Category: UCLA

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Exam Questions Money and Banking UCLA

UCLA. PhD Qualifying Exam, Money. May 1980

This post adds a fourth Ph.D. qualifying exam for the field of monetary economics at UCLA found in the papers of Robert W. Clower at the Economists’ Papers Archive at Duke University. 

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UCLA Qualifying Exams, Money
Previously posted

May 1971
May 1973
May 1974

_______________________

Ph.D. Qualifying Examination
Four Hours

MONEY

Spring Quarter 1980
May 19, 1980

INSTRUCTIONS: Answer all of the following eight questions. Be as specific and concise as possible. There is plenty of writing time to answer all of the questions satisfactorily, so try to spend some time thinking about each question before beginning to write an answer to it. Irrelevant material presented, however correct it may be, will be penalized.

  1. —
    1. Outline a proof of Patinkin’s proposition that real balances are indeterminate under a classical dichotomy between real and monetary sectors.
    2. Why is the proof inappropriate in a classical money economy, one with competitive banking and convertibility of paper money into a real commodity?
  2. —
    1. What special problem(s) does a limited horizon create for an inconvertible paper money system in which the money supplier is not committed to retire the issue?
    2. If we assume an unlimited horizon (a positive probability that the economy will last forever) do some problems still remain? If so, could governmental suppliers of money avoid such problems? Could a private money supplier?
  3. —
    1. What is the statically optimal rate of inflation in a competitive economy with a noninterest-bearing fiat money?
    2. Would you recommend adoption of this rate of inflation as a long-run policy guideline for the U.S. economy? Explain.
  4. In the standard Walrasian model of General Equilibrium an efficient allocation of resources is achieved without the use of any device called “money.” Yet the introduction and use of money is usually presumed to generate economic gains. How would you resolve this apparent conflict? Be specific in defining what you think “money” is and in identifying possible sources of economic gains.
  5. On the basis of arguments by Mickey Mouse and other leading economists, Congress in 1980 terminated all open-market operations by the Federal Reserve System and declared fine tuning through the use of monetary policy to be the moral equivalent of aggravated assault. Discuss the probable implications of this action for
    1. The rate of inflation
    2. Rates of interest
    3. Unemployment
    4. Government expenditure during the decade of the 1980’s.
  6. A few years ago an economist wrote a letter to the Wall Street Journal complaining that much discussion of how to control inflation was based on a neo-quantity theory that emphasized “the quantity of money” but ignored “the quality of credit.” The Federal Reserve System was established, he noted, to regulate commercial bank assets, but current discussion (and policy) concentrated on the liability side of the commercial bank balance sheet and entirely ignored the asset side. The economist maintained that if, for example, commercial banks were forced to limit their lending activity to short-term, self-liquidating business loans, as initially contemplated in the Federal Reserve Act of 1913, inflation would quickly be controlled. Evaluate this argument.
  7. When bank credit cards were initially spreading through the U.S., many people argued that their use would contribute to inflation because retailers would pass on — through higher prices — the charges that they had to pay to banks for credit sales. Some people argued, however, that prices would fall because the use of credit cards would reduce overall transactions costs. Yet others argued that prices might rise or fall, depending upon the precise effects of the use of such cards upon sales volumes and upon the velocity of money. Critically assess each of these arguments.
  8. It is customary for economic theorists to distinguish in their work between “barter” and “monetary” economies, and also between “value theory” and “monetary theory.”
    1. On what basis are these distinctions made (give specific references to the literature if you can)?
    2. Do you believe the distinctions are useful? If so, explain why; if not, explain why not.

Source: Duke University. Economists’ Papers Archive. David M. Rubenstein Rare Book & Manuscript Library. Robert W. Clower papers, Box 4, Folder “Monetary Economics PhD exams. Reading list, exams UCLA 1971-1988”.

 

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Exam Questions Money and Banking UCLA

UCLA. PhD Qualifying Exam, Money. May 1974

This post adds a third Ph.D. qualifying exam for the field of monetary economics at UCLA found in the papers of Robert W. Clower at the Economists’ Papers Archive at Duke University. 

In other news, the U.S. House Committee on the Judiciary was between its first (May 9) and second (July 24) days of hearings regarding the impeachment of Richard Nixon.

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UCLA Qualifying Exams, Money
Previously posted

May 1971
May 1973

_____________________________

Spring Quarter 1974
May 24, 1974

Ph.D. Qualifying Examination
MONEY

Four Hours

INSTRUCTIONS: Answer all of the following eight questions. Be as specific and rigorous as possible. There is plenty of writing time to answer all of the questions satisfactorily so try to spend a sufficient amount of time thinking before beginning to write. Irrelevant material presented, however correct, will be penalized.

  1. State whether each of the following statements Is true, false, or uncertain and then briefly explain your answer. Your grade depends entirely upon your explanation.
    1. In countries which undergo frequent, large changes in the rate of monetary growth, changes in the rate of monetary growth have little impact on real income compared to the effect those changes would have had had monetary growth been more stable.
    2. No great error is introduced into the analysis of aggregate demand by assuming that the real income elasticity of the demand for money is unity for short-term fluctuations.
    3. Lags in the adjustment of the rate of inflation to changes in the rate of growth of the money supply imply a cyclical adjustment of the rate of inflation.
    4. If governments do not intervene, floating exchange rates imply a zero balance of payments deficit on the liquidity basis.
    5. A lag in adjustment of the rate at which banks pay interest on demand deposits implies a larger short-run than long-run effect on aggregate demand from equal changes in government spending and borrowing.
    6. If all wage contracts had escalator clauses (i.e., were tied to the price level), inflation would be self-perpetuating.
  2. According to a well-known principles textbook: “The general price level usually rises when GNP is high relative to the physical productive capacity of the economy; similarly, prices generally decline when GNP is low relative to capacity, as during the 1930’s.” In fact, wholesale prices in the U.S. declined almost 50% between 1869 and 1890 although output was generally high relative to capacity during most of this period; and wholesale prices rose nearly 50% between 1932 and 1938 although unemployment during these years ranged between 17% and 25% of the labor force.
    Suppose a diligent student in a class you are teaching confronts you with the quotation and the facts above, How would you answer?
  3. An economist recently wrote a letter to the Wall Street Journal complaining that much discussion of how to control Inflation has been based on a neo-quantity theory which emphasizes the “quantity of money” while ignoring the “quality of credit.” Central banks (he noted) have been established to regulate commercial bank assets, but current discussion and policy concentrates on the liability side of the commercial bank balance sheet and entirely ignores the asset side. He maintained that if, for example, commercial banks were forced to limit their lending activity to short-term, self-liquidating business loans, inflation would quickly be controlled. What do you think of this argument? Explain in detail.
  4. “Only real magnitudes appear as arguments in individual utility functions; accordingly, the rate of inflation of money prices (a strictly nominal phenomenon) is of no welfare significance for individuals or for society at large.” Discuss critically.
  5. A recent Wall Street Journal article noted the rapid rise both in the level of short-term interest rates and in the rate of growth of money that has occurred over the past few months. The reporter explained this phenomenon by asserting that individuals in the money market took the increase in the rate of growth of money as an indication that the Fed would later have to tighten up and therefore bid up interest rates in anticipation of this. Carefully evaluate this explanation and, if you disagree with it, present an alternative explanation.
  1. The recent rise in short-term interest rates has led to much talk about financial disintermediation.
    1. Describe this process of “disintermediation.”
    2. What is the effect of “disintermediation” on the rate of growth of money?
    3. What are the socially harmful effects of such “disintermediation?”
    4. What changes in financial institutional arrangements would you suggest to prevent such “disintermediation” from occurring?
  2. The Panamanian monetary unity is the same as that of the United States, and the circulating medium consists of U.S. coins and paper dollars. The Panamanian government cannot issue currency (it does mint coins, but this can be neglected from this problem), nor does Panama have a central bank. What monetary and fiscal tools would be available to the Panamanian Minister of Economics? What contracyclical policies are possible under what conditions?
  3. There has been much discussion recently of the effects of international conditions on domestic inflation. Discuss the effects of each of the following foreign factors on the U.S. inflation rate, making explicit any assumptions you are using in your analysis.
    1. a world-wide boom
    2. a Russian wheat failure
    3. an Arab oil boycott

Source: Duke University. Economists‘ Papers Archive. David M. Rubenstein Rare Book & Manuscript Library. Robert W. Clower papers, Box 4, Folder “Monetary Economics PhD exams. Reading list, exams UCLA 1971-1988”.

Image Source: UCLA Daily Bruin at archive.org.

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Exam Questions Fields Money and Banking UCLA

UCLA. PhD Money Qualifying Examinations. Klein, Thompson, Clower, Darby. 1973

While material for the Harvard economics department has and will dominate the flow of content at Economics in the Rear-view Mirror, I will try to post items from other colleges and economics, if for no other reason than to get a change of scenery. So in this post we head out to UCLA to see what Ph.D. candidates who selected Money as a subject for a comprehensive examination were asked. The exam is transcribed from a personal copy of Robert Clower found in this papers. So from UCLA to Duke to you via Berlin.

