Egwald Economics: Macroeconomics, Microeconomics, and International Economics

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Elmer G. Wiens

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Macroeconomics Theory, Testing, and Applications

Graduate Esssays in Economics - 1972-1974

   1. Review of Disequilibrium in Markets: The Micro-Foundations.

My somewhat revised essay as a graduate student in economics that reviews research (1972) on disequilibrium in markets. I describe the constraints that confront the agents attempting to maximize their objective functions, subject to a fixed vector of relative disequilibrium prices. As the agents buy and sell goods, they must satisfy their transaction budget and goods transaction balance constraints. The amounts demanded and supplied by agents of each good subject to these criteria is called the agents’ notional demand for or supply of that good.

If the relative prices at which agents transact is not an equilibrium price vector, some agents will be unable to buy or sell their notional amounts in a given market. Agents maximize their objective functions subject to the additional effective transaction constraints arising if the prevailing relative prices are not notional equilibrium prices.

   2. Optimal Savings Under Risk and Uncertainty.

My essay as a graduate student in economics in 1973 while taking a course in Economic Fluctuations and Growth. The context of the paper is the economic problem of optimal savings under risk and uncertainty. Consider a hypothetical economy with a planner who must decide in each time period what portion of economic output is to be consumed and what portion is to be retained as capital. The planner seeks to make these allocations so as to maximize the utility (in the sense of satisfaction) of consumption over some planning horizon. Because of uncertainties due to nature and errors of observation, the planner does not know how much output will be available in the next time period by way of production with a given amount of capital during the current time period.

   3. Monetary Equilibrium and the Stockholm School

My essay as a graduate student in economics in 1974 that analyzes the contributions of the Stockholm School of Economics to monetary theory, particularly the contributions to be found in Gunnar Myrdal’s book, Monetary Equilibrium, first published in 1933.

Myrdal and his colleagues developed their monetary theories as an immanent criticism of the monetary theory of Knut Wicksell and David Davidson, the founder editor of the Swedish Ekonomisk Tidskrift.

Myrdal, in 1927, is credited with distinguishing between ex ante (looking forward) and ex post (looking backward) variables in dynamic economic analysis. Thereby, he was able to incorporate expectations into economic theory.

   4. A Survey of Intermediate Products in International Trade.

My essay as a graduate student, in 1974, in International Economics that surveys and analyzes Intermediate Products in International Trade Theories.

Incorporating intermediate goods into trade models is important because the bulk of international trade is in intermediate goods.

Many articles have been published which explicitly recognize the production and trade of intermediate and (produced) capital goods. Some of the results support the robustness of the traditional trade models; other results negate or modify the traditional propositions. The paper shows that the conclusions obtained depend upon the exact specification of the model employed.