Meek, R.L. (1962) The Economics of Physiocracy, London: Allen & Unwin. Vaggi, G. (1987) The Economics of Fran- c¸ois Quesnay, London and Basingstoke: Macmillan. queuing system (D0, P4) A method of resource allocation which distributes resources on the principle of ‘first come, first served’. It is used to avoid congestion in many European bond mar- kets and is an alternative to control by a central monetary authority. Potential is- suers of bonds are placed in the queue according to their financial need, their current creditworthiness and current monetary policy. Countries with this sys- tem include Germany and France. In general, queuing can be used as a method of allocation in any market. Seealso:pricesystem quick assets ratio (M4) Liquid assets divided by current liabilities; also known as the ‘ ACID TEST RATIO’. It should be at least 1. quit rate (J6) The proportion of workers leaving their jobs in a particular time period. This rate is used as a measure of labour turnover. Seealso:exit–voice quota (D2, F1) A restricted supply of a good or service. Import quotas are used to protect domes- tic industries; export quotas, to stabilize export earnings. Under any system of rationing, a quota will be the amount allocated to a particular person or organi- zation. Seealso:non-tariffbarrier;protection; tariff;voluntaryexportrestraint quotedcompany(K2)seelisted company © 2002 Donald Rutherford R racial discrimination (J7) Treating persons of another race un- equally, especially with regard to wages and employment opportunities. Seealso:discrimination Radcliffe Report (E5, G2) A Royal Commission report, published in 1959, on the working of the UK monetary system. It promulgated the view that money is only one ASSET in the spectrum of LIQUIDITY and that, as its VELOCITY OF CIRCULATION is unstable, the control of it is incidental to interest rate policy. Although opposed to the control of the money supply, given the sophistication of the post-war UK financial system, from day to day it recommended that interest rates should be used rather than credit controls as instruments of MONETARY POLICY: this was difficult to achieve given the need for stable interest rates to maintain an orderly gilts market. It also suggested changes in monetary statistics. References Committee on the Working of the Mone- tary System (1959) Report, London: HMSO, Cmnd 827. radical economics (A1) An application of Marxist and socialist theories to the analysis of the problems of advanced CAPITALIST countries. The major concerns of radical economists are income inequality, international capitalism in the form of MULTINATIONAL CORPORATIONS, DE-IN- DUSTRIALIZATION , UNEMPLOYMENT, MARKET FAILURE , defence expenditure and the low provision of many PUBLIC GOODS. The hu- mane concerns of these writers have influ- enced a great deal of policy making but have yet to form the basis of a new society and economy in any major country. References Linder, M. (1977) The Anti-Samuelson , Vols I and II, New York: Urizen Books. Sawyer, M. (1989) The Challenge of Poli- tical Economy: Radical Alternatives to Neo-Classical Economics, Hemel Hemp- stead: Harvester Wheatsheaf. Rambouillet Summit (F3) Economic summit held in France in 1975 at which it was agreed that CENTRAL BANKS would co-ordinate their policies to stabi- lize currencies. This was the first interna- tional monetary agreement after the collapse of the BRETTON WOODS system. Ramsey prices (D0) PARETO-optimal prices which achieve a required level of profits. These prices maximize the sum of an industry’s prices and its PRODUCER’S SURPLUS. The pricing rule Ramsey asserted was that, for a regulated firm (e.g. a PUBLIC UTILITY such as electri- city), the excess of price over MARGINAL COST will be highest for those goods which have low ELASTICITIES of demand. This is second-best pricing when first best is not available. It was adopted as a pricing rule © 2002 Donald Rutherford by the INTERSTATE COMMERCE COMMISSION in 1985. References Baumol, W.J. and Bradford, D.F. (1970) ‘Optimal departures from marginal cost pricing’, American Economic Review 60: 265–83. Ramsey saving rule (E2) The rate of saving multiplied by the MAR- GINAL UTILITY of money should always be equal to the amount by which the total net rate of enjoyment of utility falls short of the maximum possible rate of enjoyment. References Ramsey, F.P. (1928) ‘A mathematical the- ory of saving’, Economic Journal 38: 543–59. Ramsey taxes (H2) Taxes which raise a given revenue from proportionate taxes on commodities with the decrease in utility being kept to a minimum. Ramsey suggested that the so- lution to this problem posed by PIGOU was to increase tax revenue in the same pro- portion as the production of the taxed commodities. References Ramsey, F.P. (1927) ‘A contribution to the theory of taxation’, Economic