Note the examination committee for May 1973 has been identified, one might presume that most if not all members also were involved in the October 1973 examination transcribed below.

Previously posted:

May 1971 Field Exam 

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Meet the members of the Ph.D. Comprehensive Field Exam for Money
(UCLA, Spring, 1973)

Chairman, Benjamin Klein (b. 1943. Ph.D. University of Chicago)

Earl Thompson (b. 1938; d. 2010. Ph.D. Harvard University, 1961)

Michael Darby (b. 1945. Ph.D. University of Chicago, 1970)

Robert W. Clower (b. 1926; d. 2011.  D.Litt. Oxford University 1978)

For much, much more:  The Essential UCLA School of Economics by David R. Henderson and Steven Globerman.

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Memo on Comprehensive Field Exams
in the UCLA Economics Department

April 5, 1973

TO: Economics Department Faculty
FROM: The Graduate Committee and the Acting Chairman
SUBJECT: Comprehensive Field Examinations

Some faculty members have indicated to members of the Graduate Committee uncertainty about their roles and responsibilities in the examination process. The following notes may serve to lessen those uncertainties.

Each of the eleven areas designated as “fields” by the Department has a committee charged with the responsibility for composing the examination and measuring the accomplishments of our students. While the duties involved with conducting these examinations are onerous, the exams have played a central part in the graduate curriculum and are, therefore, worthy of considerable effort.

Typically, the person named chairman of the field solicits questions for the examination from all the other members of the committee. In some cases, his solicitation may go beyond the committee to other department members as well. Usually, he then composes the examination and, before submitting it to the graduate secretary to be typed, circulates a draft copy among the committee members to seek their consensus about balance and format. In particular, it is not intended that the chairman have unilateral authority with respect to the exam’s content.

After the examination has been administered to the students, the results are evaluated. All committees, to our knowledge, have at least two members read every answer. In fields in which the number of students is small, all members read all the answers.

Finally, in order to grade the examination, most committees schedule a meeting at which some consensus about grades is forged. At such meetings, a member who has strong feelings about the qualities (or lack thereof) of any given question or examination may convince the other members. For most committees this procedure has proven more useful than that of simply handing the chairman a score sheet before any dialogue about the results has occurred.

Clearly, modes of behavior with respect to the conduct of the examinations will vary among the field committees. However, to the extent that committees can standardize their actions along the lines indicated above, student and faculty uncertainty about the examinations will diminish, with an accordingly greater emphasis on more substantive matters.

______________________________

Comprehensive Field Examinations for the M.A. and Ph.D. degrees — May 1973

Field Committees:

Economic Theory. Hirshleifer (chairman), Thompson, Clower, Demetz, Leijonhufvud

Urban and Regional Economics. Hirsch (chairman), Ellickson, Chen

Public Finance. Somers (chairman), Chen, Lindsay, Vandermeulen

Government and Industry (industrial organization). Demetz (chairman), Peltzman, Hilton, Klein

Mathematical Economics. Thompson (chairman), Britto, Clower

Econometrics. Dhrymes (chairman), Ellickson, McCall

Money. Klein (chairman), Thompson, Clower, Darby

International Economics. Baird (chairman), Chu, Rugg

Economic Development. Herrick (chairman), Britto, Wolf

Labor Economics. Herrick (chairman), Lindsay, Hilton

Economic Institutions (economic history). Murphy (chairman), Shetler, Leijonhufvud

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Ph.D. Money Qualifying Examination
October 15, 1973

Four Hours

Answer six of the following seven questions. Be as specific and rigorous as possible.

There is plenty of writing time to answer all of the questions satisfactorily so try to spend a sufficient amount of time thinking before beginning to write. Irrelevant material presented, however correct, will be penalized.

1. In his 1942 article on “Say’s Law: A Restatement and Criticism,” O. Lange defines “Walras’ Law” by the identity

\sum_{i=1}^{i=N} p_{i}X_{i}\equiv 0,

where Xi denotes the sum of all individual excess demands for the ith conmodity (“collective excess demand”), and Pi denotes the price (expressed in units of the Nth commodity) of the ith commodity. In the same article, Lange defines “Say’s Law” by the identity

\sum_{i=1}^{i=N-1} p_{i}X_{i}\equiv 0,

where pi and Xi are defined precisely as before. Calling the Nth commodity “money,” Lange then asserts that if collective excess demands in an economic system A simultaneously satisfy both Walras’ Law and Say’s Law, then:

    1. Money prices are indeterminate;
    2. Individuals will never desire to change their money balances;
    3. Money is merely a worthless medium of exchange and standard of value in economy A.
    4. The economic system A is “equivalent to a barter economy.”

Critically evaluate each of the assertions a) through d).

2. a) The rapid rise in short-term interest rates during the first half of 1973 produced what is commonly called commercial bank “disintermediation” and thereby differential movements in the rates of growth of M1 compared to M2.

Clearly describe this process and how it affects the two definitions of the money supply. In such circumstances, is the rate of growth of M1 or of M2 a better indicator of monetary policy? Can you suggest a superior monetary aggregate to use as an indicator?

b) During the past year the rate of growth of money has deviated at times substantially from the rate of growth of the base or high-powered money (i.e., there has been a change in the money multiplier) due to large changes by the Treasury in the amount of demand deposits they hold at commercial banks. This led one observer to ask whether it was the Treasury or the Federal Reserve who was making monetary policy.

Clearly describe how changes in government demand deposits affect the money supply. How can the Federal Reserve offset such changes? If the Treasury decided to become a “monetary authority” and tried to control the money supply in this way, how would they fare in competition with the Fed if the two authorities adopted different money supply goals?

3. An Englishman holidaying on a small Mediterranean island paid all his expenses with checks on his English bank. The inhabitants were so impressed by his gentlemanly bearing that instead of cashing his checks, they used them thereafter as money. Who paid for the Englishman’s holiday?

Answer this question in terms of (a) fixed exchange rates and (b) floating exchange rates. Explain how different macroeconomic views of the world affect the answers.

4. There has been much discussion about the exogeneity or endogeneity of the money supply. Explain the different meanings of these terms for policy analysis and for statistical estimation and how these differences have been a source of confusion.

5. Discuss the following proposition: The rate of unemployment is affected primarily by deviations of the actual rate of change of money or government spending from their expected rates of change, and not by the rate of change or level of money or government spending.

Does this proposition have any implications about the relative and absolute possibilities of the persistent use of fiscal or monetary policy to achieve a low rate of unemployment?

Cite any empirical evidence with which you are familiar for or against the proposition (e.g., consider the Andersen & Jordan weights on the effects of changes in government spending on changes in nominal income).

6. The Federal Reserve recently adopted a rule change where required reserves instead of being calculated on the basis of current deposits is now based on commercial bank deposits two weeks earlier (which are obviously given at the time of the calculation).

This rule change has produced a situation where the Fed can no longer affect, in any given week, the total reserves of the banking system and where the major short-run effective policy tool of the Fed is how much it “forces” commercial banks to borrow from them each week — a very crude instrument by which to control the money supply.

Do you agree or disagree? Explain carefully.

Source: Economists’ Papers Archive, David M. Rubenstein Rare Book & Manuscript Library, Duke University. Robert W. Clower Papers, Box 4, Folder “Monetary Economics, PhD exams, Reading list, exams UCLA 1971-1988”.

Image Sources: Benjamin Klein, Earl Thompson, Robert Clower, Michael Darby.

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Exam Questions Macroeconomics UCLA

UCLA. Macroeconomics PhD qualifying examination. Spring 1982

There are basically two kinds of artifacts that make it into the Economics in the Rear-view Mirror collection. There are items that come from (nearly) complete and neatly arranged sub-collections found in university archives and those somewhat random items plucked from the idiosyncratic personal collections of individual scholars. Today’s Ph.D. macroeconomics exam from UCLA is found in a folder of teaching materials for macroeconomics in Robert W. Clower’s papers at Duke University’s Economists’ Papers Archive. 

Other things equal, a balanced panel of such exams across departments and time is what we would ideally hope to accumulate. But the enemy of the good is the perfect in this as in all historical research. So without apology, indeed with a bit of pride, I enter this artifact into our digital record.

Fun Facts: The quote that heads question 9 comes from Charles Dickens’ David Copperfield, for question 10 from Harriet Beecher Stowe’s Uncle Tom’s Cabin.

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Ph.D. Qualifying Examination
UCLA Department of Economics

Spring 1982

ECONOMIC THEORY
MACRO PART

TIME: 3 hours — plus an additional 15 minutes for students whose native language is not English.

INSTRUCTIONS: Answer Part I in Bluebook #1 ONLY.

