References Phelps, E.S. et al. (1970) The Microeco- nomic Foundations of Employment and Inflation Theory, New York and Lon- don: Macmillan. new political economy (D0, E0) A school of economics which attempts to demonstrate that actual economic policies are determined by a political mechanism. Income distribution and the nature of political institutions are especially empha- sized. GAME THEORY, PRINCIPAL–AGENT, TRANS- ACTIONS COSTS and the POLITICAL BUSINESS CYCLE are all used as tools of analysis. References Drazan, A. (2000) Political economy in macroeconomics, Princeton, NJ: Prince- ton University Press. Persson, T. and Tabellini, G. (2000) Poli- tical Economy: Explaining Economic Policy, Cambridge, MA: MIT Press. new protectionism (F1) see neo- mercantilism new regionalism (F1) The formation of new trading blocs in the world because of the shortcomings of multilateral agreements such as GATT, e.g. NAFTA. These new blocs often have deep integration and can consist of smaller countries making concessions to a larger one – as in the case of Mexico being subordinate to the USA. This develop- ment makes moderate trade concessions and creates deep links between national economies. New Right (B2) Political and economic thinkers who came to prominence in the 1980s in the USA and Western Europe through advocating LIBERTARIAN ECONOMICS. Their proposals in- clude a minimal role for the state, little government intervention in the running of national economies, a market approach to production and distribution and PRIVATIZA- TION . Seealso:economicdevolution;laissez- faire References Thompson, G. (1990) The Political Econ- omy of the New Right, London: Pinter. ‘news’ (G0) Information about fundamental macroe- conomic variables, e.g. unanticipated movements in interest rates, NATIONAL IN- COME or a BALANCE OF PAYMENTS current account which causes unanticipated changes in exchange rates. References Frenkel, L.A. (1981) ‘Flexible exchange rates, prices and the role of ‘news’. Lessons from the 1970s’, Journal of Political Economy 89: 665–705. new town (R5) Government-financed urban developments in the UK designed to reduce the popula- tion of the larger cities, especially London and Glasgow. The establishment of new towns occurred in two waves: in the late 1940s and the 1960s. All of these twenty- six towns were originally run by separate corporations charged with the tasks of building sufficient housing and attracting industrial and commercial investment. Although the planners of these towns hoped to integrate residential and indus- trial areas to reduce COMMUTING, this has not happened as much as expected, partly because of a mismatch of jobs and work- ers. Increasingly these towns have found it difficult to grow as they have suffered, like the major old cities, from the decline of the UK manufacturing sector. The uto- pian hopes for these towns have been dashed by rising unemployment and crime. new trade theory (F1) Models of international trade which have built on earlier models which assumed PERFECT COMPETITION to incorporate IMPER- FECT COMPETITION and INCREASING RETURNS. References Krugman, P.R. (1979) ‘Increasing returns, monopolistic competition and interna- © 2002 Donald Rutherford tional trade’, Journal of International Economics 9: 469–79. New York Mercantile Exchange (G1) The biggest market for energy futures and options; usually referred to as NYMEX. New York Stock Exchange (G1) Established in 1792 when twenty-four brokers signed an agreement in Wall Street. It moved indoors in 1793 and took its present name in 1863. Every stock traded is assigned to a specialist who also acts as a broker. All of the exchange’s transactions are published daily. By 1987, the NYSE had 1,366 members. In 1980, its subsidiary, the NEW YORK FUTURES EXCHANGE, was opened. Seealso:AmericanStockExchange N-firm concentration ratio (L1) The ratio of the sales of a group of firms of an industry to the sales of that industry as a whole. The number of firms most commonly chosen for industrial censuses is three, four, five, eight or sixteen and hence the ratios are sometimes called three-firm, four-firm, eight-firm or six- teen-firm ratios. Also known as the lead- ing firms ratio. Seealso:concentration;monopolypower niche bank (G2) 1 A specialist bank with a particular place in the financial sector. The consequence of this concentration on particular types of customer or financial service gives it higher profitability but the greater risk of not being diversified in its activities. 