyhow, mystery solved. You’re welcome!

_________________

Cambridge Economics Tripos
PART I

Monday, May 29, 1922. 9—12.
GENERAL ECONOMICS. I.

  1. “Ich bestreite nicht den Einfluss der Nachfrage weder auf den Getreidepreis noch auf dem Preis aller andern Dinge; aber das Angebot folgt ihr dicht auf den Fusse, und alsbald erlangt es die Macht, den Preis von sich aus eigenmächtig zu bestimmen, und indem es ihn regelt, ist er durch die Produktionskosten bestimmt.” Comment.

_________________

Where this German translation comes from

Alfred Marshall, “Note on Ricardo’s Theory of Value“: Anmerkung über Ricardos Werttheorie, Handbuch der Volkswirtschaftslehre, pp. 477-486. German translation from the 4th edition [sic] of Marshall’s Principles by Hugo Ephraim and Arthur Salz (Stuttgart and Berlin, 1905). Reprinted in Karl Diehl and Paul Mombert (eds.) Ausgewählte Lesestücke zum Studium der politischen Ökonomie, Band 5 Wert und Preis, II. Abteilung (Karlsruhe: 1912), p. 234.

_________________

Original: Ricardo to Malthus (1820)

“I do not dispute either the influence of demand on the price of corn or on the price of all other things; but supply follows close at its heels and soon takes the power of regulating price in his [sic] own hands, and in regulating it he is determined by cost of production.”

Source: Letter LXXIV (November 24, 1820) of Ricardo to Malthus, in James Bonar (ed.) Letters of David Ricardo to Thomas Robert Malthus, 1810-1823 (Oxford, 1887), p. 179.

Image Source: Thomas Phillips portrait of David Ricardo in 1821. Public domain copy at Wikimedia Commons.

Categories
Cambridge Exam Questions

Cambridge. Economics Tripos Examinations, 1922.

 

Links to economics examinations from the Economics Tripos at Cambridge University for other years:

Economics Tripos 1921.

Economics Tripos 1931.
Economics Tripos 1932.
Economics Tripos 1933.

_________________

PART I

Monday, May 29, 1922. 9—12.
GENERAL ECONOMICS. I.

  1. “Ich bestreite nicht den Einfluss der Nachfrage weder auf den Getreidepreis noch auf dem Preis aller andern Dinge; aber das Angebot folgt ihr dicht auf den Fusse, und alsbald erlangt es die Macht, den Preis von sich aus eigenmächtig zu bestimmen, und indem es ihn regelt, ist er durch die Produktionskosten bestimmt.” Comment.
  2. “In a sense all rents are scarcity rents, and all rents are differential rents” (Marshall). Comment on this statement.
  3. What are the chief social evils resulting from mal-investment of the community’s savings? What are the main causes of such mal-investment?
  4. “Profit is the test of service to the consumer.” Consider this defence of the economic motive.
  5. “Wages are determined by bargaining strength.”
    “Wages must correspond to the marginal net product of labour.”
    Are these views compatible ?
  6. “Whatever may be urged against attempts by the State to fix standard rates of pay, the fixing of maximum hours in all occupations has advantages that must outweigh any possible attendant drawbacks.” Comment.
  7. “In view of the heavy burdens of taxation under which British industry must for many years labour, it is inconceivable that we should quickly regain our pre-war position in our trade with those nations that do not suffer from similar handicaps.” Discuss this statement.
  8. “The fact that the general level of prices has fallen 40% during a period when the quantity of money has undergone little variation and production has been declining shows that the Quantity Theory provides a very inadequate explanation of the forces governing the general level of prices.” Comment.
  9. Discuss the view that the Law of Diminishing Returns is only a special case of a more general law of the combination of factors of production.
  10. How is the representative producer defined? Explain the use made of this idea in modern economics.

 

Monday, May 29, 1922. 1½—4½
RECENT ECONOMIC AND GENERAL HISTORY OF THE UNITED KINGDOM AND THE BRITISH EMPIRE.