Answer Part II in Bluebook #2 and subsequent books.

DO NOT MIX ANSWERS TO PART I AND PART II IN THE SAME BLUEBOOK.

NOTE WELL: It is extremely important to answer only the questions asked. Extraneous material (whether correct or incorrect) will reduce the score of an otherwise correct answer and no positive credit will be given to correct answers to questions not asked. However, a wrong answer to the question asked will receive a higher score than no answer.

PART I — SHORT ESSAYS
(weight = 1/3)

All questions in this part of the exam are true, false, or uncertain questions. FIRST indicate whether the statement is T, F, or U, and then explain or prove your answer briefly.

Answer only six (6) of the eight (8) questions in this part.

  1. What we should reject is the naive reasoning that there is a demand schedule for investment which could be derived from a classical scheme of producers’ behavior in maximizing profit.
  2. An easy money policy is good for the housing industry in the short run but bad in the long run.
  3. In testing the Quantity Theory of hyperinflations, one must realize that the usual money stock data are apt seriously to underestimate the theoretically relevant money stock. Cigarettes and all sorts of things that become money in hyperinflations are not included.
  4. Although the 1933-1934 increase in the dollar price of gold increased U.S. base money growth, it mainly served at the time as a price-support program for gold.
  5. Relative prices are explained by the theory of value, and, once relative prices are known, money prices are determined by the theory of money.
  6. If the growth rate of nominal money follows a random walk with constant variance, there is no solution to the observational equivalence problem.
  7. The first simple story about inflation is that its underlying cause is deficit spending by the federal government. In that case, the way to fix things up is simply to balance the federal budget.
  8. If expectations are formed rationally and anticipated money does not affect real output, monetary policy cannot stabilize real output.
PART II — DISCUSSION QUESTIONS
(weight = 2/3)

Answer only four (4) of the six (6) questions in this part.

  1. ANNUAL INCOME TWENTY POUNDS, ANNUAL EXPENDITURE TWENTY POUNDS, OUGHT, AND SIX, RESULT MISERY.
    The federal deficit in 1943 and 1944 was nearly $50 Billion, or some 12% of GNP. Long-term bonds yielded no more than 3% per annum in the same years. Do these facts raise any questions in your mind about the validity of present arguments to the effect that projected federal deficits amounting to some 4% of GNP explain present long-term bond yields in excess of 12% per annum? Defend your answer.
  2. NEVER HAD NO FATHER, NOR MOTHER, NOR NOTHIN’. I WAS RAISED BY A SPECULATOR — TOPSY
    1. Explain the analysis behind the presumption, shared by almost all economists, that speculation will be “stabilizing” and not “destabilizing” in any given market that is exposed to regularly recurring “disturbances.”
    2. Explain the role of “speculative behavior” in producing the “instability” problems of Keynesian macrotheory.
    3. “In any system where speculation is based on rational expectations the Keynesian type of income fluctuations should not arise.” Discuss.
  3. IT’S FINE IN THEORY, BUT WILL IT WORK IN PRACTICE?
    From October 1979 to March 1980, money growth slowed sharply in the United States. During the same period of time, inflation accelerated, the unemployment rate rose somewhat, nominal interest rates rose sharply: and the dollar generally appreciated against other major currencies.
    1. Can economic theory account for each of these occurrences? Consider each event separately.
    2. Under what circumstances, if any, are all these events simultaneously consistent with economic theory? Explain carefully.
  1. GOLDEN AND/OR BRASS RULES

In recent years there has been considerable discussion of instituting a monetary “rule” which would make monetary policy non-discretionary. One question, of course, is what form such a monetary “rule” should take. In light of this question, compare and contrast the probable impact on inflation and unemployment in both the short run and the long run from the following two possible monetary rules:

Policy 1: A k-percent rule: legally requiring the growth rate of the money supply to be k-percent.

Policy 2: A modified k-percent rule: legally requiring the growth rate of the money supply to be k-percent only when unemployment is at some target rate \bar{u}. Formally, letting \dot{m} be the growth rate of the money supply, the modified k-percent rule would require that:

\dot{m} =k+\beta \left( u^{a}-\bar{u} \right)

where β is a fixed, positive, non-discretionary constant and u^{a} is the actual unemployment rate.

  1. AN ESSAY ON THE ESSENTIAL ESSENCE
    “IS-LM analysis fails to capture the essence of Keynesian economics because it completely ignores the effect of current levels of output and employment upon current production and consumption plans.”

    1. Is this a fair comment on IS-LM analysis? Explain.
    2. Is its characterization of “the essence of Keynesian economics” valid? Explain why or why not.
  2. SOMETIMES YOU CAN’T LOSE FOR WINNING.
    “Inflation is either unanticipated or anticipated. If unanticipated, it will increase output and employment. If anticipated, it has no effect on output and employment. So either it helps you or it does not hurt you.”

Source: Duke University. David M. Rubenstein Rare Book & Manuscript Library. Economists’ Papers Archive. Robert W. Clower papers. Box 4, Folder “Econ 202. Income, Employment, Monetary Theory”.

Image Source: Macro-Man from the DC comics fandom website’s wiki.

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Exam Questions Microeconomics Suggested Reading Syllabus Theory UCLA

UCLA. Price theory. Course outline and reading list. Hirshleifer, 1972

A copy of the syllabus for Jack Hirshleifer’s UCLA price theory course taught in 1972 comes as a serendipitous find in the papers of Robert Clower at Duke’s Economist Papers Archive. 

_________________________

Posted Earlier

Harvard. Economics Ph.D. alumnus, Jack Hirshleifer, 1950

_________________________

Winter 1972

Econ 201B
Mr. Hirshleifer

COURSE OUTLINE AND READING LIST

Pre-requisite: The student is presumed to have completed Econ 201A prior to undertaking this course; only in exceptional circumstances will this requirement be waived. Acquaintance with the elements of calculus remains a practical necessity.

Procedures: As in 201A, we will have lectures, class discussions, and problems. Students are reminded that classroom contributions and homework performances enter into the final grade.

Readings: The officially required texts are Stigler, THEORY OF PRICE (3rd ed.), Friedman, PRICE THEORY, and Lerner, ECONOMICS OF CONTROL. However, substantial readings are assigned in a number of other books that would make useful additions to one’s library. These include: (1) Baumol, ECONOMIC THEORY AND OPERATIONS ANALYSIS. (But note that while chapters assigned refer to 2nd edition, a new 3rd edition is expected shortly.) (2) Becker, ECONOMIC THEORY. (3) Bronfenbrenner, INCOME DISTRIBUTION THEORY. And there are also a number of books of collected readings that are advantageous to own.

The Graduate Library has been asked to place all assigned materials on reserve. Insofar as possible, readings should be studied in order as listed. The fundamental readings for our purposes are starred below; unstarred items may provide basis for lectures and discussions.

  1. PRODUCTION AND DEMAND FOR FACTORS

*Stigler, THEORY OF PRICE, Ch. 6-9, 14.

*Hirshleifer, “Exposition of the Equilibrium of the Firm,” ECONOMICA, August 1962. [Reprinted in Kamerschen, READINGS IN MICROECONOMICS.]

*Allen, MATHEMATICAL ANALYSIS FOR ECONOMICS, pp. 284-289, 315-322, 340-343.

*Lerner, ECONOMICS OF CONTROL, Ch. 11-17.

*Friedman, PRICE THEORY, Ch. 6-9.

*Becker, ECONOMIC THEORY, Ch. 7-8.

Hicks, VALUE AND CAPITAL, Ch. 6-7.

Marshall, PRINCIPLES OF ECONOMICS (8th ed.) Book V, Ch. 6.

V. L. Smith, INVESTMENT AND PRODUCTION, Ch. 2, Appendix on Kuhn-Tucker Conditions.

*Dorfman, “Mathematical or Linear Programming,” AER v. 43 (Dec., 1953)

*Baumol, ECONOMIC THEORY AND OPERATIONS ANALYSIS (2nd ed.), Ch. 5-6 (omit appendix), 11-12.

Douglas, “Are There Laws of Production?”, AER v. 38 (March, 1948).

*Arrow, Chenery, Minhas, Solow, “Capital-Labor Substitution and Economic Efficiency”, Rev. Ec. and Stat., August 1961 (to p. 234).

  1. SUPPLY OF FACTORS; FACTOR MARKETS; ROLE OF THE FIRM

*J. Robinson, “Rising Supply Price” in AEA READINGS IN PRICE THEORY, Ch. 11.

Marshall, Book VI, Ch. 1-11.

*Stigler, THEORY OF PRICE, Ch. 15-16.

*Chiswick, “The Economic Value of Time and the Wage Rate”, WEJ (June, 1967).

*Lerner, ECONOMICS OF CONTROL, Ch. 18.

*Friedman, PRICE THEORY, Ch. 10-11.