2A LASER BANK. niche trading (G1) Specializing in a particular form of trad- ing, which is a characteristic of many securities markets. Nikkeiren (J5) Japanese Federation of Employers’ Asso- ciations. Seealso:shunto Nobel Prize for Economics (B3) The ‘Nobel Memorial Prize in Economic Sciences’ awarded to distinguished econo- mists and econometricians since 1969. Prominent in the list of prize winners are persons from the USA, France, Scandina- via, the USSR and the UK: 1969 Ragnar Frisch; Jan Tinbergen 1970 Paul Samuelson 1971 Simon Kuznets 1972 Kenneth Arrow; John Hicks 1973 Wassily Leontief 1974 Friedrich von Hayek; Gunnar Myrdal 1975 Leonid Kantorovich; Tjalling C. Koopmans 1976 Milton Friedman 1977 James Meade; Bertil Ohlin 1978 Herbert Simon 1979 W. Arthur Lewis; Theodore Schultz 1980 Lawrence Klein 1981 James Tobin 1982 George Stigler 1983 Gerard Debreu 1984 Richard Stone 1985 Franco Modigliani 1986 James M. Buchanan 1987 Robert M. Solow 1988 Maurice Allais 1989 Trygve Haavelmo 1990 Harry Markovitz; Merton Miller; William Sharpe 1991 Ronald H. Coase 1992 Gary S. Becker 1993 Robert W. Fogel; Douglass C. North 1994 John Harsanyi; John F. Nash; Reinhard Selten 1995 Robert Lucas 1996 James A. Mirrlees; William Vickrey 1997 Robert C. Merton; Myron S. Scholes 1998 Amartya Sen 1999 Robert A. Mundell 2000 James J. Heckman; Daniel L. McFadden 2001 George A. Akerlof; Andrew M. Spence; Joseph E. Stiglitz © 2002 Donald Rutherford References Breit, W. and Spencer, R.W. (1986) Lives of the Laureates, Cambridge, MA, and London: MIT Press. Lindbeck, A. (1985) ‘The prize in eco- nomic science in memory of Alfred Nobel’, Journal of Economic Literature 23 (March): 37–56. nodal pricing (D4, Q4) A set of prices related to each node of a system such as electricity transmission. The opposite of ZONAL PRICING. noise (C1) Random disturbances which distort a sig- nal. The probability distribution of what is received depends on what is sent. Seealso:whitenoise noisetrader(G1)seeinvestorsentiment no-load fund (G1) A MUTUAL FUND not charging sales commis- sion. Seealso:loadfund nomenklatura (P2) Members of the political elite of the former East European countries appointed by the Communist Party. Social and eco- nomic privileges were given to members of committees ranging from the Central Party Committee to district committees. Although out of power in the 1990s, the nomenklatura continued to exercise power in many TRANSITION ECONOMIES. nominal (D0, E0) The current money value unadjusted for inflationary change of an economic vari- able, e.g. EXCHANGE RATE, RATE OF INTEREST, rate of protection or tariff. nominal gross domestic product (E0) GROSS DOMESTIC PRODUCT at current prices. This is regarded as a suitable reference target for regulating public expenditure. In the UK and the USA, GDP figures are published quarterly. nominalincome(D0)seemoneyincome nominal tax rate (H2) The published rate of tax on a good, income or capital. The whole burden of such taxes is often reduced by tax allow- ances or credits. nominee account (G2) An arrangement for hiding the beneficial ownership of shares. Banks and other financial institutions buy shares in the name of a nominee account for persons or companies wishing to be anonymous. This is most useful to a company which is accumulating another company’s shares with a view to making a takeover bid. This system is chiefly supported for its admin- istrative convenience. non-accelerating inflation rate of unemployment(E3)seenaturalrateof unemployment non-bankactivities(G2)seeBank HoldingCompanyAct1956 non-basic commodity (D0) A commodity affecting the production of some, but not all, other commodities. Seealso:basiccommodity non-basic industry (L0) An industry providing services to a com- plex of basic industries. non-competing group (J4) An occupational group of the labour market separated from other groups by BARRIERS TO ENTRY. John Stuart MILL,who first noted this market imperfection, li- kened the labour market to a hereditary caste system. Restricted access to educa- tion, union rules and discrimination sepa- rate the labour force into these groups, giving rise to occupational WAGE DIFFEREN- TIALS . non-employment (J1, J6) Being without a job. The unemployed, retired, sick, the rich living on investment income alone and carers for dependants make up this population category. Some of this underutilization of labour is associated © 2002 Donald Rutherford with a lack of opportunity for, or restricted access to, paid employment. Seealso:labourforce non-goal equilibrium (E0) An EQUILIBRIUM state that is the conse- quence of the interaction of economic forces, not the conscious pursuit of a particular agent. A major case is NATIONAL INCOME in a MARKET ECONOMY. Seealso:goalequilibrium non-interest-bearing M1 (E4) A component of M1, introduced because somebankschangedthecharacterof CUR- RENT DEPOSITS (SIGHT DEPOSITS) by paying interest on them. non-linear correlation (C1) The relationship between two variables which