  1. Consider the objects and results of the policy of enclosures in the late eighteenth and the early nineteenth centuries.
  2. Sketch the growth of British power in Asia during the Revolutionary and Napoleonic Wars.
  3. Discuss the causes of social unrest in England in the years immediately following the peace of 1815.
  4. “The accession of Queen Victoria coincided with serious troubles in our oversea dominions.” Explain what these were. Do you consider that they had any common cause?
  5. What were the principal causes of the expansion of British trade and industry between 1828 and 1853?
  6. Explain the causes of the flow of emigrants from the United Kingdom during the latter half of the nineteenth century and indicate to what extent the emigrants have gone to other parts of the British Empire.
  7. Consider the relative importance of the agricultural and the pastoral industries in the development of Canada and Australia.
  8. Discuss the influence of the gold discoveries in the Transvaal on the economic and political development of South Africa.
  9. “Between 1830 and 1880 British Labour turned from political to economic methods.” Explain the reasons for this and sketch the progress of the Labour movement in the United Kingdom in the period 1880-1914.
  10. To what extent did the great industries of England become localised during the nineteenth century? Explain the reasons for the localisation in each case.

 

Tuesday, May 30, 1922. 9—12.
SUBJECTS FOR AN ESSAY.

  1. The future of the world’s shipping industry.
  2. Subject races, mandates and protectorates.
  3. Modern applications of psychology to the study of industrial conditions.
  4. “The experiment of free government is not one which can be tried once for all. Every nation and every generation must try it for itself.”
  5. The economic transition in India.
  6. London as a financial centre.

 

Tuesday, May 30, 1922. 1½ — 4½.
RECENT ECONOMIC AND GENERAL HISTORY OF EUROPE AND THE UNITED STATES.

  1. “Napoleon suppressed the political and maintained the social and economic results of the Revolution in France.” Discuss this statement.
  2. Sketch the history of American political parties down to the formation of the Republican Party in 1854.
  3. “The long peace which Europe enjoyed after 1815 was due to the justice of the settlement made at Vienna.” Discuss this opinion.
  4. Account for the rapid spread of settlement over the Mississippi Valley.
  5. Compare the progress made in railway construction in France and Germany down to 1870 and the principles on which each country acted.
  6. What influence had economic forces on the causes and the result of the American Civil War?
  7. “Que devenait la question des compensations? C’est ce que tout le monde se demandait dans notre pays, où l’on jugeait avec raison l’équilibre européen et les intérêts de la France compromis par le subit et énorme accroissement de la puissance prussienne. C’était bien l’avis de Napoléon III.”
    Explain the position of France at this juncture. By what means and with what success did Napoleon III endeavour to improve it?
  8. “Kurz, wenn ich in der Wahl zwischen dem russischen und dem österreichischen Bündniss das letzte vorgezogen habe, so bin ich keineswegs blind gewesen gegen die Zweifel, welche die Wahl erschwerten.”
    Discuss the problem of German foreign policy here indicated. In what manner did Bismarck deal with it?
  9. Compare the industrial development of Germany and the United States since 1880.
  10. “America’s foreign policy is summed up in the Monroe Doctrine.” Examine the truth of this statement as applied to the period since 1865.
  11. “The mutual suspicion of England and Russia was always the most serious part of the Balkan problem.” Discuss this opinion.

 

Wednesday, May 31, 1922. 9—12.
GENERAL ECONOMICS. II.

  1. Give a formula for measuring elasticity of demand. Consider the meaning of unit elasticity, and test it by an example.
  2. What are external economies? Consider the relations of a business to (a) its locality, (b) its industry, (c) general national conditions.
  3. What is theoretically included in the National Dividend? Show the difficulties of avoiding leakage and double counting.
  4. Discuss the statement that “the standard of life is the standard of activities adjusted to wants.”
  5. Discuss the relation of mobility of labour to the problem of unemployment.
  6. Describe critically any two types of sliding scale as methods of payment of wages.
  7. “The shareholders’ ultimate control is based upon the fact that they bear the financial risk of the concern.” Consider this justification of the existing control of industry.
  8. “Si vraiment l’évolution industrielle conduit aux monopoles, il est clair qu’elle conduit aussi à l’établissement du socialisme intégral. Lorsque toutes les industries auront subi la transformation annoncée comme necessaire, lorsqu’elles n’auront plus qu’une tête, lorsque la concurrence aura partout disparu, il sera logique et fatal qu’elles soient nationalisées. ” Consider this view.
  9. What are the chief sources of demand for foreign bills? Under what conditions is each form of demand most active?
  10. On what principles should bank loans be regulated (a) in a period of rising prices, (b) in a period of crisis?

 

Thursday, June 1, 1922. 9—12.
GENERAL ECONOMICS. III.