*Becker, ECONOMIC THEORY, Ch. 9.

*Bronfenbrenner, INCOME DISTRIBUTION THEORY, Ch. 9-10.

Hilton, “The British Truck System,” JPE v. 65 (June 1957).

*Alchian and Allen, UNIVERSITY ECONOMICS, Ch. 20.

Schumpeter, THEORY OF DEVELOPMENT, Ch. 1, 2, 4.

*AEA READINGS IN PRICE THEORY, Ch. 16, 17 (Coase, Scitovsky).

Hicks, THEORY OF WAGES, Ch. 6

*Cheung, “Private Property Rights and Sharecropping,” JPE (Nov./Dec., 1968).

*Lindsay, “Measuring Human Capital Returns” (on reserve).

  1. WELFARE ECONOMICS AND GENERAL EQUILIBRIUM

Bronfenbrenner, INCOME DISTRIBUTION THEORY, Ch. 1-5.

*Lerner, ECONOMICS OF CONTROL, Ch. 6, 9.

*B. Hansen, A SURVEY OF GENERAL EQUILIBRIUM SYSTEMS, Ch. 3,4.

*Baumol, ECONOMIC THEORY AND OPERATIONS ANALYSIS, Ch. 16.

AEA READINGS IN PRICE THEORY, Ch. 12 (Ellis-Fellner).

*Bator, “The Simple Analytics of Welfare Maximization,” AER, March 1957
[Reprinted in Kamerschen, READINGS IN MICROECONOMICS, also in Breit and Hochman, READINGS IN MICROECONOMICS.]

*Arrow, “The Organization of Economic Activity,” in Haveman and Margolis, PUBLIC EXPENDITURES AND POLICY ANALYSIS.

Houthakker, “Economics and Biology: Specialization and Speciation,” KYKLOS, v. 9 (1956).

*Vickrey, “Some Objections to Marginal-Cost Pricing,” JPE, (June 1948).

Demsetz, “Why Regulate Utilities?”, JLE (1968).

*Coase, “The Problem of Social Cost,” JLE (Oct., 1960) [Reprinted in Breit and Hochman, READINGS].

Gordon, “The Economic Theory of a Common-Property Resource: The Fishery,” JPE (April, 1954).

*Worcester, “Pecuniary and Technological Externalities”, AER (Dec., 1969).

*Mishan, “The Postwar Literature on Externalities,” JEL (March, 1971).

*Demsetz, “The Private Production of Public Goods,” JLE (Oct., 1970).

Hochman and Rodgers, “Pareto Optimal Redistribution,” AER (Sept., 1969).

Source: Duke University. David M. Rubenstein Rare Book & Manuscript Library. Economists’ Papers Archive. Robert W. Clower Papers, Box 4, Folder “Econ 170-171: Org. of Enterprise + Industry”.

Image Source: Seal of the University of California, Los Angeles (UCLA) at the Wikimedia Commons.

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Exam Questions Money and Banking UCLA

UCLA. Monetary Economics, PhD qualifying exam. 1971

Having just spent nearly a month travelling along the East Coast of the U.S., it is great to get back to posting new content. On this trip I was able to get in three fine days of work in the Economists’ Papers Archive at Duke. While there I found much useful material for Economics in the Rear-view Mirror in the Robert W. Clower papers. A copy of his UCLA obituary can still be found at the Wayback Machine internet archive.

In 1971 Clower joined the UCLA economics department so it is unclear whether he actually contributed to the Ph.D. preliminary examination in monetary economics transcribed below 

_______________________

Ph.D. Qualifying Examination
Four Hours

May, 1971

Monetary Economics

Answer five of the following seven questions.

  1. [On the concept of money]
    1. “Contemporary monetary theory analytically treats money as merely another commodity.” State if (and why) you agree or disagree with this proposition.
    2. Money is sometimes distinguished from commodities by the following assertions. Briefly discuss the meaning of each assertion and whether you agree or disagree with it.
      1. Money has no “intrinsic value”; it cannot be enjoyed directly, but must first be converted into something else.
      2. Money is used but is not used up.
      3. Money buys goods and goods do not buy money.
      4. Money has superior liquidity than other goods.
      5. The value of money is fixed in terms of the unit of account.
      6. Money is traded directly for every commodity and vice versa, while commodities are not traded for one another.
    3. Discuss the limitations placed on research in monetary theory if money is considered merely as a commodity.
  2. Many writers have asserted in the press that the recent international currency “crisis” points up the unique role of the dollar in present international monetary arrangements. Discuss the international role of the dollar with reference to each of the following statements taken discussions of the crisis.
    1. Over the past couple of years the U.S. has been exporting an unwanted inflation to the countries of Europe, especially Germany.
    2. The immediate cause of the crisis was the presence of interest rates in the U.S. which were too low relative to those in Europe and therefore initiated massive capital flows from the U.S. to Europe.
    3. The massive accumulation by foreigners of dollars underlined the fact that the dollar has become de facto inconvertible into gold and was now little more than an unbacked IOU.
    4. The U.S. should be unconcerned with its balance of payments deficit. Under present arrangements any adjustments to international disequilibrium must be made by foreigners; and all the options available to foreign surplus countries, assuming moderately rational behavior on their part, should be acceptable to the U.S.
    5. The recent crisis points up the inherent instability of current international monetary arrangements. The increase in foreign short-term claims upon U.S. gold reserves and the revaluation of currencies in terms of the dollar will undermine the employment of the dollar as the banking currency of the world and speed the development of a unified European currency.
    6. The recent crisis has strengthened the world monetary system by bringing closer the day when the dollar-gold fixed exchange rate standard is replaced by a system of floating exchange rates.
  3. Discuss the following three propositions. (State whether they are true or false and explain why) .
    1. Legal reserve requirements are unnecessary to place a finite limit on the quantity of commercial bank deposits if the deposits are convertible into the government supplied dominant money.
    2. Elimination of the convertibility requirement would lead to an unlimited expansion of deposits.
    3. There is no limit on the extent to which the government can expand the supply of dominant money.
  4. An economist recently wrote a letter to the Wall Street Journal complaining that much discussion of how to control inflation has been based on a neo-quantity theory which emphasizes “the quantity of money” while ignoring “the quality of credit”. The Federal Reserve was established, he noted, to regulate commercial bank assets while current discussion (and policy) concentrates on the liability side of the commercial bank balance sheet and entirely ignores the asset side. He maintained that if, for example, commercial banks were forced to limit their lending activity to short-term, self-liquidating business loans, inflation would quickly be controlled. Evaluate this argument.
  5. [Monetary vs. fiscal policy.]
    1. It is sometimes argued that fiscal policy should be used to maintain domestic full employment while monetary policy should be used to maintain balance of payments equilibrium. Present this argument and clearly state the assumptions upon which it is based.
    2. Summarize and evaluate the existing empirical evidence on the effectiveness of monetary versus fiscal policy as a stabilization device
  6. [Inflation]
    1. Inflation is often considered to be a tax. In what sense is this correct? What is the magnitude of the tax? Who pays and who collects the tax?
    2. What are the effects of inflation on real resource allocation.
      [In (a) and (b) make sure you distinguish between anticipated and unanticipated inflation.]
  7. [The Gibson Paradox]
    1. What is the Gibson Paradox?
    2. Why is it considered to be a paradox?
    3. What theoretical explanations have been advanced to explain the phenomenon?
    4. What is the existing state of the evidence concerning these explanations?

Source: Duke University. David M. Rubenstein Rare Book & Manuscript Library, Economists’ Papers Archive. Robert W.Clower Papers, Box 4, Folder: “Monetary Economics PhD exams, Reading List, Exams. UCLA, 1971-1988”.

Image Source: Screen shot from Abba—Money, Money, Money karaoke video.

Categories
Berkeley Brown Carnegie Institute of Technology Carnegie Mellon Chicago Columbia Cornell Duke Economics Programs Harvard Illinois Indiana Iowa Johns Hopkins Kansas M.I.T. Michigan Michigan State Minnesota North Carolina Northwestern NYU Ohio State Pennsylvania Princeton Purdue Rochester Stanford Texas UCLA UWash Vanderbilt Virginia Virginia Tech Washington University Wisconsin Yale

U.S. Economics Graduate Programs Ranked, 1957, 1964 and 1969

Recalling my active days in the rat race of academia, a cold shiver runs down my spine at the thought of departmental rankings in the hands of a Dean contemplating budgeting and merit raise pools or second-guessing departmental hiring decisions. 

But let a half-century go by and now, reborn as a historian of economics, I appreciate having the aggregated opinions of yore to constrain our interpretive structures of what mattered when to whomever. 

Research tip: sign up for a free account at archive.org to be able to borrow items still subject to copyright protection for an hour at a time. Sort of like being in the old reserve book room of your brick-and-mortar college library. This is needed if you wish to use the links for the Keniston, Carter, and Roose/Andersen publications linked in this post.

