Wassily Wassilyevich Leontief, was a Russian-American economist known for his research on input-output analysis and how changes in one economic sector may affect other sectors. Leontief won the Nobel Committee's Nobel Memorial Prize in Economic Sciences in 1973, four of his doctoral students have been awarded the prize. Wassily Leontief was born on August 5, 1906, in Munich, the son of Wassily W. Leontief and Zlata Leontief. W. Leontief, Sr. belonged to a family of old-believer merchants living in St. Petersburg since 1741. Genya Becker belonged to a wealthy Jewish family from Odessa. At 15 in 1921, Wassily, Jr. entered University of Leningrad in present-day St. Petersburg, he earned his Learned Economist degree in 1925 at the age of 19. Leontief sided with campaigners for academic autonomy, freedom of speech and in support of Pitirim Sorokin; as a consequence, he was detained several times by the Cheka. In 1925, he was allowed to leave the USSR because the Cheka believed that he was mortally ill with a sarcoma, a diagnosis that proved false.
He continued his studies at the Frederick William University and, in 1928 earned a Ph. D. degree in economics under the direction of Werner Sombart, writing his dissertation on The Economy as Circular Flow. From 1927 to 1930, he worked at the Institute for the World Economy of the University of Kiel. There he researched the derivation of statistical supply curves. In 1929, he traveled to China to assist its ministry of railroads as an advisor. In 1931, he was employed by the National Bureau of Economic Research. During World War II, Leontief served as consultant at the U. S. Office of Strategic Services. Leontief joined Harvard University's department of economics in 1932 and in 1946 became professor of economics there. In 1949, Leontief used an early computer at Harvard and data from the U. S. Bureau of Labor Statistics to divide the U. S. economy into 500 sectors. Leontief modeled each sector with a linear equation based on the data and used the computer, the Harvard Mark II, to solve the system, one of the first significant uses of computers for mathematical modeling, along with George W. Snedecor's usage of the Atanasoff–Berry computer.
Leontief set up the Harvard Economic Research Project in 1948 and remained its director until 1973. Starting in 1965, he chaired the Harvard Society of Fellows. In 1975, Leontief joined New York University and founded and directed the Institute for Economic Analysis, he taught undergraduate classes. In 1932, Leontief married poet Estelle Marks, their only child, Svetlana Leontief Alpers, was born in 1936. Leontief's wife Estelle wrote a memoir and Wassily, of their relations with his parents after they came to the US as emigres; as hobbies Leontief enjoyed fly fishing and fine wines. He vacationed for years at his farm in West Burke, but after moving to New York in the 1970s moved his summer residence to Lakeville, Connecticut. Leontief died in New York City on Friday, February 5, 1999 at the age of 93, his wife died in 2005. Leontief is credited with developing early contributions to input-output analysis and earned the Nobel Prize in Economics for his development of its associated theory, he has made contributions in other areas of economics, such as international trade where he documented the Leontief paradox.
He was one of the first to establish the composite commodity theorem. Leontief earned the Nobel Prize in economics for his work on input-output tables. Input-output tables analyze the process by which inputs from one industry produce outputs for consumption or for inputs for another industry. With the input-output table, one can estimate the change in demand for inputs resulting from a change in production of the final good; the analysis assumes. Input-output inspired large-scale empirical work. Leontief used input-output analysis to study the characteristics of trade flow between the U. S. and other countries, found what has been named Leontief's paradox. S. exports were labor-intensive when compared to U. S. imports. This is the opposite of what one would expect, considering the fact that the U. S.'s comparative advantage was in capital-intensive goods. According to some economists, this paradox has since been explained as due to the fact that when a country produces "more than two goods, the abundance of capital relative to labor does not imply that the capital intensity of its exports should exceed that of imports."Leontief was a strong proponent of the use of quantitative data in the study of economics.
Throughout his life Leontief campaigned against "theoretical assumptions and non-observed facts". According to Leontief, too many economists were reluctant to "get their hands dirty" by working with raw empirical facts. To that end, Wassily Leontief did much to make quantitative data more accessible, more indispensable, to the study of economics. 1925: Баланс народного хозяйства СССР. in Planovoe Khozyaystvo.