approximates in a diagram to a curve. Seealso:leastsquaresmethod;linearre- gression;scatterdiagram non-linearpricing(D4)seesecond-degree pricediscrimination non-market sector (P0) The part of an economy which does not sell its goods and services. The output of governments, households and farms (in the case of less developed economies) makes up much of the activity of this sector. non-parametric model (C5) An econometric model that attempts to use statistical inference and economic data to explore the relationship between eco- nomic variables without using a given functional relationship. non-pecuniary returns (J3) The reward to a worker other than wages, salaries and fringe benefits. Personal satis- faction, power, status and continual happi- ness are amongst these returns. non-profit enterprise (L3) An organization, other than a firm, whose members have no private PROPERTY RIGHTS associated with it and, hence, no entitle- ment to profits. These enterprises, usually financed by donations, endowments or government grants, aim to maximize the quantity and quality of the service pro- vided and to break even. In the public sector, most governmental institutions are NPEs; in the private sector, households, charitable foundations, mutual insurance companies and a variety of clubs are the major examples. The motives for establish- ing NPEs are various, including the provi- sion of MERIT GOODS, the subsidization of religion and the arts and the commemora- tion of a major benefactor. A dislike of market mechanisms and altruistic attitudes have been fundamental to the growth of NPEs. References Gassler, R.S. (1986) The Economics of Non-profit Enterprise: A Study in Ap- plied Economic Theory, New York and London: University Press of America. Holtman, A.G. (1988) ‘Theories of non- profit institutions’, Journal of Economic Surveys 2: 30–45. Rose-Ackerman, S. (ed.) (1986) The Non- Profit Sector: Economic Theory and Public Policy, Oxford: Oxford Univer- sity Press. non-renewable resources (Q3) Fossil fuels or metals which are exhausti- ble deposits of the earth’s surface. non-standard tax relief (H2) A reduction in the taxable income of a person on account of actual expenses incurred. These expenses are recognized by a tax authority as deductible. non-tariff barrier (F1) A barrier to imports, other than an import tax. The non-tariff methods used include the imposition of rigid safety standards, strict administrative standards, global and bilateral quotas, orderly marketing ar- rangements and VOLUNTARY EXPORT RE- STRAINTS . Examples include the MULTI-FIBRE ARRANGEMENT , the USA’s orderly marketing arrangement with Korea and Taiwan on © 2002 Donald Rutherford non-rubber footwear, safety measures on colour TVs and CB radios, and the EUR- OPEAN COMMUNITY ’s import restrictions in 1981 on steel from Korea. The GENERAL AGREEMENT ON TARIFFS AND TRADE approxi- mately measures the extent of the applica- tion of restrictive measures as the ratio of restricted imports/total imports. This mea- sure is imprecise as a restriction will affect the total flow of imports. Non-tariff bar- riers can also be measured by calculating restricted imports as a share of the total consumption of manufactured goods, or consumption of restricted manufactured goods as a share of the total consumption of manufactured goods. Seealso:protection;tariff non-tradables (F1) Goods and services that do not enter into international trade. Many services of a personal kind, e.g. hairdressing, can only be sold within a country, but most goods can be traded with the exception of those which cannot be preserved from perishing and those which are too heavy and fixed to remove, e.g. buildings (although there are exceptional cases of UK buildings being shipped to the USA). non-zero-sum game (C7) A situation in which the total amount to be distributed amongst the players is not equal to zero. The game may be a positive sum game, a negative sum game, or the sum may vary because of the strategies or decisions of the players, as in the PRISON- ERS’ DILEMMA game. Seealso:zero-sumgame normal distribution (C1) A symmetric distribution shaped like a bell. Seealso:kurtosis normal good (D0) A good whose demand increases as in- come rises. Such a good will have an IN- COME ELASTICITY OF DEMAND more than one. Seealso:inferiorgood normal price (D4) MARSHALL’s notion of an equilibrium price. Seealso:naturalprice normal profit (D0) The minimum amount of PROFIT a firm must earn to remain in existence. The normal profit rate is the OPPORTUNITY COST to the firm of employing capital in that industry. Since this profit is the minimum supply price of ENTREPRENEURSHIP, it will be included along with other costs in the total costs of a firm. When measuring MONOPOLY