Journal 37: 47–61. Randall Commission (N7) US commission which reported on foreign economic policy in 1954. It took the view that the policy of the USA should be to guide the world economy back to the liberal policies holding before 1914 – if not in trade, certainly in the movement of private long-term capital and in the con- vertibility of currencies. The main type of aid proposed by the commission was technical assistance. random variations (C1) Irregular movements in time series calcu- lated by dividing the original data by the TREND, seasonal variations and CYCLICAL VARIATIONS . random walk theory (G1) A theory concerning successive prices independent of each other in SECURITY or commodity markets which asserts that there are no trends in prices with the consequence that today’s prices cannot be used to predict future prices. Bachelier was the first to note this, in 1900, in a study of French commodity markets. Seealso:chartism References Cootner, P.H. (ed.) (1964) The Random Character of Stock Market Prices, Cam- bridge, MA: MIT Press. Randstad (R1) A continuous urban area of the Nether- lands from Amsterdam to Rotterdam. For centuries, it has been noted for its high population density. range (C1) The difference between the largest and smallest numbers in a set, e.g. 5 is the range of 2, 3, 4, 5, 6, 7. Seealso:semi-interquartilerange rank correlation (C1) The correlation between variables repre- sented by the ranks they have in an ordered list, e.g. the relationship between cities ranked by population size and by average per capita income to see if the larger a city ranks, the greater the average income per capita. See also: Spearman’s rank correlation for- mula rank-order tournament (C7) An economic game in which the partici- pants compete according to what is judged their rank. rank size rule (J1, R1) This states that the population of a city or town in an urban hierarchy of a country is approximately the population of the lar- gest city divided by the rank of the place concerned. For example, if the largest city has a population of 2 million, then the © 2002 Donald Rutherford fourth-largest city will have 500,000 inha- bitants. References Madden, C.A. (1956) ‘On some indicators of stability in the growth of cities in the United States’, Economic Development and Cultural Change 4: 236–52. ratchet effect (E2) An upward shift in aggregate demand. This higher level of consumption and investment is permanent, preventing an economy in recession from reverting to a level of output lower than at the beginning of the previous expansion. The RELATIVE INCOME HYPOTHESIS asserts that when in- comes are failing, consumption will not fall by the same amount as it will be difficult for households to make a swift adjustment to a new standard of living. rateofexploitation(D3)seesurplus value rate of interest (E4) 1 The charge for borrowing money, usually measured as the percentage ratio between the sum payable to the lender and the amount borrowed, at an annual rate. 2 The bridge between income and capital. 3 The amount of money contractually promised at certain specified future dates as a proportion of the principal borrowed. 4 The rate of capitalization. Theories of the rate of interest have explained this factor price as being deter- mined by either real forces (productivity and thrift) or monetary forces (the de- mand for and supply of money). KEYNES took the latter approach, as did some writers as early as the MERCANTILISTS. The Judaic, Islamic and Christian religions have often condemned interest charges for exploiting persons who borrow out of necessity. However, interest has been justi- fied on the grounds that, as the lender has to abstain from current consumption to make the loan, he or she should be compensated. Seealso:Islamicbanking;loanablefunds theory;Senior;usury rate of return (G0, M2) The ratio of the earnings from an asset to the value of that asset, usually expressed as a percentage. Companies calculate this as the ratio of pre-tax profit to the capital employed. Private and social rates of return of HUMAN CAPITAL and of major public investments are often calculated. An alternative measure is the INTERNAL RATE OF RETURN which takes into account the timing of earnings. rate of return regulation (L3, L5) Regulation of a PUBLIC UTILITY by insisting that product prices should be set to obtain a desired rate of return to capital em- ployed. rates (H7) A tax on non-agricultural property long used in the UK to finance local govern- ment expenditure. Periodically, property was revalued on the basis of the expected rental income from property of that type to calculate its rateable value. Each local authority decided, knowing the total rate- able value of all properties in its area, what rate in the pound must be levied to obtain a desired level of