The recurrent crises which have-plagued the housing industry can be largely traced to the interaction of a rising and variable rate of inflation with two major institutional features which have characterized the financing of housing in the United States in the postwar period. These are almost exclusive reliance on the traditional fully amortized, level-payment mortgage as the vehicle for financing the acquisition of single-family houses; and overwhelming dependence for mortgage funds on thrift institutions which secure the bulk of their funds through relatively short-term deposits. By far the largest share of private mortgage funds, especially those financing owner-occupied housing, has come from the thrift institutions—savings and loan associations and mutual savings banks—and to some extent from commercial banks and life insurance companies. A higher inflation, results in a more rapid decline in the outstanding debt. Correspondingly, the owner's equity also builds up more rapidly, if the value of the house remains constant in real terms.

Franco Modigliani and Merton Miller (M-M) establish that in a perfect capital market1 optimal investment decisions by a firm are independent of how such decisions are financed. T his theorem has an important corollary: Investment decisions should never be determined by dividend decisions, and dividend decisions periodby-period need not be affected by investment decisions. The main goal of the present paper is to examine empirically the extent to which the dividend and investment decisions of individual firms are interrelated.2 Many models of investment and financing decisions based on the assumption of an imperfect capital market are available. Only the model of Phoebus Dhrymes and Mordecai Kurz is discussed here, since they provide what appears to be corroborating empirical evidence. Following John Meyer and Edmund Kuh, Dhrymes and Kurz propose a world in which, because of capital market imperfections, internal funds are a cheaper source of financing for the firm than new security issues, and dividends and investments are competing uses for limited internal funds. Moreover they hypothesize that firms not only allow investment decisions to affect dividend decisions, but that the desire to pay 'reasonable dividends causes investment decisions to be affected by dividend decisions. The Dhrymes-Kurz empirical evidence is discussed later.

Durante los ultimos anos y especialmente desde los inicios de la depre sion actual los economistas y el publico profano en general han oido ya bastante acerca del agudo conflicto entre y keynesianos o entre y fiscalistas. La diferencia entre ambas escuelas habitualmente se centra en la cuestion de si es la oferta monetaria o son las variables fiscales los principales determinantes de la actividad econo mica agregada, y, por lo tanto, en la de cual es el instrumento mas ade cuado para las politicas de estabilizacion. Mi tesis central es que este enfoque se encuentra bastante alejado de la realidad, y que los puntos a discutir son mucho mas de indole prac tica. realidad no existen desacuerdos analiticos grandes entre los prin cipales y los no mas connotados. Se sabe que Milton Friedman dijo en alguna ocasion: En la actualidad somos keynesianos, y yo estoy completamente dispuesto a responderle diciendo que todos somos monetaristas —si entendemos por monetarismo asig narle un papel primordial a la cantidad de dinero en la determinacion de la produccion y los precios. realidad la lista de los que han sido en este sentido desde tiempo atras es muy larga, e incluye entre otros a John Maynard Keynes y a mi mismo, como lo demuestran mis articulos de 1944 y 1963. A decir verdad las caracteristicas que distinguen a la escuela moneta rista y sus verdaderos puntos de desacuerdo con los no no versan sobre el monetarismo propiamente dicho sino mas bien sobre el papel que deberia asignarsele a las politicas de estabilizacion. Los no aceptan lo que yo considero es el mensaje practico funda mental de la Teoria general: que una economia de iniciativa privada que emplea dinero intangible o fiduciario necesita ser estabilizada, puede ser estabilizada, y por lo tanto deberia ser estabilizada por politicas moneta rias y fiscales adecuadas. Por contraste, los son de la opinion

Lo scopo del presente scritto è quello di sviluppare un metodo di analisi piuttosto che quello di presentare una nuova dottrina. Per questa ragione l’autore si propone di riallacciare la sua analisi alle posizioni sostenute nel passato dai principali indirizzi dottrinali.