  1. Discuss the extent to which the future development of Economic knowledge is dependent upon either (a) mathematical methods, or (b) statistical investigations.
  2. To what extent is modern advertising an economic waste?
  3. Explain one form of the theory of “overproduction” and discuss its validity.
  4. Discuss the merits, limitations and social potentialities of Profit Sharing.
  5. Explain the process of dealing in futures in any produce market and give some details.
  6. Discuss the alleged advantages of “devaluation” at the present time.
  7. Discuss the economic problems that have arisen through the accumulation of gold in the United States.
  8. What use can properly be made of banking statistics in judging the extent to which inflation or deflation is proceeding?
  9. What is the relation between the burden of the National Debt and the National Income in the immediate future?
  10. Discuss the modern tendency to use taxation as an instrument for modifying the distribution of wealth.

 

PART II

Monday, May 29, 1922. 9—12.
ECONOMIC PRINCIPLES.

  1. “Der Tausch ist, obgleich historisch älter als Ein- und Verkauf, in mancher Beziehung verwickelter.” Explain and elaborate.
  2. “Le fait est que l’abondance ou la rareté de l’argent, de la monnaie, ou de tout ce qui en tient lieu n’influe pas du tout sur le taux de l’intérêt, pas plus que l’abondance ou la rareté de la cannelle, du froment, ou des étoffes de soie.” Comment.
  3. How far can a policy of emigration be regarded as a remedy for unemployment?
  4. “There is no essential difference between domestic and international trade, and consequently no place for any special theory regarding the latter.” Discuss this statement.
  5. Examine the possible effects of inventions upon the economic rent of land.
  6. “A controlling influence over the relatively quick movements of supply price during short periods is exercised by causes in the background which range over a long period.” Indicate some of the ways in which such an influence may be exercised; and examine the general significance of the above proposition.
  7. Do you consider that it would be good policy for a country like Great Britain to discourage the export of capital?
  8. “The problems of distribution and exchange are so closely connected that it is doubtful whether anything is to be gained by the attempt to keep them separate.” Discuss this statement.
  9. Examine critically the assistance given to economic analysis by the method of classifying industries under the headings of (a) decreasing, (b) constant, (c) increasing returns.
  10. “Now the quantity of wealth abstained from is gauged by its value; and its value depends on its cost of production. If, then, we introduce abstinence as an element in determining value, and value as a factor in the measure of abstinence, we are clearly guilty of using the thing to be measured as part and parcel of our standard for measuring it.” Comment.

 

Monday, May 29, 1922. 1.30—4.30.
ECONOMIC FUNCTIONS OF GOVERNMENT.

  1. State, in its most plausible form, the principle of minimum sacrifice in relation to taxation, and consider its practical application. Is there a corresponding principle of maximum benefit, which is applicable to public expenditure?
  2. Is it desirable to subsidise from public funds (a) housing, (b) postal services, (c) University education?
  3. Examine the nature of the real burden of a public debt. For what purposes and within what limits is it legitimate to borrow in order to meet public expenditure?
  4. Examine the special arguments in favour of protective duties on imports from countries with depreciated foreign exchanges.
  5. “Expenditure on armaments is economic waste.” “The services of soldiers and sailors form part of the national dividend, no less than the services of policemen, plumbers and physicians.” Discuss these statements.
  6. Discuss the possibility of taxing a monopolist in such a way as to induce him to lower his selling price, and consider the practical difficulties in the way of making such a policy effective.
  7. “The removal of taxes on articles of working-class consumption will enable employers to reduce wages and will, therefore, benefit employers and not workmen.” Examine this view, distinguishing between cases where wages (a) are, and (b) are not, paid on a cost-of-living sliding-scale.
  8. In most countries, the State regulates the employment of women and children in industry more extensively and more stringently than that of men. Can this discrimination be justified on economic grounds? Consider separately the regulation of (a) wages, (b) hours, (c) working conditions.
  9. “Contrairement à ce qui se passe en Prusse, où la régie des chemins de fer, instrument fiscal, verse ses produits dans la caisse de l’Etat, en Suisse la régie garde pour elle ses bénéfices, de même qu’elle supporte les pertes, s’il s’en présente.” Which of these two arrangements do you consider the better, and why?
  10. “Eine gleichmässige Wertsteuer von allen wirtschaftlichen Gütern, oder was dasselbe heisst, eine Steuer auf den Aufwand, ist von vornherein die beste Steuer, denn sie leitet den Aufwand der Individuen nicht aus seinen natürlichen Kanälen.” Comment

 

Tuesday, May 30, 1922. 9—12.
MONEY, CREDIT AND PRICES.