revenue. Each property owner paid an amount equal to the rateable value of the property times the rate in the pound. As such local taxation has long been condemned for being full of anomalies, many proposals for reforming it have been made. In 1989 in Scotland and in 1990 in England and Wales, the domestic rate was replaced by the COMMUNITY CHARGE (nicknamed ‘the poll tax’); in 1990, the UNIFORM BUSINESS RATE replaced business rates. References Foster, C.D., Jackman, R.A. and Perlman, M. (1980) Local Government Finance in a Unitary State, London: Allen & Unwin. Layfield Committee (1976) Local Govern- © 2002 Donald Rutherford ment Finance. Report on the Committee of Inquiry, London: HMSO, Cmnd 6453. rate support grant (H7) An expenditure subsidy previously paid by the UK government to local authorities which resulted in less having to be raised by rates (local property tax). This grant on average was equal to about one-half of total local government expenditure. Cen- tral government, in order to ensure that minimum standards of services, e.g. in education, are maintained, has to provide this subsidy. After the domestic rates were replaced by the COMMUNITY CHARGE, the rate support grant was replaced by a REV- ENUE SUPPORT GRANT . ratingagency(G2)seebondrating agency ratio analysis (M4) Percentages calculated in financial analysis to discover solvency, OVERTRADING and PROFITABILITY. Financial ratios, using bal- ance sheet data, include quick, current, stock and capital (or earnings) ratios; operating ratios include TURNOVER (or sales) ratios and cost ratios. The most important measure of overall profitability is the ratio of profit before tax to operat- ing assets. rational decision (D0) A choice that best serves a decision-maker in pursuit of a particular objective. rational expectations (E0) A view of how individuals form their EX- PECTATIONS of the future values of eco- nomic variables first advanced by Muth in 1961 and now a central pillar of NEW CLASSICAL ECONOMICS . Individuals, when making decisions, it is assumed, have all relevant information, including knowledge of the structure of the economic system, and any errors in the analysis of that information are attributable to random forces. This approach has been used to analyse asset markets, the business cycle and the NATURAL RATE OF UNEMPLOYMENT. There have been many criticisms of ra- tional expectations, including questions about the assumption of rationality, the recurrence of economic processes and the adequacy of information. References Attfield, C.L.F., Demery, D. and Duck, N.W (1985) Rational Expectations in Macroeconomics, Oxford: Basil Black- well. Begg, D.K.H. (1982) The Rational Expec- tations Revolution in Macroeconomics: Theories and Evidence, Oxford: Philip Alan. Muth, J.F. (1961) ‘Rational expectations and the theory of price movements’, Econometrica 29: 315–35. Pesaran, M.H. (1987) The Limits to Ra- tional Expectations, Oxford: Basil Blackwell. Sheffrin, S.M. (1996) Rational expecta- tions, 2nd edn, Cambridge, New York and Melbourne: Cambridge University Press. rationing (D0) A method of allocating a limited supply. The person or organization in control of the supply of a factor of production, good or service distributes it to individual con- sumers according to set criteria or a QUEU- ING SYSTEM . Although the price system will ensure that a supply is assigned to the highest bidders, governments are reluctant to use such a method for essential goods. In socialist economies (and in other economies under the strain of conducting a war) extensive use is always made of rationing by the issue of vouchers and coupons which must be exchanged to obtain goods and services. raw data (C8) Data not yet arranged in numerical order. Seealso:frequencydistribution Rawlsian difference principle (D3, D6) The toleration of inequalities only if it is to the advantage of the worse off through making that person as well off as possible in terms of rights, freedoms, opportunities, income and wealth. Also, inequalities must © 2002 Donald Rutherford provide economic incentives to work harder and increase production. Seealso:egalitarianism;Rawlsianjustice References Rawls, J. (1999) A Theory of Justice,rev. edn, Oxford : Oxford University Press. Rawlsian justice (D3) 1 A revival of social contract theory with general application to basic social and political institutions. 2 Anti-meritocratic EGALITARIANISM. 