L’intento dell’articolo è analizzare i legami esistenti tra inflazione, domanda aggregata, disavanzo della bilancia dei pagamenti e disavanzo del bilancio pubblico in un economia aperta nella quale i salari sono indicizzati al cento per cento o anche più rispetto alle variazioni dei prezzi. Il risultato di questa analisi permette a sua volta di individuare le politiche economiche che possono essere perseguite al fine di combattere simultaneamente inflazione e disoccupazione.

72 1024x768 The article takes up the debate on the problem of international liquidity. While a significant consensus has emerged on several major issues in recent years, no single plan has been adopted. The main problem blocking adoption of a particular plan is how to determine, and who will control, decisions as to the rate at which total reserves should change over time. Here the authors outline a plan designed to provide a workable answer, including the proposal of a new international monetary unit, referred to as the Medium for International Transactions (MIT). In order to bring out most clearly the basic properties and goals of the proposed system, how the system could be set up and would function is described, assuming that the MIT is the sole legal tender for international transactions between central banks. It is then shown how the system could be modified to permit the continued use of gold, along with the MIT. Finally, some of the issues that will have to be resolved if the participating parties are not prepared to disregard the past are dealt with. JEL: E42, F31, F33, F34 Normal 0 14 /* Style Definitions */ table.MsoNormalTable {mso-style-name:Tabella normale; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:; mso-padding-alt:0pt 5.4pt 0pt 5.4pt; mso-para-margin:0pt; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:Times New Roman;}

The work looks at Holt’s theoretical model of the labour market based on turnover rates and the case of Italy. The authors argue that Holt’s assumption that the flows of hirings and separations are random variables which remain constant as aggregate demand varies cannot be justified theoretically or empirically. “Holt’s conjecture” and the implications of its theoretical construction for the labour market and the Phillips curve are first examined. The authors then present a basic model and describe its implications for the structural and transitory determinants of labour mobility. An empirical test is then made with reference to the flows of hirings and separations in Italy are the results are presented. Finally, the authors then discuss the implications of their model. JEL: J01, J60

Faced with the two extremes of fixed and rigid parities on the one hand, and a system of floating rates on the other, many economists have proposed a system based on official sliding parities. According to this line of reasoning, floating exchanges is unachievable politically and therefore this solution would be the maximum concession towards floating that one may hope to negotiate. In this paper, the authors develop a different argument in favour of sliding pegs as compared to either extremes and conclude that such a system combines the advantages of short-run fixity in mitigating propagation of cyclical disturbances with long-run or structural changes in surplus or deficit. JEL: E42, F33

There appears to be a rather wide agreement among Italian economists, in and out of the Government, on the causes of Italy’s balance of payments crisis and of the recession that began in 1964. This explanation, originally put forward by the Bank of Italy, though rather unsatisfactory, has been uncritically accepted or at least has not been challenged in any systematic way. The present paper assesses the validity of this explanation and proposes an alternative one. For the sake of simplicity the authors keep separate the case of an open economy from that of a closed one. The Bank of Italy’s model is first formalised before its basic shortcomings are demonstrated. The authors then present the alternative model they propose. The nature of the Italian inflation and the determinants of wage movements are then discussed. The authors then consider the case of an open economy before provided a formal treatment of the problems raised. JEL: E31, E52, F31, F34

The letter, dated 14 September 1956, starts a decade long correspondence between Franco Modigliani and Paolo Sylos Labini. Here Modigliani discusses at length a first draft of Sylos Labini’s book on oligopoly theory. Differently from Modigliani’s well known 1958 review of the book, Modigliani focuses here not mainly on the structure of oligopoly industries, but especially on the macroeconomic implications of Sylos Labini’s model. The letter is reproduced with Sylos Labini’s annotated comments on Modigliani’s remarks. Keywords: Macroeconomic theory, Oligopoly, Neoclassical synthesis, Modigliani, Sylos Labini JEL codes: B31, D43, E13