  1. Discuss the influence exerted upon the general level of prices by a change in the amount of credit granted by manufacturers and traders to their customers. Would you treat trade- credit as “money” in expounding the Quantity Theory?
  2. “No bank can lend more money than is deposited with it.” Examine this statement and, in particular, its bearing upon the power of banks to increase the supply of money.
  3. Enumerate the principal items in the “Floating Debt” of the British exchequer. Would the general level of prices be either lowered or made steadier if a large part of this debt were (a) converted into long-term loans, (b) paid off out of taxation? Support your conclusions by arguments or evidence.
  4. Compare the present position of the Bank of England in the London money market with its position before the war, paying special attention to its power of controlling credit. Are the changes which have occurred likely to be permanent?
  5. How would you construct an index-number of prices to be used in testing the view that the foreign exchanges tend towards “purchasing-power parity”? Should such an index- number differ from one designed to measure the changes in expenditure necessary to enable a particular class of people in a particular country to purchase the same “standard of comfort” at different dates?
  6. Discuss the practicability of stabilising the price-level by currency regulation. Would this make for stability of trade?
  7. Compare the situation which developed in the London money market in August 1914 and the measures which were taken to meet it with the corresponding features of previous crises.
  8. Examine the causes which influence the day-by-day rate in the London money market, and discuss its relation with the Bank Rate.
  9. What were the principal respects in which the pre-war banking systems (a) of the United States, (b) of Germany differed from that of Great Britain?

 

Tuesday, May 30, 1922. 1.30—4.30.
DISTRIBUTION AND LABOUR.

  1. In several recent arrangements for changes in wages equal weekly amounts, instead of pro rata amounts, have been added or subtracted over a wide range of districts and occupations within an industry. Discuss the effect of this on the supply of labour to districts and occupations.
  2. Describe any one of the existing scales connecting wages to the index-number of Cost of Living. Discuss the view that these scales eliminate the variability in the purchasing power of currency and so facilitate wage-bargaining in relation to other factors.
  3. To what extent could industry accommodate itself to fluctuations of demand if there was no reserve of labour and if no overtime was worked? Is there any economic justification for paying higher rates of wages for overtime?
  4. Under what circumstances is the argument for a legal minimum wage strongest? Why in fact does the minimum continue in coal-mining while it is abolished in agriculture?
  5. How far does the classification of income by economic categories (arising from capital, enterprise, labour, etc.) correspond to a classification by persons? What were the sources and nature of information before the war about incomes of persons and how far are these sources still available?
  6. Distinguish between co-partnership and profit-sharing. Why are these methods commonly disliked by organised labour?
  7. Consider the advantages and disadvantages of bonus systems of wage payment, giving examples of such systems.
  8. In what way and to what extent does the provision of friendly benefits by a trade-union affect its bargaining power? Why do some unions provide large friendly benefits and others scarcely any?
  9. “The theory that people tend to receive as their remuneration the marginal net product of their services amounts, when analysed, to no more than that they tend to get what they tend to get.” How far is this criticism justified?

 

Wednesday, May 31, 1922. 9—12.
STRUCTURE AND PROBLEMS OF MODERN INDUSTRY.

  1. Examine the claims of industrial combinations to promote industrial stability.
  2. “There are few who do more to increase the efficiency of labour in creating material wealth than an able and upright company promoter.” Comment.
  3. To what principal causes would you attribute British predominance in the shipping trade during the last half century? Analyse the influence on British shipping of the country’s Free Trade policy.
  4. How would you expect a great development in the means of transport and communication to affect the localisation of industry?
  5. In what types of industry is there (a) the strongest, (b) the weakest case for the ownership or control of industry by the State?
  6. To what extent is the large amount of time and money devoted by many manufacturers to advertisement, and selling organisation generally, evidence (a) of the existence of “increasing returns,” (b) of the wastefulness of competition?
  7. Discuss the probable limits to the future growth of the British co-operative movement. How might the question be affected by a marked change in the distribution of income?
  8. Consider and weigh against one another the arguments for and against greater publicity regarding business profits.
  9. “The necessity that those who bear the risks should exercise the control bars out all projects for workers’ control of industry.” “Workers’ control of industry is justifiable on the ground that they alone bear the risks of unemployment, accident and fluctuating wages.” Discuss these statements.

 

Wednesday, May 31, 1922. 1.30—4.30.
SUBJECTS FOR AN ESSAY.

  1. “Nothing is true in theory which is not also true in practice.”
  2. The relation of economics to ethics.
  3. The prospects of the League of Nations.
  4. Free Trade.
  5. Population — quantity and quality.
  6. “For each age is a dream that is dying,
    Or one that is coming to birth.”

 

Thursday, June 1, 1922. 9—12.
MISCELLANEOUS ECONOMIC QUESTIONS.