3 A non-utilitarian approach to justice. The view that justice is ‘fairness’ is based on two principles. Firstly, that each person is entitled to the most extensive amount of liberty compatible with the liberty of others. Secondly, that the arrangement of social and economic inequalities is such that they are reasonably expected to be to everyone’s advantage and attached to po- sitions and offices open to all. Seealso:utilitarianism References Daniels, N. (ed.) (1975) Critical Studies on Rawls’ ‘A Theory of Justice’, Oxford: Basil Blackwell. reaction curve (D0) A diagram indicating a firm’s price and output as a function of the price or output set by another firm. reaction function (C7, E6, L1) This shows the preferences of decision- makers as revealed by an analysis of their actions. These functions have been used to study both economic policy making by governments and the behaviour of non- collusive oligopolists. References Theil, H. (1964) Optimal Decision Rules for Government and Industry, Amster- dam: North-Holland; Chicago: Rand McNally. Reaganomics (B2, E6) An application of SUPPLY-SIDE ECONOMICS to the running of the US economy in the 1980s that attempted to stimulate the economy. The policies it advocated in- cluded the reduction of taxes, of govern- mental regulation of business, of governmental interference in the market and a switch in federal expenditure so that more was spent on defence and less on social programmes. Reaganomics were for- cefully expounded by the US COUNCIL OF ECONOMIC ADVISERS in the Economic Report of the President to the Congress of Febru- ary 1982. Seealso:Thatcherism References Boskin, M. (1989) Reagan and the Econ- omy, San Francisco: Institute for Con- temporary Studies. Niskanen, W.A. (1988) Reaganomics: An Insider’s Account of the Policies and the People, New York: Oxford University Press. real assets (L2, Q0) LAND and reproducible tangible assets in the form of inventories, business fixed capital stock and dwellings. real balance effect (E0) A change in the aggregate demand for goods resulting from a change in the quantity of real money balances. This effect was noted by both PIGOU and PATIN- KIN . The effect asserts that unemployment causes a fall in prices, a rise in the real value of people’s money holdings, a rise in aggregate demand and thus full employ- ment. As this effect takes years to operate, the Keynesian ‘unemployment equili- brium’ is most of the time a case of DIS- EQUILIBRIUM . It should be contrasted with the KEYNES EFFECT. References Patinkin, D. (1956) Money, Interest and Prices: An Integration of Monetary and Value Theory, New York: Oxford Uni- versity Press. real bills doctrine (B1) Adam SMITH’s doctrine that there can never be an inflationary excess issue of © 2002 Donald Rutherford COMMERCIAL BILLS and other paper money because each bill represents a real transac- tion. Henry THORNTON, in his Paper Credit (1802), criticized the doctrine for ignoring the fact that the same sum of money can support many bills. Seealso:BankingSchool;lawofreflux real business-cycle theory (E3) An account of BUSINESS CYCLES generated by technological or monetary shocks, or by changes in expectations. References King, R. and Plosser, C. (1984) ‘Money, credit and prices in a real business cycle model’, American Economic Review 74: 363–80. Kydland, F.E. and Prescott, E.C. (1982) ‘Time to build and aggregate fluctua- tions’, Econometrica 50: 1345–70. Long, J.B. and Plosser, C.J. (1983) ‘Real business cycles’, Journal of Political Economy 91: 39–69. real estate investment trust (G2) A trust which manages real estate assets in the form of equities and mortgages and is financed by stock, bond and bill issues and loans from financial institutions. The high leverage of these trusts led to many of them going bankrupt in the 1970s. real exchange rate (F3) A currency’s value in terms of its real purchasing power. A basket of goods and services representative of an average con- sumer’s purchasing is valued in the two currencies. This calculation is often made to show the relative cost of living for executives moving between the major cities of the world or to establish the real value of investment projects. Seealso:purchasingpowerparity real growth (O4) An increase in the output of goods and services measured at constant prices, i.e. after price changes have been eliminated. real income (E3) 1 Money income adjusted by the amount of inflation over a given period. A PRICE INDEX is used to deflate money income. If, for example, prices have risen by 10 per cent and money incomes by the same amount, real income will remain constant. 