___________________________

1925 Rankings

R. M. Hughes. A Study of the Graduate Schools of America (Presented before the Association of American Colleges, January, 1925). Published by Miami University at Oxford, Ohio. (See earlier post that provides the economics ranking from the Hughes’ study)

1957 Rankings

Hayward Keniston. Graduate Study and Research in the Arts and Sciences at the University of Pennsylvania (January 1959), pp. 115-119,129.

Tables from Keniston transcribed here at Economics in the Rear-view Mirror:
https://www.irwincollier.com/economics-departments-and-university-rankings-by-chairmen-hughes-1925-and-keniston-1957/

1964 Rankings

Allan M. Cartter, An Assessment of Quality in Graduate Education Washington, D.C.: American Council on Education, 1966.

1969 Rankings

Kenneth D. Roose and Charles J. Andersen, A Rating of Graduate Programs. Washington, D.C.: American Council on Education, 1970.

Tables transcribed below.

___________________________

Graduate Programs in Economics
(1957, 1964, 1969)

Percentage of Raters Who Indicate:
Rankings “Quality of Graduate Faculty” Is:
1957 1964 1969 Institution Distiguish-
ed and strong		 Good and adequate All other Insufficient Information
Nineteen institutions with scores in the 3.0 to 5.0 range, in rank order
1 1* 1* Harvard 97 – – 3
not ranked 1* 1* M.I.T. 91 – – 9
2 3* 3 Chicago 95 – – 5
3 3* 4 Yale 90 3 – 7
5* 5 5 Berkeley 86 9 – 5
7 7 6 Princeton 82 9 – 10
9 8* 7* Michigan 66 22 – 11
10 11 7* Minnesota 65 19 – 15
14 14* 7* Pennsylvania 62 22 – 15
5* 6 7* Stanford 64 25 – 11
13 8* 11 Wisconsin 63 26 – 11
4 8* 12* Columbia 50 37 – 13
11 12* 12* Northwestern 52 32 – 16
16 16 14* UCLA 41 38 – 21
not ranked 12* 14* Carnegie-Mellon Carnegie-Tech (1964) 39 35 – 26
not ranked not ranked 16 Rochester** 31 39 1 29
8 14* 17 Johns Hopkins 31 56 – 13
not ranked not ranked 18* Brown** 20 52 1 27
15 17 18* Cornell** 21 56 2 21
*Score and rank are shared with another institution.
**Institution’s 1969 score is in a higher range than ist 1964 score.

 

Ten institutions with scores in the 2.5 to 2.9 range, in alphabetical order
(1969)
Duke
Illinois
Iowa State (Ames)
Michigan State
North Carolina
Purdue
Vanderbilt
Virginia
Washington (St. Louis)
Washington (Seattle)

 

Sixteen institutions with scores in the 2.0 to 2.4 range, in alphabetical order
(1969)
Buffalo*
Claremont
Indiana
Iowa (Iowa City)
Kansas
Maryland
N.Y.U.
North Carolina State*
Ohio State
Oregon
Penn State
Pittsburgh
Rice*
Texas
Texas A&M
Virginia Polytech.*
* Not included in the 1964 survey of economics

 

Categories
Economists Gender Labor UCLA

UCLA. First woman economics Ph.D. Gene Bunning Tipton, 1953

For our irregular series “Meet an economics Ph.D. alumnus/a” we introduce you now to the first woman economics Ph.D. (1953!) from the University of California, Los Angeles, Gene Bunning Tipton. I have been unable to find any bibliographic references to her research, probably because she clearly chose a path as college educator. She served as the chair of the department of economics and statistics at California State Los Angeles.
Can anyone find an example of an interview where a male economist is asked what his family’s favorite recipe is? Seventy years ago, Gene Bunning Tipton was asked for hers. Here it is:  Bonus Material. To be honest, it looks pretty good.

______________________

Gene Bunning Tipton

  1. Born September 20 in Bellflower, Los Angeles County, CA to Percy Jay Bunning (1882-1937) and Mattie May Forquer (1883, 1917).
  1. Married Albert Vern Tipton, Jr. (1912-1996) February 16 in Pasadena, Los Angeles County, CA. Three children.
  1. California Voter Registration: Registered Democrat. Occupation: Housewife.
  1. A.B. from the University of California, Los Angeles. Summa cum laude, Phi Beta Kappa. Economics major. Transfer from Pasadena J.C.
  1. M.A. from University of California, Los Angeles. Economics.
  1. Los Angeles Evening Citizen News. May 11, 1960, p. 6.

“Problems of California government and society will be studied under three research fellowship grants awarded for 1950-51 by the Haynes Foundation of Los Angeles.
Graduate students to whom fellowships have been awarded are…and Gene B. Tipton, UCLA economics student, who will study the labor movement in Los Angeles during the 1940’s.
Each of the students is a candidate for the doctoral degree at his respective institution. The fellowship carries a stipend of $2000 for the academic year.”

  1. Ph.D. in economics from UCLA, first woman.

University Bulletin: a weekly bulletin for the staff of the University of California (March 23, 1953), p. 144.

“During the 1940’s the number of union members in proportion to the labor force increased nearly 15 per cent in Los Angeles County, according to a doctoral dissertation recently completed by a student in the Department of Economics.

Mrs. Gene B. Tipton of El Monte, the first woman ever to receive a Ph.D. degree from the Department, credits this growth to the past decade’s high prosperity and a favorable governmental climate. Also important were court decisions upholding directives of the National Labor Relations Board limiting the activities of organizations which advocated laws to ban the union shop in California.”

  1. The Whittier News. September 17, 1953, p. 7

“Officials of Whittier College have announced the appointment of ten faculty members for the 1953-54 school year…

New in the department of economics and business administration will be Dr. Jesse S. Robinson and Dr. Gene B. Tipton…

Dr. Tipton received her degree from UCLA where she was the winner of a fellowship from the John Randolph and Dora Haynes Foundation.

Her teaching background includes service at UCLA and Pomona College. More recently she has been an investment specialist with the Prudential Life Insurance Co.

  1. Daily News. October 20, 1954, p. 23

Article with photo. “Woman economist puts theory into practice in her cooking” by Martha Grayson. Includes recipe: Roast Canadian Bacon. To give a free seminar “Family Finance Forum” in the Whittier Woman’s Clubhouse on October 26, 1954 sponsored by the Whittier Savings and Loan Association in commemoration of the 34th anniversary of its founding.

Full-page ad in The Whittier News, October 25, 1954, p. 9.

  1. East Review. October 26, 1958, p. 3.

“Members of Soroptimist Club of Whittier will hostess a joint dinner meeting Tuesday evening of women’s service clubs in Whittier. Included on the guest list are members of the Business and Professional Women’s Club, Quota and Altrusa Clubs. The 6:30 dinner will be held in the Campus Inn at Whittier College.

Speaker for the evening will be Gene B. Tipton, Ph.D., who will speak on the subject, ‘Inflation in Our Time.’ Dr. Tipton is assistant professor of economics at Los Angeles State College. She graduated Summa cum Laude, Phi Beta Kappa, from the University of California at Los Angeles in 1953. She is the wife of A. Vern Tipton and they have three children.”

  1. Independent Star News (Pasadena, CA), p. 4.
    Elected to the Executive board of the L.A. State chapter of the American Association of University Professors for the coming year.
  1. Promotion to associate professor of economics, Los Angeles State College.

“Notes.” The American Economic Review, vol. 51, no. 5, 1961, p. 1165. JSTOR, http://www.jstor.org/stable/1813901.

1963-64. August 1963 to April 1964.

Fulbright scholar at the Indian Institute of Economic Research. Associate Professor of Economics at Los Angeles City College.

  1. South Pasadena Review, March 24, 1965, p. 1.

Dr. Gene B. Tipton, Associate Professor of Economics, 12116 Magnolia, El Monte elected Secretary-Treasurer of the Cal State L. A. alumni chapter of Phi Beta Kappa.

  1. Star-News (Pasadena, CA). May 6, p. 7.

“Dr. Gene B. Tipton of 12116 Magnolia St., El Monte, has been promoted from assistant [sic] professor to professor of economics at Cal State Los Angeles. She earned her B.A., M.A. and Ph.D. degrees at UCLA and was on the faculty of Whittier College before joining Cal State.

  1. 26 full-time faculty members under leadership of department chairman Donald A. Moore and associate chairman Gene Tipton. Cf. In 1960 the department of economics was 11 full-time, 5 part-time members.
  1. September. Becomes chairman of the department of economics and statistics.

“Notes.” The Journal of Business, vol. 46, no. 2, 1973, pp. 331–47. JSTOR, http://www.jstor.org/stable/2351382.

  1. Star-News (Pasadena, CA). June 15, p. A-6.
    Dr. Gene B. Tipton, chairman of the department of economics and statistics at Cal. State L.A.