This study is an extension of two previous studies in which the authors build upon their model of trade union action on contract renewals. To this end, a distinction is made between the percentage of workers at any given moment of time whose new contracts take effect on or before the expiration date of their previous contract. The model is subjected to economic tests with data referring to the Italian industrial sector. The central conclusion is that, since with the wave of strikes initiated by the contract renewals of Fall 1969, the Phillips curve has shifted to the right and upwards and its slope for any given level of unemployment is nearly doubled with respect to the slope prevailing in the previous twenty years. Some implications concerning the present conditions of dynamic instability of the inflationary process are then highlighted. JEL: E24, E31, J51

Faced with the two extremes of fixed and rigid parities on the one hand, and a system of floating rates on the other, many economists have proposed a system based on official sliding parities. According to this line of reasoning, floating exchanges is unachievable politically and therefore this solution would be the maximum concession towards floating that one may hope to negotiate. In this paper, the authors develop a different argument in favour of sliding pegs as compared to either extremes and conclude that such a system combines the advantages of short-run fixity in mitigating propagation of cyclical disturbances with long-run or structural changes in surplus or deficit. JEL: E42, F33

The work looks at Holt’s theoretical model of the labour market based on turnover rates and the case of Italy. The authors argue that Holt’s assumption that the flows of hirings and separations are random variables which remain constant as aggregate demand varies cannot be justified theoretically or empirically. “Holt’s conjecture” and the implications of its theoretical construction for the labour market and the Phillips curve are first examined. The authors then present a basic model and describe its implications for the structural and transitory determinants of labour mobility. An empirical test is then made with reference to the flows of hirings and separations in Italy are the results are presented. Finally, the authors then discuss the implications of their model. JEL: J01, J60

This study is an extension of two previous studies in which the authors build upon their model of trade union action on contract renewals. To this end, a distinction is made between the percentage of workers at any given moment of time whose new contracts take effect on or before the expiration date of their previous contract. The model is subjected to economic tests with data referring to the Italian industrial sector. The central conclusion is that, since with the wave of strikes initiated by the contract renewals of Fall 1969, the Phillips curve has shifted to the right and upwards and its slope for any given level of unemployment is nearly doubled with respect to the slope prevailing in the previous twenty years. Some implications concerning the present conditions of dynamic instability of the inflationary process are then highlighted. JEL: E24, E31, J51

This article constitutes the slightly modified italian version of a conference held at Trinity College in San Antonio, Texas, the text of which is being published in Lives of the Laureates - Enlarges Edition , MIT Press, Cambridge, Mass. In it, Nobel laureate Franco Modigliani offers readers an informal lesson on modern economic thought through an autobiographical essay touching on his life, career and intellectual development. JEL Codes: B31

The objective of this paper is to reexamine the monetary mechanism, that is the mechanism through which the monetary authority by controlling certain financial variables achieves (more or less) effective control over nominal income. We propose to argue that the view of the monetary mechanism which has been widely accepted, at least until very recently, by both monetarists and Keynesians and which focuses on the role of the money supply has in reality but limited applicability since it neglects many other possible and practical forms of this mechanism. We will be concerned with the nature of such alternative mechanisms and how their functioning is related to the structure of financial markets and with deriving implications from this analysis for the choice of intermediate targets for monetary policy. The need for a careful reexamination of the monetary transmission mechanism has become evident in the light of recent developments in both the practice and theory of monetary policy and in the presence of pervasive and continuous changes in the structure of financial markets. An important development in monetary policy in recent years has been the gradual adoption of monetary and credit aggregates as the primary targets in the formulation and implementation of policy by the monetary authorities of most major countries. The inflationary environment of the ’70s impaired the usefulness of interest rates as instruments and/or targets of monetary policy and contributed to the shift towards greater emphasis on monetary aggregate targets. The abandonment of the system of fixed exchange rates also motivated the formulation of policy in terms of aggregates which were often viewed as conditioning, at least in part, the inflationary expectations of the public. The adoption of monetary targets has not proved a panacea either for achieving the major policy goals of eliminating inflation and fostering output growth or for improving the formulation and implementation of monetary policy. Most monetary authorities have, in fact, followed a rather flexible approach both in selecting specific quantitative targets and in pursuing them. The flexibility or eclecticism of central bank policies reflects two major con-