2 The amount of goods and services which can be purchased with a given money income. real interest rate (E4) 1 The money RATE OF INTEREST adjusted by the rate of inflation. When there is a positive real interest rate, increased sav- ings will be encouraged and investment discouraged; negative real rates will make borrowing more attractive. Real interest rates are zero when the money rate of interest is equal to the rate of inflation. The high real interest rates of the UK and US economies in the 1980s were regarded as a major cause of low industrial investment in some years. Because of their effect on profit mar- gins, high real interest rates are, in a sense, equivalent to administered price controls. The real rate is calculated by the formula 100 þx 100 Ây Â100 À100 where x is the nominal rate of interest and y is the percentage rate of infla- tion. 2 The interest rate measured in goods. Seealso:ownrateofinterest real option theory (G2) An extension of financial option theory to the study of real, non-financial, options. Real options are embedded in investments rather than being contractual terms. This theory is used to value private companies. References Amram, M. and Kulatilaka, N. (1999) Real Options, Cambridge, MA: Harvard Business School Press. © 2002 Donald Rutherford real price (D0) 1 The nominal price of a good adjusted by a price index. 2 A relative price showing how much of one good exchanges for other goods. These prices show economic scarcity as they make possible a comparison be- tween the price increases of particular commodities and of all commodities in general. real property tax (H2) A tax based on the value of buildings and land. Such taxes are known as RATES in the UK. real rate of return (G0) The rate of return to capital assets after allowing for inflation. This rate, used as a target for UK nationalized industries in a White Paper of 1978, was intended to be related to the real rate of return on private sector assets, taking into account the cost of finance, SOCIAL TIME PREFERENCE and the social objectives set for that particular industry. real-wage hypothesis (E0) The view that real wages are inflexible downwards. This is a considerable expan- sion of KEYNES’s assumption that money wages are inflexible downwards. real wages (J3) 1 Money wages adjusted for inflation. Real wages can only increase if money wages rise faster than inflation. 2 The amount of goods and services a money wage can purchase. recession (E3) 1 A phase of the business cycle which succeeds a boom and precedes a trough. 2 A six-month fall in GROSS DOMESTIC PRO- DUCT according to the NATIONAL BUREAU OF ECONOMIC RESEARCH of Washington, DC. The principal indicators of this are falling output and rising UNEMPLOYMENT. recessionarygap(E0)seedeflationary gap recession exposure scoring system (E3, E6) Assigning a value in a range of +3 to À3 to show the effects of a recession in another economy with +3 being the great- est effect. Taking the USA as an example, income from US-based assets, capital flows from the USA, commodity price declines, US dollar weakness and asset price effects have been used as relevant indicators. This is more sophisticated than regarding the exposure of one country to another in terms of the proportion of exports sent to the other country. RECHAR (Q4) ‘Reconversion charbon’: a EUROPEAN COM- MUNITY scheme introduced in 1990 to help the revitalization of areas hit by coalpit closures. reciprocal demand law (F1) A refinement of the law of COMPARATIVE ADVANTAGE used to determine the TERMS OF TRADE between countries according to the relative demand measured in the amount of goods offered for the goods of another country. John Stuart MILL, in his first essay of his collection Essays on Some Unsettled Questions of Political Economy (1844), and TORRENS refined RICARDIAN international trade theory in this way. Reciprocal Trade Agreements Act 1934 (F1) US federal trade statute of the Roosevelt Administration that attempted to undo the PROTECTIONISM of the SMOOT–HAWLEY TAR- IFF ACT by authorizing the president to negotiate bilateral, reciprocal trade agree- ments to reduce the tariffs introduced in 1930. The US Congress repeatedly voted three-year extensions of the powers under this Act. recognition lag (E6) The length of time elapsing before an economic decision-maker is aware of a change in economic circumstances. This can occur because economic statistics take time to collect and are published less frequently than a decision-maker needs. © 2002 Donald Rutherford Seealso:implementationlag recognizedprofessionalbody(K2) AninstitutionregulatingpartoftheUK financialsectorthathasreceivedrecogni- tionbythe FINANCIALSERVICESACT1986. Theseareinstitutions,suchastheInstitute ofCharteredAccountants,whicharenot involvedintradingbutinotherinvestment services. Seealso:self-regulatoryorganization reconciliationbill(H6)seeappropriation bill recontract(D0) EDGEWORTH’snotionthatbuyersandsellers initiallymakeprovisionalcontractsat DIS- EQUILIBRIUMPRICES andthensubsequently, asaresultoftheirexchange,makeanew contractat,orapproaching,anequili- briumprice. Seealso:ta ˆ tonnement References Walker,D.A.