1984-85. Vice-President of the State Association of Emeriti Professors.

1985-86. President of the State Association of Emeriti Professors.

  1. Died in March 20 in Arcadia, Los Angeles County, CA.
Obituary

Gene B. Tipton, Emeritus Professor of Economics who was serving as the 1985/86 president of the Emeriti Association, died on March 20. Gene served on the University faculty as a teacher and administrator for 26 years (1957-83). Prior to coming to Cal State L.A., she taught at Whittier College and UC Riverside. A native of El Monte, Gene prepared for her career in economics by earning her BA, MA, and PhD degrees at UCLA, graduating summa cum laude. She was elected to Phi Beta Kappa. In addition to her academic achievement, Gene also was an outstanding tennis player, winning state titles in her collegiate days. A highlight of her tennis career was defeating Alice Marble, an international star in her day. In addition to her teaching, Gene was in demand as a consultant. She served as a special economic consultant to the Federal Reserve Board in San Francisco for 17 years. A Gene Tipton Memorial Lecture, under the joint sponsorship of the Emeriti Association and the Department of Economics in the School of Business and Economics, is being arranged for the Fall Quarter at the University. Gene is survived by her husband, Vern, three children and six grandchildren.

Source: The Emeritimes. Vol. VII, No. 3 (September 1986)

______________________

Bonus Material

From: Woman economist puts theory into practice in her cooking
By Martha Grayson (Daily News food editor)

As a noted economist and busy instructor at Whittier College and Los Angels State College in subjects ranging from consumer economics and family investments to public finance, it’s a miracle that Dr. Gene Tipton has had time to develop a favorite recipe.

But this she has done. And her Roast Canadian Bacon, hot from the oven, is a great favorite with her husband and her three teen-age children, as well as with the Tipton’s many friends who dine from time to time at their home in El Monte….

Roast Canadian Bacon

2½ Ibs. Canadian bacon
2 teaspoons dry mustard
4 tablespoons brown sugar
2 teaspoons ground cloves

Put bacon in water to cover, bring to boil and cook for 45 minutes. Remove from water and place in a greased baking dish with one-fourth water in bottom. Mix mustard, sugar and cloves thoroughly; press mixture into meat, covering it thoroughly. Bake without cover at 350 degrees for 1½ hours. (Start in cold oven.)

With this tasty roast Doctor Tipton likes to serve sweet-sour green beans cooked with a little finely chopped onion, baked potatoes, a tossed green salad, cornbread squares and apple sauce.

For dessert she serves an assortment of fresh fruits frequently. A frozen berry pie and ice cream, obtained from the freezer cabinet at her market, also are favorite desserts in the Tipton household, since admittedly there is not too much time for baking.

When the family has a special yen for cake, however, Doctor Tipton obliges with either an angel food or a devil’s food, which she makes from a prepared mix.

Source: Daily News (Los Angeles, CA), October 20, 1954, p. 23.

Image Source: Daily News (Los Angeles, CA), October 20, 1954, p. 23.

Categories
Chicago Economics Programs Economists Harvard UCLA War and Defense Economics

Harvard. Economics Ph.D. alumnus, Jack Hirshleifer, 1950

 

This UCLA economics department obituary of Jack Hirshleifer is so good that Economics in the Rear-view Mirror keeps a copy for its “Meet an economics Ph.D. alumnus/a” series. Hirschleifer was Brooklyn born and Harvard bred, but his scientific fruit definitely ripened in the California sun.

__________________________

Harvard Ph.D. 1950

Jack Hirshleifer, S.B. [Harvard] 1946 (1945), A.M. [Harvard] 1948.

Subject, Economics. Special Field, Labor Problems. Thesis, “Price Flexibility and General Interdependence.”

Source: Harvard University. Report of the President of Harvard College 1949-50, p. 197.

__________________________

UCLA
Department of Economics
Obituary of Jack Hirshleifer

Education:

Ph.D. Harvard University

Research Areas:

Economic analysis of conflict; bioeconomics with particular reference to sources of cooperative behavior and the nature of evolutionary equilibrium; voluntary provision of public goods.

Biography:

Jack Hirshleifer, professor emeritus of economics, died July 26, 2005, bringing to a close a career marked by wide- ranging interests and brilliant contributions to the subfields of information economics, investment and capital theory, bioeconomics, and the economic theory of conflict.

After active duty in the U.S. Naval Reserve during World War II, Hirshleifer completed his A.B. degree at Harvard, magna cum laude. Five years later he had earned his doctorate in economics, also at Harvard. From 1949 to 1955 he worked as an economist at the Rand Corporation. Before coming to UCLA in 1958, he took a postdoctoral fellowship in statistics and economics at the University of Chicago where he also taught for five years.

His extensive publications included seven books and close to a 100 scholarly articles. From his first study, Water Supply: Economics, Technology, and Policy [Chicago, 1960] to The Dark Side of the Force: Economic Foundations of Conflict Theory [Cambridge, 2001], Professor Hirshleifer in his scholarship has demonstrated a clarity of analysis and probing for fundamental assumptions which set him apart as one of the most distinguished economists of his generation.

Elected a fellow of both the American Academy of Arts and Sciences and the Econometric Society, Professor Hirshleifer also served on the editorial boards of the American Economic Review, the Journal of Economic Behavior and Organization, and the Journal for Bioeconomics. In 2000 he was elected a Distinguished Fellow of the American Economic Association. He also served as president of the Western Economic Association and as vice- president of the American Economic Association.

Professor Hirshleifer was deeply respected by all his fellow faculty members during his 33 years as a member of the UCLA economics department. His door was always open for any colleague, graduate student or undergraduate who might feel like “popping- in.” While a giant among researchers, Professor Hirshleifer was also deeply committed to the teaching of economics. As a teacher he always strove to give his students a sense of his own deep fascination with the role of competitive markets. This led him to write a revolutionary and best- selling textbook in intermediate microeconomics, Price Theory and Applications. While prior books focused on modeling and theory, the new text added dozens of intriguing real world illustrations of economics forces at work. Through his own text- book and through the many texts that have copied his approach, Professor Hirshleifer continues to influence tens of thousands of undergraduates each year.

Tribute by David Levine

Jack Hirshleifer was an economic theorist with broad-ranging interests. Two areas in economics have especially felt the impact of his work. Early in his career, he was instrumental in the information economics revolution; late in his career, he expanded the domain of economic discourse with his work on evolutionary economics and conflict resolution.

Hirshleifer spanned a broad range of issues in his early work as one of the founding fathers of information economics. He made the abstract ideas of contingent claims concrete through his examples and applications. In the process, he helped develop fundamental tools, such as the covariance of risks, the analysis of gambling and insurance, the Modigliani-Miller Theorem, and the analysis of public investment. He also expanded the range of information economics with two fundamental contributions. His work on the private and social value of information clearly shows that competitive markets need not reflect the social value of information. His example of an inventor who can invest based on the knowledge of the impact of his invention shows that there can be an oversupply of inventive activity. This “race to be first” has its reflection in the current literature on patent races, and represents a fundamental problem in intellectual property law that the profession is only now coming to grips with. His second fundamental contribution showed that differences in taste are not enough to explain speculation. He was the first to analyze speculation in a full general-equilibrium model, with different structures of market completeness carefully considered. Although not generally recognized as such, this is also the first paper to point out the indeterminacy of equilibrium when markets are incomplete.

In addition to his founding contributions in information economics, Hirshleifer had a lifelong interest in conflict, beginning with his earliest work on war damages. Late in his career this area became the focus of his contributions, and he was a leader in extending economic methods to problems more traditionally studied in political science. He wrote broadly on expanding the domain of economic discourse to include the “rational” evolutionary analysis of altruism and spite. His work on conflict showed how “Peace is more likely to the extent that the decisiveness of conflict is low, or … if the stakes are small or the technology favors the defense. More surprisingly, perhaps, increased productive complementarity between the parties does not systematically favor peace…the poorer side is generally motivated to invest more heavily in fighting effort. So conflict can become an income-equalizing process.” Finally, his weakest link/best shot experiment (with Glenn Harrison) demonstrates that economic incentives play a key role in determining how much people will contribute to a public good.

Tribute by Roger Farmer

I was approached last month by Junyao Ying, a UCLA alum who is now working in China. Junyao and his wife Weiyi Qiu have recently translated Jack’s book, Investment Interest and Capital into Chinese. Junyao asked me to write a few words about Jack for the translation. This is what I wrote.

The economics department at UCLA was a very exciting place in the 1980s, not least because of Jack Hirshleifer.  Many of us ate lunch every day in the Faculty Center, and being in Southern California, most days we ate outdoors in the sunshine.  Jack would arrive at 12.00 sharp with an economic question for the day that he would pose to the table. Jack’s questions would be from the news of the day and the analysis he expected would be in the UCLA style.