POWER, normal profit is used as a benchmark: if a firm has profits in excess of normal profit, it is to some extent a monopolist. normative economics (A1) Economics based on value judgments stating what should be the case, e.g. ‘personal incomes should be equal’. The distinction between this type of economics and POSITIVE ECONOMICS includes in its ancestry HUME’s ‘is–ought’ dichotomy. Normative issues, central to WELFARE ECO- NOMICS , cannot be settled by appeals to facts. Seealso:economicmethodology References Myrdal, G. (1954) The Political Element in the Development of Economic Thought, trans. P. Strecten, London: Routledge & Kegan Paul. Norris–La Guardia Act 1932 (J5) US federal statute that gave US LABOR UN- IONS substantial relief from judicial inter- ference. Under section 3 of the Act, YELLOW DOG CONTRACTS were made unen- forceable; under section 5 courts were prohibited from granting injunctions on the grounds of unlawful combination or conspiracy. Similar Acts were passed by several US states. Seealso:WagnerAct1935;Taft–Hartley Act1947 North American Free Trade Area (F1) An extension of the US–Canada Free © 2002 Donald Rutherford Trade Agreement of 1989 to include Mexico, agreed in 1992. Over fifteen years all duties, tariffs and non-tariff barriers between the countries will be eliminated. For trade-sensitive products such as beer, footwear and maize there will be long periods of adjustment. A three-nation panel will consider trade disputes, includ- ing related employment and environmen- tal matters. North, Douglass Cecil, 1920– (B3) Educated at the University of California, he taught at the University of Washington from 1950 to 1983 and was subsequently Henry R. Luce Professor of Law and Liberty at Washington University, St Louis. His celebrated work in CLIOMETRICS considers the evolution and economic effects of legal and social institutions. He is famous for The Economic Growth of the United States, 1790–1860 (1961) and Structure and Change in Economics (1981). In 1993 he was awarded the NOBEL PRIZE FOR ECONOMICS with FOGEL. north–south gap (R5) The regional difference in prosperity in Great Britain and many other countries usually measured by GDP per capita, property prices and levels of unemploy- ment. Some countries such as Italy have a north more prosperous than the south. The gap often represents the difference between the region with the national capital and peripheral areas. In the world as a whole there is a disparity in income between prosperous countries north of the equator and the poorer countries to the south. note issuance facility (G2) Promises by banks to lend money to companies when they cannot raise it in short-term securities markets. This is a form of OFF-BALANCE-SHEET FINANCING or adjusted claim. Increasingly US banks are using NIFs as an alternative to traditional medium-term credit facilities, often ar- ranged with a syndicate of banks. Seealso:revolvingunderwritingfacility ‘Not in my backyard’ (R0) A frequently made objection to an envir- onmental change perceived to be detri- mental with the recommendation that someone else suffer. This plea, nicknamed ‘NIMBY’, is often uttered when waste dumps and unsightly buildings are pro- posed. no-trade equilibrium (D0) An equilibrium position with domestic demand equal to domestic supply for an autarkic state. Seealso:autarky NOW account (G2) Negotiable order of withdrawal account; a CHECKING ACCOUNT (US) which bears inter- est. Super-NOW accounts offer a higher rate of interest. Nozick, Robert, 1938–2002 (B3) US philosopher of the NEW RIGHT famous for his notion of the ‘minimal state’. He was educated at Columbia College and Princeton University. He has taught at Princeton from 1962 to 1965 and been a full professor of philosophy at Harvard since 1969. His libertarian view of the limited role of government is in accord with much of the thinking of FRIEDMAN and HAYEK. Seealso:forcedlabour References Nozick, R. (1974) Anarchy, State and Utopia, Oxford: Basil Blackwell. N share (G1) An AMERICAN DEPOSITORY RECEIPT issued by a Chinese company and listed on the New York Stock Exchange. Seealso:Ashare;Bshare;Lshare null hypothesis (C1) In statistics, the hypothesis that there are no differences between the characteristics of a population and a sample taken from it, or between two samples of that population. nume ´ raire (D0, E4) A measuring rod for stating relative prices; © 2002 Donald Rutherford WALRAS’s term for a commodity used for this measurement purpose. nutcracker theory of the business cycle (E3) A cycle in economic activity in which profits are squeezed like a nut from the two sides of limited demand and rising costs. This occurs because in every expan- sion of an economy costs rise faster than demand as a