On money as a medium of exchange when goods vary by supply and demand

Models of the exchange process based on search theory can be usedto analyze the features of objects that make them more or less likely toemerge as ``money'' in equilibrium. These models illustrate the trade--offbetween endogenous acceptability (an equilibrium property) and intrinsiccharacteristics of goods, such as storability, recognizability, etc. Inthis paper, we look at how the relative supply and demand for various goodsaffect their likelihood of becoming money. Intuitively, goods in highdemand and/or low supply are more likely to appear as commodity money,subject to the qualification that which object ends up circulating as amedium of exchange depends at least partly on convention. Welfare propertiesare discussed.

Start-up costs and pecuniary externalities as barriers to economic development

We use a dynamic monopolistic competition model to show that an economythat inherits a small range of specialized inputs can be trapped into alower stage of development. The limited availability of specialized inputsforces the final goods producers to use a labor intensive technology, whichin turn implies a small inducement to introduce new intermediate inputs. Thestart--up costs, which make the intermediate inputs producers subject todynamic increasing returns, and pecuniary externalities that result from thefactor substitution in the final goods sector, play essential roles in themodel.

What other sciences look like

In order to have references for discussing mathematical menus in political science, Ireview the most common types of mathematical formulae used in physics andchemistry, as well as some mathematical advances in economics. Several issues appearrelevant: variables should be well defined and measurable; the relationships betweenvariables may be non-linear; the direction of causality should be clearly identified andnot assumed on a priori grounds. On these bases, theoretically-driven equations onpolitical matters can be validated by empirical tests and can predict observablephenomena.

Power transformations in correspondence analysis

Power transformations of positive data tables, prior to applying the correspondence analysis algorithm, are shown to open up a family of methods with direct connections to the analysis of log-ratios. Two variations of this idea are illustrated. The first approach is simply to power the original data and perform a correspondence analysis this method is shown to converge to unweighted log-ratio analysis as the power parameter tends to zero. The second approach is to apply the power transformation to thecontingency ratios, that is the values in the table relative to expected values based on the marginals this method converges to weighted log-ratio analysis, or the spectral map. Two applications are described: first, a matrix of population genetic data which is inherently two-dimensional, and second, a larger cross-tabulation with higher dimensionality, from a linguistic analysis of several books.