[OPE-L:2961] Re: In Search of (E)

Allin Cottrell (cottrell@wfu.edu)
Wed, 4 Sep 1996 11:08:51 -0700 (PDT)

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On Tue, 3 Sep 1996, andrew kliman wrote (inter alia):

> The following by Gil is somewhat perplexing: "by allowing equilibria in which
> input and output prices diverge other than by a given time discount factor,
> Andrew is implicitly assuming a form of market incompleteness which requires
> explicit justification, since futures markets do in fact exist in the real
> capitalist world. Thus in my reading Roemer's assumptions are more clearly
> spelled out than Andrew's." I'm not sure what "given" means, but unless it
> means "constant," then input and output prices in my examples only diverge by
> a "given time discount factor"-I have no variation in relative prices over
> time.

I may be getting confused here, but if the model or illustration
under discussion is of the sort presented by Andrew in his EEA
Value Theory paper of the spring of this year, then I think he
does have relative price variation over "time" (more precisely,
between each of his tableaux and the next). Shortly after the
EEA conference I posted to ope an extension (also a critique)
of Andrew's tables. Looking back at my notes from that time, I
see that the relative prices of the outputs of the three sectors
(taking III as numeraire) are:

3.14 : 1.57 : 1.00 in table 1
3.40 : 1.60 : 1.00 in table 2
3.49 : 1.61 : 1.00 in table 3 ...
3.53 : 1.61 : 1.00 in table 21

As I remember, my table 1 and 2 results simply replicated Andrew's,
and Andrew agreed that the algorithm I used for generating the
subsequent tables was faithful to his procedure. Am I off the

Allin Cottrell