cycle reaches its peak. References Sherman, H.J. (1991) The Business Cycle: Growth and Crisis under Capitalism, Princeton, NJ: Princeton University Press. © 2002 Donald Rutherford O Oaxaca wage decomposition (J3, J7) A method of distinguishing wage differ- ences due to human capital characteristics from those based on DISCRIMINATION. References Oaxaca, R. with Ransom, M. (1994) ‘On discrimination and decomposition of wage differentials’, Journal of Econo- metrics, 61: 5–21. objective function (D0, E0) A statement in equation form of a depen- dent variable which has to be maximized or minimized by independent variables attaining optimal values. In the case, e.g. of a UTILITY FUNCTION, utility is the depen- dent variable to be maximized and quan- tities of different goods are the independent variables which have to be optimally combined. objectives of firms (L2) What a FIRM has as its aim or target. PROFIT MAXIMIZATION is assumed in many theories of the firm to be the central aim of a firm but research since the 1930s has noted that managers have many other objectives, partly because they are not shareholders directly rewarded in propor- tion to a firm’s profitability. Objectives replacing profit maximization include sales maximization, maintaining (or in- creasing) a market share and achieving a target rate of return on capital employed. Seealso:managerialmodelsofthefirm; theoryofthefirm occupation (J2) The work activity of a person defined according to the education, skill, responsi- bility and experience demanded by an employer. References International Labour Organisation (1968) The International Standard Classification of Occupations, Geneva: ILO. occupational licensing (J2, K2) The regulation of types of employment or SELF-EMPLOYMENT, including the crafts and PROFESSIONS. The regulatory bodies engaged in licensing have included guilds and professional associations. They aim to maintain the quality of a particular occu- pational group by supervising training, punishing malpractice and limiting entry. occupational mobility (J6) A worker’s movement between one type of job and another. The amount of mobility depends greatly on the fineness of the occupational classification chosen. Since 1945, even with the broadest classification of occupations, a great shift from manual to white-collar jobs has been apparent in many advanced countries, partly because of DE-INDUSTRIALIZATION and the expansion of the service industries. Seealso:labourmobility © 2002 Donald Rutherford occupational segregation (J4) An occupational distribution of a labour force such that men, or women, or differ- ent ethnic groups, are under-represented or over-represented in particular occupa- tions compared with their proportions in the total labour force. An example of this would occur if overwhelmingly black males worked in domestic service. In many countries women are heavily concentrated in nursing, retailing, secretarial and do- mestic service jobs. Seealso:crowdinghypothesis;discrimi- nation off-balance-sheet financing (G3, M4) Funds raised for a business not shown in its BALANCE SHEET. This type of financing is resorted to when the company has bor- rowed near to the limit set by its Articles of Association or when it wants to avoid increasing its GEARING and attracting an adverse stock market reaction. The ap- pearance of a company’s balance sheet can be improved by transferring liabilities to associated companies or by using particu- lar devices, e.g. the leasing of capital equipment, the artificial sale of stock to a financial company to acquire extra funds, mortgage SECURITIZATION, FACTORING, sale and repurchase agreements and loan transfers. Increasingly, the bodies super- vising the accountancy profession are de- manding fuller and more open financial reporting. Seealso:creativeaccounting offer curve (F1) A curve showing what a country will offer in exports for the amount it imports in a model of two goods. It is used to analyse the effects of tariffs. Also known as a reciprocal demand curve. offer price (G1) 1 The price at which a company offers to sell its shares to the public. 