The department had a unique approach to economics and Jack, along with Harold Demsetz, Armen Alchian, Ben Klein and later, Al Harberger, were a huge part of that. Their economics was intuitive, often verbal, but always incisive.  One story, relayed to me by another UCLA  giant of the era, Axel Leijonhufvud, expresses well the Socratic teaching style that permeated the UCLA curriculum. As Axel relays it, he was sitting in on Armen’s first graduate micro class when the master appeared, paced back and forth for a few minutes, and then boomed loudly: “So why don’t we sell babies anyway?”

Jack had the same approach. Many of our discussions would end up around one of his favorite topics: the economics of disasters. Earthquakes were never far from our minds and Jack was an expert on what today we might call black swan events. LA earthquakes are relatively frequent but they typically register less than 5.0 on the Richter Scale, enough to shake the floor, but usually not to do much damage. Sometimes we see larger quakes and every century or so, an 8.0 magnitude quake brings significant loss of life. Jack pointed out that, if you go far enough back in the fossil record, there have been earthquakes large enough to cause a slippage in the earth’s crust large enough to move two points that were previously next to each other five miles apart!

Jack was an economic imperialist. He believed passionately that the economic method can and should be applied to all of the social sciences. While we may not all share that opinion, in this time of crisis, we can nevertheless benefit from Jack’s insights. He may not be here in person to opine on how to deal with black swan events,  but we can still learn from Jack by reading his written words.

Publications

“War Damage Insurance,” The Review of Economics and Statistics, Vol. 35, No. 2. (May 1953), pp. 144-153. Argues that vulnerability rated war damage insurance would create private incentives to make property less vulnerable to enemy bombing, and that this would be superior to administrative fiat.

“On the Theory of Optimal Investment Decision,” The Journal of Political Economy, Vol. 66, No. 4. (Aug 1958), pp. 329-352. Examines different internal rate of return and present value rules when there is a divergence between borrowing and lending rates, and shows that while the problem can be solved by careful consideration of the budget constraint,  neither of these rules gives the correct answer all the time.

“Risk, The Discount Rate, and Investment Decisions,” The American Economic Review, Vol. 51, No. 2(May 1961), pp. 112-120. Discusses how covariance of new risks with the existing portfolio makes it desirable to diversify by adding new risks.

“Investment Decision Under Uncertainty: Choice-Theoretic Approaches,” The Quarterly Journal of Economics, Vol. 79, No. 4. (Nov 1965), pp. 509-536; and “Investment Decision under Uncertainty: Applications of the State-Preference Approach,” The Quarterly Journal of Economics, Vol. 80, No. 2. (May 1966), pp. 252-277. These two paper develop the time-state-preference approach (what we now call the state-contingent model) applied to traditional problems in economics: gambling and insurance; Modigliani-Miller Theorem and evaluation of public projects.

“Urban Water Supply: A Second Look,” (with  J. W. Milliman) The American Economic Review, Vol. 57, No. 2 (May 1967), pp. 169-178. In a famous earlier work with J.C. DeHaven Water Supply: Economics, Technology and Policy(University of Chicago Press, 1960) alternative methods of supplying water to Southern California were subject to cost-benefit analysis. This paper review what actually happened: policy makers ignored the advice, and chose what both prospectively and retrospectively was the worst economic choice. They conclude: “It appears that the agenda for economists, at this point, should place lower priority upon the further refinement of advice for those efficient and selfless administrators who may exist in never-never land. Rather, it should focus on devising institutions whereby fallible and imperfect administrators may be forced to learn from error.”

“The Private and Social Value of Information and the Reward to Inventive Activity,” The American Economic Review, Vol. 61, No. 4. (Sep 1971), pp. 561-574.   Makes the simple yet crucial point that the benefit of receiving information first bears no necessary relationship to the social value of the information. For example, inventive activity may be oversupplied because the inventor can make investments based upon knowledge of the invention. This paper also makes careful use of an infinitesimal deviant individual in a representative individual world.

“Speculation and Equilibrium: Information, Risk, and Markets,” The Quarterly Journal of Economics, Vol. 89, No. 4. (Nov 1975), pp. 519-542. This paper shows that differences in taste are not enough to explain speculation – differences in beliefs are required. Unlike earlier work on speculation that ignores the endogeneity of prices, the setup here is a full general equilibrium model, with different structures of market completeness carefully considered. In particular, market incompleteness alone cannot explain speculation.  Although not generally recognized as such, this is the first paper to point out the indeterminacy of equilibrium in an incomplete market setting.

“Competition, Cooperation, and Conflict in Economics and Biology,” The American Economic Review, Vol. 68, No. 2 (May 1978), pp. 238-243. This paper draws connections between the economics and sociobiology literature, and marks the beginning of Hirshleifer’s interest in sociobiology and conflict.

“The Expanding Domain of Economics,” The American Economic Review, Vol. 75, No. 6. (Dec 1985), pp. 53-68. This paper is a broad overview of the application of economic logic to a variety of “non-economic” problems. Hirshleifer begins by examining endogeneity of preferences. He identifies the different between altruistic preferences, and what would now be called the “warm-glow” effect of participation. He reviews Becker’s “rotten kid” theorem, which says that an altruistic parent can actually gain from altruism. As an alternative theory of preferences, models of status, such as the rat-race are examined. The underlying point of view is that of “as-if” rationality – altruism must provide some benefit to the altruist. From this perspective, Hirshleifer examines models such as the psychological model of “anger, gratitude, response” and argues that seemingly irrational behavior does indeed benefit the individual. The final topic is once again that of conflict. A narrow range of possible settlements it is argued increases the potential for conflict. Increasing returns followed by diminishing returns explains the monopoly on military force within the state, while also explaining the multiplicity of states.

“An Experimental Evaluation of Weakest Link/Best Shot Models of Public Goods,” (with Glenn W. Harrison) The Journal of Political Economy, Vol. 97, No. 1. (Feb 1989), pp. 201-225. This experimental contribution to the public goods literature explores how the increasing incentives to free ride lead to greater free riding. This paper also introduces the “best-shot” game, a public goods contribution game in which only the largest contribution to the public good matters. In this type of game it is socially and individually optimal for only one player to contribute, and unlike many other types of public goods games, this theoretical prediction is exactly what happens in the laboratory.

“The Technology of Conflict as an Economic Activity,” The American Economic Review, Vol. 81, No. 2  (May 1991), pp. 130-134. “Peace is more likely to the extent that the decisiveness of conflict is low, or … if the stakes are small or the technology favors the defense. More surprisingly, perhaps, increased productive complementarity between the parties does not systematically favor peace…the poorer side is generally motivated to invest more heavily in fighting effort. So conflict can become an income-equalizing process.”

Source: Jack Hirshleifer UCLA page archived by the Wayback Machine.

Image Source: The 1946 Harvard Class Album, p. 153.

Categories
Cal Tech Carnegie Mellon Chicago Economists Suggested Reading Syllabus UCLA

Carnegie-Mellon. Economics of the Firm reading list. Richard W. Roll, 1967

 

It shouldn’t come as a surprise that economists who were pack rats with respect to their professional and personal papers often provide a significant source of material from their colleagues. Martin Bronfenbrenner was one such paper hoarder. Whenever I stumble across an economist’s materials in someone else’s archival papers, I feel a disproportionate obligation to transcribe the stuff, since it is somewhat unlikely that a fellow historian of economics seeking material on economist X would search the papers of economist Y without having good cause. And so, stumbling upon the reading list for one of Richard Roll’s first Carnegie-Mellon courses in a folder of Martin Bronfenbrenner’s papers, I now add that course reading list below. 

Note: “GI” before the course number matches the course numbering for Carnegie Mellon seen in Bronfenbrenner’s papers, but 1968 is given in Roll’s own c.v. for the start of his assistant professorship there. This probably means he was initially hired as an ABD [“all-but-dissertation”] instructor and promoted upon the completion of the requirements for his Chicago Ph.D.

_____________________

Richard W. Roll

Born: October 31, 1939

1961, B.A.E. (Aerospace Engineering), Auburn University, 1961
1963, M.B.A., University of Washington
1968, Ph.D., University of Chicago

Ph.D. thesis. The Behavior of Interest Rates: An Application of the Efficient Market Model to U.S. Treasury Bills awarded the Irving Fisher Prize as best American dissertation in economics (1968).

 

1961-64 The Boeing Company, Seattle and New Orleans, Aeronautical Engineer

1968-73 Carnegie-Mellon University, Pittsburgh, Assistant and Associate Professor

1973-75 European Institute for Advance Studies in Management, Brussels, Belgium, Professor

1975-76 Centre d’Enseignement Superiéure des Affaires, Jouy-en-Josas, France, Professeur Associé

1976-2014 University of California, Los Angeles, The Anderson School
Professor of Finance, Allstate Chair, 1982-2002, Japan Alumni Chair, 2002-2011, Joel Fried Chair in Applied Finance, 2011-2014, Professor Emeritus, 2014-

1985-87 Goldman, Sachs & Co., New York, Vice-President and Director of Mortgage Securities Research

1985-2005 Roll and Ross Asset Management Corporation, Culver City, CA, Co-Chairman of the Board

1992-95 WP Capital Management, Greenwich, CT, Managing Director

2002 Visiting professor, Université de Toulouse, France

2003- Founder and Principal, Compensation Valuation, Inc.

