[OPE-L:5649] [ALEJANDRO R] andrew: random profits

Gerald Levy (glevy@pratt.edu)
Sun, 26 Oct 1997 14:20:38 -0500 (EST)

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Im resending this because it was a problem with the server.
A brief comment/question to Andrew Kliman's PIAF:

> Date: Thu, 23 Oct 97 19:09:47 UT
> From: "andrew kliman" <Andrew_Kliman@CLASSIC.MSN.COM>
> To: ope-l@galaxy.csuchico.edu
> Subject[OPE-L:5649] : (ope-l) RE: andrew: random profits

Andrew K says:

> Furthermore, what is "unfair" about NH1? Evidently, that actual
> costs are a "price" variable, so that NH1 unfairly uses prices to
> predict prices. (Correct me if Im wrong.) Yet lets not be
> confused by the word "price." The VILCs used to compute the
> "value" of inputs are just as much prices as are
> the actual input prices. Moreover, just as the VILCs differ from
> *output* prices, so do *input* prices (sorry about this Ajit, but
> it is true). Allins theory holds that output prices are
> determined by costs based on VILCs; NH1 holds that output prices
> are determined by costs based on input prices. So, in principle,
> theres no problem here of using the dependent variable to
> explain itself.

1. Could you explain the last sentence? I think it suggests a kind
of "tautology" like "prices explain prices" ("dependent variable
explain[s] itself"). IMO this is why Allin is thinking that this is a

Isnt there a "temporal determination" in which there is no
such a "tautology"? "Dependent variable" is "output prices, period
t+1" while "independent variable" is "input prices, period t".

I think the issue of "determination" is perhaps the most interesting
thing one can find in the TSS interpretation. However, unfortunately,
it is hard to have a clear and understanable account of it.

2. I think the temporal conception of determination of value
and prices requires a kind of "model" with "lags". However, its not
clear to me if the statistical stuff that you have in developed
countries is adequate to do that.

For example, can you really trace *temporally* the price of inputs,
so that you can distinguish them from the output prices? When Allin
tested NH1, did he really have *different* series of prices for
inputs and outputs? Or, did he actually work with a *unique*
set of prices corresponding to a generic "period t", lets say "year
1996"? Isnt this hypothetical "unique set" an average of input and
output prices? Could you both, Allin and Andrew, explain more about
the "secrets" of the statistical stuff you are using?

Alejandro Ramos