  1. “The assertion that unemployment is due to German reparations must mean that, owing to reparations, German goods are flooding our markets to a far greater extent than before the war. In fact, the proportion of such goods brought to this country last year was only one-quarter of what it was before the war.” Mr Bonar Law in the House of Commons. Comment.
  2. Distinguish the more important forms of economic pro vision for the future. Do you consider that the provision normally made in modern societies, under any of these forms, is either markedly excessive or markedly inadequate?
  3. The national capital may be estimated either by capitalising income or by multiplying the value of estates passing by death in a year by an appropriate factor; the latter method yields the smaller result. Can the discrepancy be explained by differences in definition of national capital?
  4. Distinguish the various types of inheritance tax which are, or might reasonably be imposed in modern communities, and compare their economic effects.
  5. Distinguish the chief causes of trade fluctuations in this country since 1918, and estimate their comparative importance.
  6. Show how the conception of the elasticity of demand as applied to an individual’s desire for income throws light upon (a) the effect of changes in wage-rates upon output, (b) the effect of taxation upon enterprise and saving.
  7. Discuss the more important conclusions which may be drawn from recent enquiries into industrial fatigue.
  8. “Reduction of wages causes reduction in purchasing power and therefore results in decreased rather than in increased employment.” Is there any element of truth in this statement?
  9. Is it reasonable that the cost of roads should fall mainly on the community and the cost of railroads on the users thereof?

 

Thursday, June 1, 1922. 1.30—4.30.
THE THEORY OF STATISTICS.

  1. How far does the precision of measurement of prices by index-numbers depend (a) on the theory of sampling, (b) on the theory of weighted averages? In your answer distinguish between the purposes for which such numbers are used.
  2. Discuss what system of averages, measurements of dispersion, etc. is best suited for comparing two wage groups, such as follows:

Wages of men working full time for a week in 1906
Cotton Industry

Woollen and
Worsted Industry

Under 15/-

 19 18
15/- ____ 141

134

20/- ____

 244 316
25/- ____ 193

206

30/- ____

 126

197

35/- ____

 87 65
40/- ____ 86

31

45/- ____

 58 10
50/- ____ 31

8

55/- ____

 10 3
60/- ____ 3

6

65/- and above

 2 6
1000

1000

Without doing the complete arithmetical work, show the method of calculation for the system you prefer.

  1. {{\mu }_{2}},{{\mu }_{3}},{{\mu }_{4}} are the second, third and fourth moments about the average of a frequency group containing an indefinitely great number of quantities. A variable y is formed by selecting two quantities from the group independently and adding them. M2, M3, M4 are the moments about its average of the frequency distribution of y.

Show that {{M}_{2}}=2{{\mu }_{2}}, {{M}_{3}}=2{{\mu }_{3}},, and {{M}_{4}}-3M_{2}^{2}=2\left( {{\mu }_{4}}-3\mu _{2}^{2} \right).

Assuming, that y is formed by the addition of n (instead of 2) quantities then {{M}_{2}}=n{{\mu }_{2}}, {{M}_{3}}=n{{\mu }_{3}}, {{M}_{4}}-3M_{2}^{2}=n\left( {{\mu }_{4}}-3\mu _{2}^{2} \right), show that when n is great the frequency curve of y satisfies the conditions for Type VII (the normal curve) in Professor Pearson’s system.

  1. Show that Pareto’s Law for the distribution of incomes, N=\frac{A}{{{x}^{\alpha }}}, where N is the number of incomes above x units, and A and \alpha are constants, leads to the law “average of incomes above x varies directly as x.”
    Test graphically and otherwise whether Pareto’s law is satisfied by the following figures and estimate roughly the value of \alpha .

Number of Persons Assessed to Super-Tax, 1916-17

Income

Number

Exceeding

Not exceeding

£

 £
3000 5000

16,065

5000

 10,000 10,306
10,000 50,000

5272

50,000

 100,000 239
100,000 ___

103

31,98

 

  1. Newton’s interpolation formula may be written

y={{y}_{0}}+\frac{x-{{x}_{0}}}{h}\cdot {{\Delta }_{0}}+\frac{x-{{x}_{0}}}{h}\cdot \frac{x-{{x}_{0}}-h}{2h}\Delta _{0}^{2}+....
State on what hypothesis it rests, and illustrate its use by estimating the number of wage-earners between 30/- and 32/- in the Cotton Industry (Question 2), using only the four entries 244, 193, 126, 87.