2009-2012 Co-Founder and Research Director, Factor Advisors

2014- Linde Institute Professor of Finance, California Institute of Technology

 

1987, President, American Finance Association

Fellow, Econometric Society

Source: C.V. (July 15, 2015)

Fun fact:

At Boeing the early 1960s, Richard Roll worked on the Minuteman missile and the Saturn moon rocket.

Source: Richard W. Roll webpage (Mar 16, 2020) Caltech, Division of the Humanities and Social Sciences.

_____________________

ECONOMICS OF THE FIRM

R. Roll
GI-351
Fall, 1967

TEXT: Kalman J. Cohen and Richard M. Cyert, Theory of the Firm: Resource Allocation In a Market Economy, (1965)

A mid-term exam of 1½ hours will be given the week of Nov. 4. One-fourth of the final grade will be based on the mid-term and three-fourths on the final. Problem sets will be distributed periodically. These are intended to guide you in assessing your performance and will not usually be turned in.

Readings in the list below are divided into three categories:

  1. No preceding symbol indicates a required reading.
  2. A preceding * indicates an optional reading.
  3. A preceding $ indicates material that Ph.D. students should know.

Most of the material uses basic mathematics. The non-mathematician can be helped immeasurably by referring to R.G.D. Allen, Mathematical Analysis for Economists. Students will find that a thorough reading of J. Johnston, Econometric Methods, complements this course and will also be of aid in future courses.

*  *  *  *  *  *  *  *  *  *  *  *  *

SUPPLEMENTAL TEXTS
(books)

Armen A. Alchian and William A. Allen, University Economics, (2nd edition, 1967)

R. G. D. Allen, Mathematical Analysis for Economists, (1964)

William J. Baumol, Economic Theory and Operations Analysis, (1965)

Gregory Chow, Demand for Automobiles in the United States, (1957)

Joel Dean, Managerial Economics, (1957)

Milton Friedman, Essays in Positive Economics, (1953)

J. R. Hicks, The Theory of Wages, (1963)

J. R. Hicks, Value and Capital, (1946)

H. S. Houthakker and Lester D. Taylor, Consumer Demand in the United States, 1929-1970, (1966)

J. Johnston, Econometric Methods, (1960)

J. Johnston, Statistical Cost Analysis (1960)

Richard H. Leftwich, The Price System and Resource Allocation, (1960)

Edwin Mansfield, Managerial Economics and Operations Research, (1966)

Alfred Marshall, Principles of Economics, Ninth (Variorum ) edition, (1961)

James Quirk and Rubin Saposnik, Introduction to General Equilibrium Theory and Welfare Economics, (1968)

Paul A. Samuelson, Foundations of Economic Analysis, (1963)

Ezra Solomon, The Management of Corporate Capital, (1959)

Milton H. Spencer and Louis Siegelman, Managerial Economics, (1964)

George J. Stigler, Essays in the History of Economics, (1965)

George J. Stigler, The Theory of Price, (1967)

Leon Walras, Elements of Pure Economics, (1954)

Leonard Weiss, Case Studies in American Industry, (1967)

John Kenneth Galbraith, The New Industrial State, (1967)

 

PERIODICALS

American Economic Review, (December, 1948), (June, 1964)

American Economic Review, Papers and Proceedings, (May, 1954) (June, 1958) (May, 1961)

Journal of Business, (October, 1955) (April, 1965)

Journal of Political Economy, (April, 1954) (Feb, 1957) (August, 1958)

Quarterly Journal of Economics, (August, 1967)

*  *  *  *  *  *  *  *  *  *  *  *  *

  1. Introduction to the Economic Problem, Resource Allocation

Text, Ch. 1
*Leftwich, pp. 1-22.

  1. The Methodology of Model Building

Marshall, pp. 29-37.

Text, Ch. 2
*$ “The Methodology of Positive Economics” in Friedman
*J. Johnston, Econometric Methods, pp. 3-39. (This reading requires an elementary knowledge of probability).

  1. The Fundamentals, Supply and Demand
    1. Price determination under perfect competition.

Text, ch. 4

*Weiss, “Pure Competition and Agriculture”, pp. 19-50
*Alchian and Allen, ch. 7
$George Stigler, “Perfect Competition, Historically Contemplated”, Journal of Political Economy, (Feb., 1957), reprinted in George J. Stigler, Essays…
*An example of model building and demand analysis, Gregory Chow, Demand for Automobiles in the United States

    1. Theory of Cost and Production
      1. Alternative costs

Stigler, Theory of Price, ch. 6

*W. Lee Hansen and Burton A. Weisbrod, “Economics of the Military Draft”, Quarterly Journal of Economics, (August 1967) Mimeographed copies on reserve.

      1. Theory of Production

Text, chs. 6-8

$Marshall, pp. 337-380
*Stigler, Theory of Price, chs. 7-8
$Samuelson, Foundations, ch. IV

      1. Estimating Cost Curves

Johnston, Statistical Cost Analysis, pp. 26-73

*Joel Dean, pp. 278-347
*Johnston, Statistical…pp. 136-194
$Apel, “Marginal Cost Constancy and its Implications”, American Economic Review, December, 1948

      1. Temporal cost allocation

Alchian and Allen, chs. 13-14

    1. Theory of Consumer Demand
      1. Utility Theory

Text, pp. 65-83

$J. R. Hicks, Value and Capital, chs. I-III

      1. Estimating Demand Curves

Text, pp. 83-87

*Stigler, “The Early History of Empirical Studies of Consumer Behavior”, J.P.E., (April, 1954), reprinted in Essays in the History…
*Joel Dean, “Estimating the Price Elasticity of Demand”, in his Managerial Economics, pp. 180-191. Reprinted in Mansfield, pp. 55-65.
*E.S. Houthakker and Lester D. Taylor, pp. 5-29, ch.4 presents estimated demand curves for 84 categories of personal consumption expenditures.

  1. Monopoly and Oligopoly
    1. Theory
      1. Monopoly

Text, ch. 10, pp. 187-200
Alchian and Allen, ch. 17

*Stigler, Theory of Price, ch. 11
*Galbraith, pp. 166-218

      1. Oligopoly

Stigler, Theory of Price, chs. 12-13

*Text, ch. 12

    1. Cases of monopoly

Text, pp. 200-203
Weiss, ch. 4

*Arnold C. Harberger, “Monopoly and Resource Allocation”, American Economic Review Papers and Proceedings, (May, 1954)

    1. Pricing and Advertising
      1. *Rules of thumb — Joel Dean, pp. 427-467
      2. $Peak-Load Pricing — Jacques Dreze, “Some Postwar Contributions of French Economists”, American Economic Review, (June, 1964), pp. 8-27. This article is bound in the back of the AER, Vol. 54, part 2.
      3. Advertising

Lester G. Telser, “How Much Does It Pay Whom to Advertise”, American Economic Review, Papers and Proceedings, 1961, pp. 194-205

*Kristian S. Palda, “The Measurement of Cumulative Advertising Effects”, Journal of Business, (April, 1965)

  1. Demand and Supply of Productive Services
    1. Theory

Stigler, Theory of Price, ch. 14
Text, Ch. 13

*Marshall, pp. 381-393

    1. Capital

Stigler, Theory of Price, ch. 17
Ezra Solomon, “Measuring a Company’s Cost of Capital”, Journal of Business, (October, 1955) reprinted in The Management of Corporate Capital, Ezra Solomon, ed.

$ Jack Hirshleifer, “On the Theory of Optimal Investment Decision,” Journal of Political Economy, (August, 1958) reprinted in Solomon
$Fraco Modigliani and Merton H. Miller, “The Cost of Capital, Corporation Finance and the Theory of Investment”, American Economic Review, (June, 1958) reprinted in Solomon

    1. Labor

Alchian and Allen, ch. 20

*Weiss, ch. 6
$Hicks, Theory of Wages, ch. I-III
*Alchian and Allen, ch. 21

  1. General Equilibrium, Welfare Economics and Government Participation in the Market Place

Baumol, ch. 13
Alchian and Allen, ch. 24
*Text, chs. 9, 14
$Walras, pp. 153-172
$Quirk and Saposnik, ch. 2
*Weiss, Ch. 3

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Papers of Martin Bronfenbrenner. Box 25, Folder “Micro-econ and Distribution 1 of 2, 1966-1971, n.d.”.

Image Source: Richard Roll in the Auburn University Yearbook, 1960 Glomerata, p. 134