(1973)‘Edgeworth’stheory ofrecontract’,EconomicJournal83: 138–49. recovery(E3) Thephaseinabusinesscycle,aftera SLUMP andbeforeaBOOM,inwhichoutputis risingand,often,unemploymentisfalling. rectification(E6) Cuba’scampaignforgreaterefficiency. ComparabletotheUSSR’s PERESTROIKA. recurrentspotcontracting(G0)see employmentcontract recursivesystem(C3) Asystemofeconometricequationssuch thatifweknowthevaluesofvariablesup tothetimetÀ1wecanobtaintheir valuesattimet.Systemsofthiskind demonstrateunilateralcausaldependence. recycling(F3,Q3) 1Thereuseofscarcerawmaterials,espe- ciallypaper,glassandmetals. 2Theredistributionoffinancialreserves fromcreditortodebtorcountries.After OPEC’spriceincreasesof1973–4,the surplusesoftheoilproducerswerelent onEuromarketstopoorcountries,par- ticularlyoftheThirdWorld,helpingto acceleratetheworlddebtproblem RedBook(H6)seeFinancialStatement andBudgetReport redchip(G1) AshareinaChinesestateenterprisethat hasbeenpartiallyprivatized.Thecom- panycanbeeitheraMainlandChinese companywithHongKongsubsidiaries,or aHongKongcompanywhosebusinessis mainlyinMainlandChina. redemptiondate(G0) Thedatebywhichafixed-termstockmust berepaidbythegovernment,companyor corporationwhichhasissuedit. redemptionyield(G0) Theyieldonastockrepayablebyafixed date which includes both the interest on that stock and the capital gain if the current price is less than the redemption price. A net redemption yield adjusts the yield for income and capital gains taxes payable. redlining (G2, R2) 1 Giving an area the status of a slum by making it ineligible for mortgage fi- nance. Once this status has been given, redlining accelerates the decline of such areas. This has occurred in several US urban areas, including parts of New York City. 2 Refusing to grant credit because the lender cannot obtain a required return at any rate of interest. There can be passive redlining when a credit institu- tion avoids contact with some cate- gories of lender. red tape (L5) Regulations on business which incur high COMPLIANCE COSTS. reduced form equation (C1) An equation which has been manipulated to show each endogenous variable as the © 2002 Donald Rutherford function of the set of exogenous and, if present, error terms. reference cycle (E3) The basic series of economic statistics, e.g. GROSS NATIONAL PRODUCT or industrial out- put, which is chosen to indicate fluctua- tions in an economy. Seealso:coincidentindicators;economic indicators;laggingindicator;leadingindi- cator refugeecapital(F2,G0)seecapital flight;hotmoney refunding (E5, H6) Issuing new government securities to re- place bonds or other securities which have matured. Seealso:overfunding regional banking pacts (G2) US banking agreements used to overcome the restrictive banking legislation that banned interstate commercial banking to create, in effect, interstate banks. The first pacts were between neighbouring states, e.g. in New England, excluding MONEY CEN- TRE BANKS . regional economics (R1, R3) The analysis of firms’ location decisions and the causes of regional growth. Econo- mists, with geographers, have the same analytical foundations in the works of von THUNEN and Losch. It is mainly in times of high national growth that regio- nal imbalances attract much interest. Seealso:economicgeography References Armstrong, H. and Taylor, J. (1985) Re- gional Economics and Policy, Oxford: Philip Allan. Isard, W. (1965) Methods of Regional Analyses: An Introduction to Regional Science, Cambridge, MA: MIT Press; New York: Wiley. Nijkamp, P. and Mills, E.S. (1986–7) Handbook of Regional and Urban Eco- nomics, 2 vols, Amsterdam and New York: North-Holland. Temple, M. (1994) Regional economics, New York: St Martin’s Press; London: Macmillan. regional employment premium (H2, J2) UK wage subsidy to firms in depressed regions in force from 1967 to 1977. Initi- ally, it was a subsidy of £1.50 per man per week, with lower rates for women and juveniles. regional multiplier (R1) The number of times the income or employment of a region will multiply as a consequence of an increase in AUTONOMOUS EXPENDITURES . Two approaches are often used: the economic base multiplier and the modified KEYNESIAN approach. The economic base approach assumes that regional income can be divided into two parts – what arises from the BASIC INDUSTRIES of the region and what springs from other regional indus- tries. This multiplier is then calculated as l /(l À s) with s the ratio of income earned in the non-basic sector to total regional income, i.e. the regional multiplier is 1 1 Àð1 ÀtÞðc ÀmÞ with t the income tax rate, c the marginal propensity to consume and m the marginal propensity to import. There are many problems in calculating this multiplier, including the fact that basic industries may vary greatly in the extent to which they export to other regions. The KEYNE- SIAN approach merely applies a national multiplier formula to a region. A multi- plier for a particular region is usually smaller than that for the national economy of which it is part as regions are more open, thus suffering from leakages of expenditures to other regions. Seealso:multiplier regional policy (R5) 1 Measures to reduce the imbalance in prosperity between the regions of a © 2002 Donald Rutherford [...]