  1. Explain the terms “crude death-rate,” “standardised death-rate,” “correcting factor.”
    Give an account of the two methods in use for removing the local variations in age distribution which vitiate the utility of the crude death-rate and consider whether they may be expected to give approximately the same result.
  2. Under what conditions may a regression locus be expected to be approximately rectilinear?
    Estimate the correlation coefficient between girth and height from the following data:

Height
inches

 Number of instances Average girth
60 2

32.7

61

 7 33.6
62 9

33.5

63

 14 34.2
64 18

34.1

65

 14 34.7
66 14

34.7

67

 12 35.0
68 10

35.1

69

 7 35.5
70 3

36.3

110

Height: average 65.6, standard deviation 2.52.
Girth : average 34.5, standard deviation 1.66.

  1. The notation used in connection with the Life Table (stationary population) is based on successive values of lx, the number of persons who reach the precise age of x.

Express the central death-rate (mx), the force of mortality ({{\mu }_{x}}), and the complete expectation of life in terms of these values.

Show that {{m}_{x}}={{\mu }_{x+\left( {1}/{2}\; \right)}}, if the line representing survivals is regarded as straight in the neighbourhood of x.

  1. “Bernoulli’s Theorem exhibits algebraical rather than logical insight.” Comment.

Source:  Economics Tripos Papers, 1921-1926, pp. 21-36.

Image Source: Cambridge University, St. John’s Library from website Vintage Postcards.

Categories
Chicago Exam Questions Suggested Reading Syllabus

Chicago. Theory of Distribution. Readings and exam questions. Metzler, 1961-64

 

In the early 1960s Lloyd A. Metzler taught a course at the University of Chicago that offered a mélange of production, capital, fiscal, growth and international trade theories as a/the “theory of distribution”. It is fascinating to see these very different theoretical streams converging on the topic of distribution. 

_________________________

ECONOMICS 302
Reading List—Spring, 1961

THEORY OF DISTRIBUTION
L. A. Metzler

Principal Topics and Suggested Reading

I. Production Functions and Income Distribution

Paul H. Douglas, “Are There Laws of Production?” American Economic Review, XXXVIII, No. 1, March 1948.

D. Gale Johnson, “The Functional Distribution of Income in the United States, 1850-1952,” The Review of Economics and Statistics, XXXVI, No. 2, May 1954.

Solomon Fabricant, Basic Facts on Productivity Change, Occasional Paper No. 63, National Bureau of Economic Research.

II. Capital and the Concept of Income

Knut Wicksell, Lectures on Political Economy, Vol. I, Part II.

Frank H. Knight, “The Quantity of Capital and the Rate of Interest,” Part 1, Journal of Political Economy, August, 1936, Part 2, Journal of Political Economy, October, 1936.

T. W. Schultz, “Investment in Human Beings Capital,” American Economic Review, March 1961.

Irving Fisher, The Theory of Interest (1906), reprinted by Kelley and Millman, New York, 1954.

III. Investment and Economic Growth

Evsey Domar, Essays in the Theory of Economic Growth, New York, Oxford University Press, 1957, Chapter 1.

Walter W. Rostow, The Process of Economic Growth, New York, 1952.

Trygve Haavelmo, A Study in the Theory of Investment, University of Chicago Press.

J. M. Keynes, The General Theory of Employment, Interest and Money, Chapters 11-14.

A. P. Lerner, “On the Marginal Product of Capital and the Marginal Efficiency of Investment,” Journal of Political Economy, February, 1953.

James Tobin, “A Dynamic Aggregative Model,” Journal of Political Economy, April, 1955.

IV. The Economic Consequences of Public Debt

James Buchanan, Public Principles of Public Debt, Irwin, 1958.

Lloyd A. Metzler, “Wealth, Saving and the Rate of Interest,” Journal of Political Economy, April, 1951.

Robert A. Mundell, “The Public Debt, Corporate Income Taxes, and the Rate of Interest,” Journal of Political Economy, December, 1960.

J. R. Hicks, “Mr. Keynes and the ‘Classics’: A Suggested Interpretation,” Econometrica, Vol. V, April 1937.

IV. International Trade and the Distribution of Income

Bertil Ohlin, Interregional and International Trade, Harvard University.

Wolfgang Stolper and Paul Samuelson, “Protection and Real Wages,” Review of Economic Studies, IX (1941), 58-73.

David Ricardo, Principles of Political Economy and Taxation, Chapter 7.

