Aggregation lies at the heart of macroeconomics. Economists using such aggregates as capital, investment, labor, and even output or GNP assume that such constructions have a sound analytic foundation. The question of the existence of aggregate production functions is not only part of the foundation of macroeconomic theory and policy but also played a central role in the "Cambridge vs. Cambridge" debate, which challenged long-held assumptions about the foundations of neoclassical microeconomics.
In this third collection of his essays, Franklin M. Fisher settles the question of the conditions for the existence of aggregate production functions. He examines the conditions for approximate aggregation and, through simulation experiments, considers why aggregate production functions appear to work in practice. He also explores related topics involving price aggregation and aggregation in international trade.
This collection of work by economist, consultant, and expert witness Franklin M. Fisher constitutes an integrated body of the economic analysis of the law, with particular emphasis on antitrust issues. Fisher's involvement with applying economic analysis to real disputes and to problems of microeconomic policy has resulted in valuable lessons. These lessons are incorporated in themes running through many of these essays about the uses and abuses, achievements and shortcomings, of economic analysis.
The book opens with a broad overview of key issues in antitrust law. Fisher stresses the importance of understanding the analytic tools used to examine monopoly and competition. He shows that the notion that simple indicators such as market share, or especially, profit rates can be used to provide an easy test for market power is badly mistaken. And he goes on to discuss oligopoly and its modern game theoretic treatment, which he sees as missing the questions that matter in real situations. Throughout, specific cases and policy issues are used to illustrate these important points.
The second part of the book looks at the regulation of television, particularly cable, an area in which Fisher has been active since cable television's early days. The book concludes with a section on economic analysis and the law with essays on such matters as the uses of statistical methods and punishment as a deterrent to crime.
The first volume of Franklin M. Fisher's collected essays, Industrial Organization, Economics, and the Law, focused on the application of economic analysis to legal disputes in the areas of regulation and antitrust. This second volume brings together Fisher's work in econometric theory and practice, including studies on the underlying structure of econometric models that were fundamental to the subject.
Fisher's early discovery of block-recursive systems, together with his results on continuity for small specification errors, provided a foundation for all structural estimation. His later work on causation dealt with the implications of regarding simultaneous equation models as limiting cases of nonsimultaneous models. The essays in this book enlarge on those themes in various ways.
Part one begins with essays that introduce the basic concepts of block-recursive systems and the foundational material for structural estimation in econometrics. They focus on simultaneous equations and the problem of exogenous variables, raising questions about the nature of econometric models and attempting to answer them through the analysis of block recursive models. Part two uses the results from Part one to examine issues of specification error and includes Fisher's classic exposition of Chow tests. Part three contains empirical I work, including studies of the copper industry, wheat supply in the nineteenth century, the famous Fisher-Griliches-Kaysen examination of the costs of automobile model changes, and the effect of the removal of firemen on railroad accidents.