... wealth and the quality of life’, Journal of Socioeconomics 29: 305–40 relative concentration (L1) A measure of the distribution of economic activity, or of values of an economic variable, using Lorenz curves and Gini coefficients This is used to examine the distribution of the size of firms and the size of individual incomes relative income hypothesis (E2) Duesenberry’s theory of the CONSUMPTION FUNCTION... Portuguese Synagogue of Amsterdam, a lucrative career as a London stock jobber and a chance reading of SMITH’s Wealth of Nations at Bath in 1799 The great inflation of the Napoleonic Wars period brought him to write a pamphlet on monetary economics, The High Price of Bullion, in 181 1 The CORN LAWS controversy inspired An Essay on the Influence of a Low Price of Corn on the Profits of Stock, his first... good; private good; public good Robbins, Lionel (Lord), 189 8–1 984 (B3) UK economist who was educated at the London School of Economics where he subsequently became lecturer from 1925 to 1927, professor from 1929 to 1961 and the Director and Chairman of the Court of © 2002 Donald Rutherford the Board of Governors from 19 68 to 1974 Before the Second World War he established his fame as an economic theorist... Stuart MILL disputed aspects of it Say’s supply and demand analysis, incorporating the concepts of UTILITY and SCARCITY, make him one of the forerunners of NEOCLASSICAL ECONOMICS Much of his economics was, in the French style, very abstract – as Malthus was quick to note Say’s law (E1) A law of markets often summarized as ‘supply creates its own demand’ This view of macroeconomics was based on the idea... References Becker, G (1974) ‘A theory of social interactions’, Journal of Political Economy 82 : 1063–94 Bergstorm, T (1 989 ) ‘A fresh look at the rotten kid theorem – and other household mysteries’, Journal of Political Economy 97: 11 38 59 roundabout method of production (D2) A method of production using CAPITAL goods to increase the future PRODUCTIVITY of factors of production In a simple case such as... revenue neutral (H2) The characteristic of a tax reform which does not alter total tax revenue revenue seeking (F1) Attempting to gain part of the revenue from protective tariffs References Bhagwati, J.N and Srinivasan, T.N (1 980 ) ‘Revenue-seeking: a generalisation of the theory of tariffs’, Journal of Political Economy 88 : 1069 87 revenue sharing (H7) The transfer of the revenue from federal or central... Universities of Czernowitz and Graz from 1911 to 19 18, was briefly Austrian Minister of Finance in 1920 and president of the Biederman Bank before moving to Bonn where he was professor from 1925 to 1932, completing his career as professor at Harvard from 1932 to 1950 His major contributions to economics were the study of capitalist development and industrial fluctuations and the analysis of a vast economics. .. occurred often to evade ANTITRUST policy References Stigler, G.J (1971) ‘The theory of economic regulation’, Bell Journal of Economics 2: 3–21 © 2002 Donald Rutherford Reid, Margaret, 189 6–1991 (B3) Born in Cardale, Manitoba, and educated at the Universities of Manitoba, Winnipeg and Chicago where she was awarded a PhD in 1931 for a thesis on ‘The economics of household production’ She taught consumer economics. .. economics at Iowa State College as a colleague of SCHULTZ, and was employed by the federal government from 1943 to 19 48 rising to be head of the Family Economics Division of the Department of Agriculture She measured food expenditures to produce the consumption standards reported in her Food for People (1943) Professor at the Universities of Illinois from 19 48 to 1951 and Chicago from 1951 to 1961 She... (G2) The mixture of types of finance used to provide credit for a particular project, e.g a fixed interest loan and an issue of ordinary shares risk pooling (G2) The adding together of the risks of many persons to reduce the cost of RISK; a basic principle of INSURANCE Those who face the same risk are charged the same insurance premium A major example of this is the underwriting system of Lloyd’s insurance . rates of return of HUMAN CAPITAL and of major public investments are often calculated. An alternative measure is the INTERNAL RATE OF RETURN which takes into account the timing of earnings. rate of. ‘Relational wealth and the quality of life’, Journal of Socio- economics 29: 305–40. relative concentration (L1) A measure of the distribution of economic activity, or of values of an economic variable,. UTILITY of money should always be equal to the amount by which the total net rate of enjoyment of utility falls short of the maximum possible rate of enjoyment. References Ramsey, F.P. (19 28) ‘A