_________________________

ECONOMICS 302
Reading List—Spring, 1963
[same for Spring, 1964]

THEORY OF DISTRIBUTION
L. A. Metzler

I. Production Functions and Income Distribution

Paul H. Douglas, “Are There Laws of Production?” American Economic Review, XXXVIII, No. 1 (March, 1948).

D. Gale Johnson, “The Functional Distribution of Income in the United States, 1850-1952,” The Review of Economics and Statistics, XXXVI, No. 2 (May, 1954).

Solomon Fabricant, Basic Facts on Productivity Change, Occasional Paper No. 63, National Bureau of Economic Research.

Marvin Frankel, “The Production Function: Allocation and Growth,” American Economic Review, LII, No. 5 (December, 1962).

Kenneth Arrow, Hollis B. Chenery, Nigicha Minhas, and Robert M. Solow, “Capital-Labor Substitution and Economic Efficiency,” Review of Economics and Statistics, XLII, No 3 (August, 1961).

R. M. Solow, “A Skeptical Note on the Constancy of Relative Shares,” American Economic Review, XLVIII (1958).

II. Income, Interest, and the Concept of Capital

Knut Wicksell, Lectures on Political Economy, Vol. I, Part II.

Frank H. Knight, “The Quantity of Capital and the Rate of Interest,” Part I, Journal of Political Economy (August, 1936), Part II, Journal of Political Economy (Oct., 1936).

T. W. Schultz, “Investment in Human Capital,” American Economic Review (March, 1961).

Irving Fisher, The Theory of Interest (1906), reprinted by Kelley and Millman, New York, 1954.

David Meiselman, The Term Structure of Interest Rates, Prentice-Hall, Inc., 1962.

[Handwritten addition:] J. A. G. Grant, “Meiselman on the Structure of Interest Rates: A British Test,” Economica, New Series, Vol. XXXI, No. 121, Feb. 1964.

Friedrich A. Lutz, “The Structure of Interest Rates,” Quarterly Journal of Economics, 1940-41. Reprinted in American Economic Association, Readings in the Theory of Income Distribution (eds.) William Fellner and Bernard Haley.

J. R. Hicks, Value and Capital, Oxford at the Clarendon Press (2d ed.), Parts III and IV.

Lloyd A. Metzler, “Wealth, Saving and the Rate of Interest,” Journal of Political Economy, LIX, No. 2 (April, 1951).

Robert A. Mundell, “The Public Debt, Corporate Income Taxes, and the Rate of Interest,” Journal of Political Economy, LXVIII (December, 1960).

III. Production Functions, Innovations and Economic Growth

Evsey Domar, Essays in the Theory of Economic Growth, New York: Oxford University Press, 1957, Chapter 1.

Walter W. Rostow, The Process of Economic Growth, New York, 1952.

Trygve Haavelmo, A Study in the Theory of Investment, University of Chicago Press.

Hirofumi Uzawa, “On a Two-Sector Model of Economic Growth,” Review of Economic Studies, XXIX, No. 1 (1962).

T. W. Swan, “Economic Growth and Capital Accumulation,” Economic Record, XXXII (1956).

James Tobin, “A Dynamic Aggregative Model,” Journal of Political Economy (April, 1955).

IV. International Trade and the Distribution of Income

Wolfgang Stolper and Paul Samuelson, “Protection and Real Wages,” Review of Economic Studies, IX (1941).

Paul Samuelson, “International Trade and the Equalization of Factor Prices,” Economic Journal, LVIII (1948).

Paul Samuelson, “International Factor Price Equalization Once Again,” Economic Journal, LIX (1949).

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Papers of Lloyd A. Metzler, Box 9, Folder “Reading Lists 300A+B—302”.

_________________________

Economics 302
FINAL EXAMINATION
Spring Quarter, 1963

Lloyd A. Metzler
June 4, 1963

Answer all questions:

