Three Essays in Theoretical, Applied, and Normative Economics

• Main Author: Selinger, Stephen Richard
• Format: Others
• Language: en
• Published: 1984
• Online Access: https://thesis.library.caltech.edu/11261/2/SELINGER_SR_1984.pdf; Selinger, Stephen Richard (1984) Three Essays in Theoretical, Applied, and Normative Economics. Dissertation (Ph.D.), California Institute of Technology. doi:10.7907/21dr-cz26. https://resolver.caltech.edu/CaltechTHESIS:10312018-092033160 <https://resolver.caltech.edu/CaltechTHESIS:10312018-092033160>

<p>The first essay of this dissertation treats the question of ethical fairness towards future generations. It is argued that Harsanyi's equiprobability characterization of the original position captures the notion of ethical fairness and that the result of applying this model to a future generations context and also satisfying the axioms of the expected utility theorem results in classical utilitarianism being chosen. This is in contrast to the average utilitarianism which is widely thought to be the more plausible utilitarian position in a short run framework. It is also argued that classical utilitarianism does not entail a situation where individuals would exist at a subsistence level as some (Parfit) have assumed.</p> <p>The second essay is an efficient market test of the real estate market. The question of whether lagged real interest rates contain statistically significant information about future housing prices is examined. It is found that the coefficients of lagged real rates of twelve and eighteen months were negative and statistically significant; thus efficiency is rejected. A Hausmann test was then run to see if it was permissible to use an ordinary least squares approach; such an approach was valid.</p> <p>The third essay examines the effect of inflation on rates of return in different socieo-economic areas. Measures of expected and unexpected inflation are defined. The rates of return from holding real estate in different areas are then regressed upon the measures of expected and unexpected inflation. A Chow test was then run to see if it was permissible to pool the coefficients of expected and unexpected inflation. The pooling is permissible and so we can say that in a statistical sense, inflation had the same impact upon the different areas.</p>