A price is the quantity of payment or compensation given by one party to another in return for one unit of goods or services.. A price is influenced by both production costs and demand for the product. A price may be imposed on the firm by market conditions. In modern economies, prices are expressed in units of some form of currency. Although prices could be quoted as quantities of other goods or services, this sort of barter exchange is seen. Prices are sometimes quoted in terms of vouchers such as trading stamps and air miles. In some circumstances, cigarettes have been used as currency, for example in prisons, in times of hyperinflation, in some places during World War II. In a black market economy, barter is relatively common. In many financial transactions, it is customary to quote prices in other ways; the most obvious example is in pricing a loan, when the cost will be expressed as the percentage rate of interest. The total amount of interest payable depends upon credit risk, the loan amount and the period of the loan.
Other examples can be found in other financial assets. For instance the price of inflation-linked government securities in several countries is quoted as the actual price divided by a factor representing inflation since the security was issued. "Price" sometimes refers to the quantity of payment requested by a seller of goods or services, rather than the eventual payment amount. This requested amount is called the asking price or selling price, while the actual payment may be called the transaction price or traded price; the bid price or buying price is the quantity of payment offered by a buyer of goods or services, although this meaning is more common in asset or financial markets than in consumer markets. Economic price theory asserts that in a free market economy the market price reflects interaction between supply and demand: the price is set so as to equate the quantity being supplied and that being demanded. In turn these quantities are determined by the marginal utility of the asset to different buyers and to different sellers.
Supply and demand, hence price, may be influenced by other factors, such as government subsidy or manipulation through industry collusion. When a commodity is for sale at multiple locations, the law of one price is believed to hold; this states that the cost difference between the locations cannot be greater than that representing shipping, other distribution costs and more. The paradox of value was debated by classical economists. Adam Smith described what is now called the diamond – water paradox: diamonds command a higher price than water, yet water is essential for life and diamonds are ornamentation. Use value was supposed to give some measure of usefulness refined as marginal benefit while exchange value was the measure of how much one good was in terms of another, namely what is now called relative price. One solution offered to the paradox of value is through the theory of marginal utility proposed by Carl Menger, one of the founders of the Austrian School of economics; as William Barber put it, human volition, the human subject, was "brought to the centre of the stage" by marginalist economics, as a bargaining tool.
Neoclassical economists sought to clarify choices open to producers and consumers in market situations, thus "fears that cleavages in the economic structure might be unbridgeable could be suppressed". Without denying the applicability of the Austrian theory of value as subjective only, within certain contexts of price behavior, the Polish economist Oskar Lange felt it was necessary to attempt a serious integration of the insights of classical political economy with neo-classical economics; this would result in a much more realistic theory of price and of real behavior in response to prices. Marginalist theory lacked anything like a theory of the social framework of real market functioning, criticism sparked off by the capital controversy initiated by Piero Sraffa revealed that most of the foundational tenets of the marginalist theory of value either reduced to tautologies, or that the theory was true only if counter-factual conditions applied. One insight ignored in the debates about price theory is something that businessmen are keenly aware of: in different markets, prices may not function according to the same principles except in some abstract sense.
From the classical political economists to Michal Kalecki it was known that prices for industrial goods behaved differently from prices for agricultural goods, but this idea could be extended further to other broad classes of goods and services. Marxists assert that value derives from the volume of necessary labour time exerted in the creation of an object; this value does not relate to price in a simple manner, the difficulty of the conversion of the mass of values into the actual prices is known as the transformation problem. However, many recent Marxists deny. Marx was not concerned with proving. In fact, he admonished the other classical political economists for trying to make this proof. Rather, for Marx, price equals the average rate of profit. So if the average rate of profit is 22% prices would reflect cost-of-production plus 22%; the perception that there is a transformation problem in Marx stems from the injection of Walrasian equilibrium theory into Marxism where there is no such thing as equilibrium.
Price is co
Eli Filip Heckscher was a Swedish political economist and economic historian. Heckscher was born in Stockholm, son of the Jewish Danish-born businessman Isidor Heckscher and his spouse Rosa Meyer, completed his secondary education there in 1897, he studied at Uppsala University and Gothenburg University, completing his PhD in Uppsala in 1907. He was professor of Political economy and Statistics at the Stockholm School of Economics from 1909 until 1919, when he exchanged that chair for a research professorship in economic history retiring as emeritus professor in 1945. In 1929 Heckscher founded the Institute for Economic History Research. According to a bibliography published in 1950, Heckscher had, as of the previous year, published 1148 books and articles, among which may be mentioned his study of Mercantilism, translated into several languages, a monumental Economic history of Sweden in several volumes. Heckscher is best known for a model explaining patterns in international trade that he developed with Bertil Ohlin at the Stockholm School of Economics.
