†This research was supported in part by Grants from the Social Science Research Council to the MIME Programme at the London School of Economics and by HR8789 to Nuffield College. I am indebted to Frank Srba and Neil Ericsson for the calculations reported below. The paper was prepared at the invitation of the Scottish Economic Society, the concluding section then being modified to clarify issues arising in discussion. Helpful discussions with Neil Ericsson, Robert Marshall and John Muellbauer are gratefully acknowledged.
*Eighteenth Annual Lecture of the Scottish Economic Society delivered at the University of Stirling on 5 February 1983. The Society acknowledges with gratitude the financial support provided by Shell International for the Annual Lecture.