2 The selling price of UNIT TRUST units. off-exchange instrument (G2) A financial product that is not traded on an official stock exchange but resembles officially recognized products. An example is a bank CERTIFICATE OF DEPOSIT linked to the performance of STANDARD & POOR’S 500 stock index. Office of Fair Trading (L4) UK organization set up in 1973 to admin- ister COMPETITION policy. Its tasks include examining monopoly situations, monitor- ing ANTI-COMPETITIVE PRACTICES in the UK, regulating CONSUMER CREDIT and consider- ing proposed mergers which might be referred to the COMPETITION COMMISSION.It maintains the register of permitted restric- tive trade practices. Office of Management and Budget (H1) An office of the US president set up in 1970 in succession to the Bureau of the Budget (founded 1921) which is responsible for preparing the Executive’s budget for pre- sentation to Congress in January each year. After examination by House and Senate committees, a concurrent resolution on the budget is announced by 15 April to be followed by legislation by 15 May. Once the budget is passed, the OMB supervises and controls its administration and provides data on programme performance. official development assistance (O0) Aid granted by a national government to an international organization such as the WORLD BANK. Seealso:foreignaid official financing (F4) An item in the balance of payments of a country which is the amount of finance which has to be raised from overseas monetary authorities, by currency borrow- ing and drawing on official reserves to finance a deficit in the current and capital accounts. officialreserves(E5)seeinternational reserves offshore banking (G2) Banking activities conducted abroad to evade domestic monetary controls. UK © 2002 Donald Rutherford financial institutions have resorted to small Commonwealth countries such as the Bahamas and a number of islands, including the Channel Islands and the Isle of Man. (The USA regards banking activ- ities in every foreign country, including the UK, as ‘offshore’.) The principal activities of offshore banks are the management of investment trusts and participation in Eurodollar and Eurobond markets. off-the-job training (J2) Formal training, usually away from the premises of one’s employer, which takes the form of lectures, tutorials and practical sessions. A switch to this type of training has been necessary because of the hapha- zard nature of much ON-THE-JOB TRAINING and the increasing amount of technical knowledge required for many occupations. Seealso:generaltraining Ohlin, Bertil, 1899–1979 (B3) Swedish international trade and macroe- conomic theorist and a leader of the STOCKHOLM SCHOOL, who was educated at Lund University, the Stockholm School of Business Administration, Harvard Univer- sity and at the University of Stockholm where he was a doctoral student of CASSEL. He was a professor of economics from 1925 to 1930 at Copenhagen and at Stock- holm from 1930 to 1965 (as successor to HECKSCHER). In a parallel political career, he was a member of the Swedish parlia- ment (1938–70), leader of the Swedish Liberal Party (1944–67) and Minister of Trade (1944–45). As a member of the STOCKHOLM SCHOOL, he in many ways anticipated KEYNESIAN ideas by using the concepts of the PROPEN- SITY TO CONSUME , LIQUIDITY PREFERENCE and the MULTIPLIER in articles of 1933 and 1934. In times of excess capacity, he argued (in 1934) that the government should under- take investment projects that would not compete with the private sector and would be deficit financed. He developed Heckscher’s factor price equalization the- ory of international trade to produce the HECKSCHER–OHLIN TRADE THEOREM. His most famous work is Interregional and Interna- tional Trade (1933). His contribution to international trade theory earned him, with MEADE, the NOBEL PRIZE FOR ECONOMICS in 1977. References Samuelson, P.A. (1981) ‘Bertil Ohlin (1899–1979)’, Scandinavian Journal of Economics 83: 355–71. Steiger, O. (1976) ‘Bertil Ohlin and the origins of the Keynesian Revolution’, History of Political Economy 8: 341–66. oil-price increases (E3, Q4) Major supply shocks in 1973–4 caused by the ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES raising the price of oil and in 1979–80 by a cutback in Iranian oil pro- duction and exports after the Iranian Revolution. In 1973–4, the price rose from $1.90 to $9.76; in 1979–80 from $17.26 to $28.67; and in 1990, Iraq’s invasion of Ku- wait also led briefly to oil-price inflation. Okun, Arthur M., 1928–80 (B3) US economist and policy adviser who was educated at Columbia University and taught at Yale University from 1952 to 1963. He was a member of the COUNCIL OF ECONOMIC ADVISERS from 1964 to 1968, the year in which he was chairman. His most influential work was with the BROOKINGS INSTITUTION as its senior fellow from 1969, contributing to Brookings Papers on Eco- nomic Activity as joint editor. His fame largely rests on his The Political Economy of Prosperity (1970), Equality and Effi- ciency – The Big Trade-off (1975) and his posthumous classic Prices and Quantities – A Macroeconomic Analysis (1981). His work as a macroeconomist had the major concern of attaining economic growth without inflation; the trade-off between equality and efficiency also interested him. Seealso:discomfortindex;invisiblehand- shake;leakybucket;Okun’slaw References Gordon, R.J. and Hall, R.E. (1980) © 2002 Donald Rutherford [...]