Eli Heckscher's son was Gunnar Heckscher, a political scientist and the leader of what would become the Swedish Moderate Party 1961–1965. His grandson is the Social Democratic politician Sten Heckscher. Bertil Ohlin, "Heckscher, Eli Filip", Svenskt biografiskt lexikon, vol. 18, pp. 376–381. Eli Heckscher, International Trade, Economic History, Ronald, Rolf G. H. Henriksson, Håkan Lindgren and Mats Lundahl, eds; the MIT Press, 2007. Heckscher, Eli F.. Westergaard, Harald, ed; the Continental System: An Economic Interpretation. Oxford: At the Clarendon Press. Retrieved 2 June 2016 – via Internet Archive
Labour economics seeks to understand the functioning and dynamics of the markets for wage labour. Labour markets or job markets function through the interaction of employers. Labour economics looks at the suppliers of labour services and the demanders of labour services, attempts to understand the resulting pattern of wages and income. Labour is a measure of the work done by human beings, it is conventionally contrasted with such other factors of production as capital. Some theories focus on human capital. There are two sides to labour economics. Labour economics can be seen as the application of microeconomic or macroeconomic techniques to the labour market. Microeconomic techniques study individual firms in the labour market. Macroeconomic techniques look at the interrelations between the labour market, the goods market, the money market, the foreign trade market, it looks at how these interactions influence macro variables such as employment levels, participation rates, aggregate income and gross domestic product.
The labour force is defined as the number of people of working age, who are either employed or looking for work. The participation rate is the number of people in the labour force divided by the size of the adult civilian noninstitutional population; the non-labour force includes those who are not looking for work, those who are institutionalised such as in prisons or psychiatric wards, stay-at home spouses and those serving in the military. The unemployment level is defined as the labour force minus the number of people employed; the unemployment rate is defined as the level of unemployment divided by the labour force. The employment rate is defined as the number of people employed divided by the adult population. In these statistics, self-employed people are counted as employed. Variables like employment level, unemployment level, labour force, unfilled vacancies are called stock variables because they measure a quantity at a point in time, they can be contrasted with flow variables. Changes in the labour force are due to flow variables such as natural population growth, net immigration, new entrants, retirements from the labour force.
Changes in unemployment depend on inflows made up of non-employed people starting to look for jobs and of employed people who lose their jobs and look for new ones, outflows of people who find new employment and of people who stop looking for employment. When looking at the overall macroeconomy, several types of unemployment have been identified, including: Frictional unemployment – This reflects the fact that it takes time for people to find and settle into new jobs. Technological advancement reduces frictional unemployment. Structural unemployment – This reflects a mismatch between the skills and other attributes of the labour force and those demanded by employers. Rapid industry changes of a technical and/or economic nature will increase levels of structural unemployment; the process of globalization has contributed to structural changes in labour markets. Natural rate of unemployment – This is the summation of frictional and structural unemployment, that excludes cyclical contributions of unemployment.
It is the lowest rate of unemployment that a stable economy can expect to achieve, given that some frictional and structural unemployment is inevitable. Economists do not agree on the level of the natural rate, with estimates ranging from 1% to 5%, or on its meaning – some associate it with "non-accelerating inflation"; the estimated rate varies from country from time to time. Demand deficient unemployment – In Keynesian economics, any level of unemployment beyond the natural rate is due to insufficient goods demand in the overall economy. During a recession, aggregate expenditure is deficient causing the underutilisation of inputs. Aggregate expenditure can be increased, according to Keynes, by increasing consumption spending, increasing investment spending, increasing government spending, or increasing the net of exports minus imports, since AE = C + I + G +. Neoclassical economists view the labour market as similar to other markets in that the forces of supply and demand jointly determine price and quantity.
However, the labour market differs from other markets in several ways. In particular, the labour market may act as a non-clearing market. While according to neoclassical theory most markets attain a point of equilibrium without excess supply or demand, this may not be true of the labour market: it may have a persistent level of unemployment. Contrasting the labour market to other markets reveals persistent compensating differentials among similar workers. Models that assume perfect competition in the labour market, as discussed below, conclude that workers earn their marginal product of labour. Households are suppliers of labour. In microeconomic theory, people are assumed to be rational and seeking to maximize their utility function. In the labour market model, their utility function expresses