## Assets, Beliefs, and Equilibria in Economic Dynamics: Essays in Honor of Mordecai KurzMordecai Kurz, Charalambos D. Aliprantis Mordecai Kurz, Joan Kenney Professor of Economics at Stanford University, USA The genuine savings criterion and the value of population * l 2 3 Kenneth J. Arrow , Partha Dasgupta , and Karl-Goran Maler 1 Department of Economics, Stanford University, Stanford, CA 94305-6072, USA (e-mail: arrow@stanford. edu) 2 Faculty of Economics and Politics, University of Cambridge, Cambridge CB3 9DE, UK (e-mail: partha. dasgupta@econ. cam. ac. uk) 3 Stockholm School of Economics and Beijer International Institute for Ecological Economics, Royal Academy of Sciences, Box 50005, 10691 Stockholm, SWEDEN (e-mai: Karl@Beijer. kva. se) Received: June 1,2002; revised version: September 27,2002 Summary. In any dynamic model of the economy with changing population, the latter should properly be one of the state variables of the system. It enters both in the maximand, at least under total utilitarianism, and into the production function in one way or another. If population growth is exponential and constant returns prevails, then a simple transformation to per capita variables can be used to eliminate one state variable, but this ceases to be true if growth is not exponential, as it obviously is not and cannot be. If the growth of population is exogenous, then introducing it into the system does not affect the optimal policy. |

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### Contents

Foreword to the Symposium in Honor of Mordecai Kurz | 1 |

The genuine savings criterion and the value of population | 3 |

Macro foundations of microeconomics | 13 |

Risk aversion in the Talmud | 19 |

Annuities and retirement | 27 |

Claims problems and weighted generalizations of the Talmud rule | 55 |

Speculative trading with rational beliefs and endogenous uncertainty | 77 |

the role of endogenous uncertainty | 107 |

The cheapest hedge | 387 |

The informational efficiency of finite price mechanisms | 413 |

Information at equilibrium | 461 |

Nash and Walras equilibrium via Brouwer | 473 |

an analysis of the discrepancy between WTP and WTA based on survey data | 493 |

Similarity of endowments and the factor price equalization condition | 507 |

Domestic and international strategic interactions in environment policy formation | 515 |

Firm reputation with hidden information | 537 |

Endogenous uncertainty and the nonneutrality of money | 131 |

Inside and outside fiat money gains to trade and ISLM | 161 |

imperfect private credit markets | 213 |

Speculative trade asset prices and investment levels | 237 |

Indeterminacy of equilibrium in stochastic OLG models | 249 |

natural monopoly in the most liquid asset | 269 |

Is assortative matching efficient? | 303 |

On extensive form implementation of contracts in differential information economies | 323 |

Vickrey auctions with reserve pricing | 355 |

the core | 369 |

The rule not the exception | 555 |

Effect of credible quality investment with Bertrand and Cournot competition | 579 |

an axiomatic characterization | 599 |

Closedloop equilibrium in a multistage innovation race | 619 |

Modelling exchange of probabilistic opinions | 643 |

Effects of asset market structure on welfare and trading volume | 675 |

Estimating the stationary distribution of a Markov chain | 695 |

the symmetric case | 709 |

A more reasonable model of insurance demand | 733 |

### Common terms and phrases

agents analysis approximations asset assume assumption auction bidders coalition coincidence of wants commodity competition concave condition consider constraints consumer consumption continuum mechanism converges convex Cournot competition defined definition denote distribution Economic Theory efficient emission tax rate endogenous uncertainty endowment endowment effect equal equation equilibrium price example exists exogenous fiat money finite firm given Hence holds households implies incentive compatible increasing individual investors Journal of Economic Kurz Lemma Markov matrix measure medium of exchange message space monetary equilibrium Nash equilibrium optimal paper payoff player positive probability probability space Proof Proposition Radner equilibrium random variable rational beliefs rational expectations risk aversion rule satisfies scale economies Section sequence solution stationary stochastic strategies strongly stationary structure Theorem trading posts transaction costs unique utility function vector Vickrey auction volatility Walrasian mechanism Yannelis zero