Economics Insights @ CBS

In this paper, the author outlines what he believes to be causes of why many people do not save. Much of the research examining levels of consumption, saving, and wealth, as well as their responsiveness to policy, has been done using a life-cycle model with the simplifying assumption of perfect certainty. More recently, a line of inquiry has examined the effects of uncertainty on saving, generally in the context of highly stylized models. This research has shown that, in these models, uninsured earnings uncertainty can alter optimal saving behavior in a variety of important ways.

We consider Markovian GSMPs (generalized semi-Markov processes) in which the rates of events are subject to control. A control is monotone if the rate of one event is increasing or decreasing in the number of occurrences of other events. We give general conditions for the existence of monotone optimal controls. The conditions are functional properties for the one-step cost functions and, more importantly, structural properties for the GSMP. The main conditions on costs are submodularity or supermodularity with respect to pairs of events.

Over the last few years, the Italian government has intensified its privatization program of state-owned industries. Since 1989, it has privatized the banking and food industries and will begin work on the telecom and insurance industries in late 1994. Paolo Savona, the Minister of Industry, has been in part responsible for these reforms.

We examine associations between accounting measures of earnings and stock returns in Japan over varying window lengths and compare them to those for the United States. Our results are consistent with the view that Japanese investors utilize less accounting information in their pricing of equities than do their U.S. counterparts. This was particularly evident in the 'boom' period of the mid to late 1980s when the fundamental values conveyed by accounting measures appear to have been largely ignored.