  1. Give the formula for the Cobb-Douglas production function and prove its implications with respect to the following:
    1. The effects of a uniform increase in capital and labor upon relative and absolute wages and interest rates on the assumption that competitive conditions exist in both the factor markets and the commodities markets.
    2. The effect of a rise in the ratio of capital to labor upon relative and absolute wages, and interest rates again on the assumption of competitive conditions.
  2. Answer the same questions for the C.E.S. production function.
    1. State what is meant by a production function which is homogeneous of the first degree.
    2. Show that if a production function possesses this type of homogeneity, the output per worker depends entirely upon the ratio of capital to labor, and not at all upon the scale of production.
    3. Prove that the Cobb-Douglas production function and the C.E.S. function are both homogeneous of the first degree.
  4. The U. S. Treasury wants to reduce the long-term interest rate so as to encourage investment and at the same time increase the short-term rate so as to prevent short-term capital outflows. For this purpose it has been shortening the term structures of the federal debt. That is, the treasury has been purchasing its long-term bonds and issuing short-term bonds as a substitute.
    1. Show how such an operation might be expected to achieve the desired results.
    2. In view of the expectations hypothesis investigated by David Meiselman, would you expect such an operation to achieve its purpose? Explain carefully.
    1. Distinguish between the expectations hypothesis concerning the term structure of interest rates and the liquidity preference hypothesis and show what each implies with respect to the term structure of interest rates.
    2. Which hypothesis does the historical evidence seem to support?
    3. Is there any way of reconciling the two views?
    1. Given the yield on long-term bonds, R1, R2,…, Rn, show how a series of expected forward rates for one-year bonds r1, r2, r3,…, beginning in years 1, 2, 3, can be derived from the yield table on long term bonds. What operations would a bond holder need to undertake in order to be sure that he would receive these expected forward rates in spite of changes in bond prices?
    2. Derive the formula for the yield of a three-year forward bond, with interest rates applicable at the end of the third year, and show again, how a bondholder can realize this yield through operations in the bond market, regardless of fluctuations in bond prices.

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Papers of Lloyd A. Metzler, Box 9, Folder “Exams 302”.

_________________________

ECONOMICS 302
COURSE EXAMINATION — SPRING, 1964

Lloyd A. Metzler
June 9, 1964
1:30—3:30

ANSWER ALL QUESTIONS

  1. In the theory of distribution, it is usual to assume that the production function for output as a whole is homogeneous of the first degree.
    1. What is the meaning of a homogeneous production function?
    2. Show that homogeneity implies that commodities are produced at constant cost.
    3. Show that if the production function is homogeneous of the first degree and all factors of production are paid according to the value of their marginal products, the total amount paid will be exactly equal to the total return.
    4. Is it necessary to have homogeneous production functions to prove this proposition? Why, or why not?
    1. Define “elasticity of substitution” and show what bearing it has on the distribution of income.
    2. The following is a table indicating indexes of units of capital k and the price of capital, pk, as well as the units of workers, w, and the price of workers, pw.
P Price of workers
(pw)		 Units of workers
(w)		 Price of capital
(pk)		 Units of capital
(k)
Period I 1.00 200 2.00 100
Period II 2.00 250 1.00 500

Does this table give any indication as to the elasticity of substitution? Why, or why not?

    1. Define the Cobb-Douglas production function and the C.E.S. production function and show that: Cobb-Douglas production function is homogeneous of the first degree with an elasticity of substitution equal to unity.
    2. Show that the C.E.S. production function is homogeneous of the first degree.
    3. Show that, when \rho approaches zero the C.E.S. production function has an elasticity of substitution equal to unity.
    1. Define and evaluate the capital theories of the following economists:
      (1) T. W. Schultz
      (2) Irving Fisher
      (3) Knut Wicksell
      (4) F. H. Knight
    2. What are Knight’s objections to the notion of a period of production? Why does he believe there are no diminishing returns to the accumulation of capital?
    1. Derive the Harrod-Domar concept of a balanced state of growth, and show why it is inherently unstable.
    2. How is the concept of balanced growth related to Keynes’ theory of employment?
    1. Discuss the following theories of interest, and show how they are related to the term structure of interest rates.
      (1) Liquidity preference.
      (2) Expectations.
      (3) Constitutional weakness in the futures market.
    2. Does a downward-sloping term-to-maturity structure of interest rates conflict with the liquidity-preference theory? Why, or why not?
    3. Assuming that the interest rates for bonds of various maturities are as follows:
      year bonds R1
      2. year bonds R2
      3. year bonds R3
      4. year bonds R4
      5. year bonds R5
      6. year bonds R6
      7. year bonds R7
      8. year bonds R8
      Show how the implicit forward rates for short-term one year bonds r1, r2, r3, r4, r5, r6, r7, r8can be computed from the actual market yields, R1, R2, R3, R4, R5, R6, R7, R8.
    4. Assuming that the market rates are R1, R2, R3, R4, R5, R6, R7, R8, you are asked to derive the rate for a 3 year bond beginning in year 6 and show what market transactions the typical bondholder would have to make to insure that he actually received the interest rate implicit in this formula.

 

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Papers of Lloyd A. Metzler, Box 9, Folder “Exams 302”.

Source Image: Posting by Margie Metzler on the Metzler Family Tree at the genealogical website, ancestry.com.