... Participants of a December 1 978 Conference, Federal Reserve Bank of Minneapolis Samuelson, P.A (1958) ‘An exact consumption loan model of interest with or without the social contrivance of money’, Journal of Political Economy 66: 4 67 82 Wilson, C.A.(1981) ‘Equilibrium in dynamic models with an infinity of agents’, Journal of Economic Theory 24: 95–111 constitutes the NET PROPERTY INCOME FROM item of the... enlightened labour practices In 18 17 he published a plan to own rate of interest (E4) notion, used by KEYNES, that for every durable commodity there is a rate of interest for it in terms of itself, e.g a wheat rate of interest, a steel rate of interest A steel rate of interest of 10 per cent means that 110 tonnes of steel in a year’s time exchanges for 100 tonnes now The money rate of interest is based on the... Penrose was Professor of Economics at the School of Oriental and African Studies, University of London, from 1964 to 1 979 Her most famous contribution to economics is her theory of the growth of the firm It had the optimistic theme that the human and material resources managed by a firm can be used to achieve its limitless expansion through product and market diversification and the recruitment of additional... product prices organizational economics (A1) A branch of microeconomics which has made use of psychology, sociology, political science, biology, ecology and anthropology to study the nature of organizations and the phenomena associated with them From early studies of power within organizations and the consequences of being dependent on outside resources, this form of economics has changed to using... a regulated firm to produce a minimum output Under this form of regulation profit is usually lower than under price regulation The two forms of regulation coincide under a monopoly References Weitzmann, M.L (1 974 ) ‘Prices vs quantities’, Review of Economic Studies 41: 477 –91 output gap (E1) The difference between the actual level of output of an economy and its potential or capacity output level, usually... to higher demand and profits paradox of debt (G3) The impossibility of a particular company reducing its debt (leverage) ratio because other companies are following the same strategy If debt ratio reduction becomes widespread, capital accumulation and profits fall with the consequence that the rate of growth of internal funds based on profits is less than the rate of growth of borrowing References... finance as a result of operating at a higher output See also: economy of scale pecuniary external economy (D0) A reduction in the average costs of a firm brought about by the financial actions of other firms A major example of this is the simultaneous undertaking of several investment projects that reduce costs by reducing the risk of one of the projects failing See also: economy of scale pecuniary... do not vary with the level of output overheating (E6) An excessive expansion in the level of economic activity of an economy, often as a result of the using of DEMAND MANAGEMENT to expand demand at a faster rate than the output potential of the economy permits In some cases, a simplistic application of KEYNESIANISM which poorly estimates sustainable growth and the amount of excess capacity in an economy... short notice personnel economics (J2) The study of the business aspects of human resources based on microeconomic principles, especially the notions of maximizing agents, equilibrium and efficiency References Lazear, E.P (2000) ‘The future of personnel economics , Economic Journal 110: 611–39 per-unit tax (H2) A tax which increases the cost of producing a unit of a good by the amount of the tax; import... MARX as the ‘founder of political economy’ and by KEYNES as ‘the father of modern economics He had an eventful life rising from being a cabin boy of humble origins to a chair of anatomy at Oxford, a chair of music at Gresham’s College, London, Physician-General to Cromwell’s army in Ireland, a founder of the Royal Society and an original thinker in economics, far surpassing most of his MERCANTILIST . PRIZE FOR ECONOMICS in 1 977 . References Samuelson, P.A. (1981) ‘Bertil Ohlin (1899–1 979 )’, Scandinavian Journal of Economics 83: 355 71 . Steiger, O. (1 976 ) ‘Bertil Ohlin and the origins of the Keynesian. Hicks 1 973 Wassily Leontief 1 974 Friedrich von Hayek; Gunnar Myrdal 1 975 Leonid Kantorovich; Tjalling C. Koopmans 1 976 Milton Friedman 1 977 James Meade; Bertil Ohlin 1 978 Herbert Simon 1 979 W COMMISSION.It maintains the register of permitted restric- tive trade practices. Office of Management and Budget (H1) An office of the US president set up in 1 970 in succession to the Bureau of the Budget (founded