Knowledge that Transforms

A well-established feature of the labor market is that an inverse relation exists between the unemployment rate (u) and the vacancy rate (v). Hansen (1970) provides a clear exposition of the theoretical model that implies that the u-v relation will be negatively sloped and convex to the origin. The usefulness of the relation is that it provides a means of distinguishing between changes in deficient demand unemployment (indicated by movements along the curve) and changes in nondeficient demand unemployment (indicated by a shift of the curve). In the United States, Great Britain and Canada there has been an upward shift of the u-v relation since the mid-sixties, although the timing and the magnitude of the shifts have varied considerably.' As figure 1 illus-

A substantial portion of the research in input-output analysis has been concerned with attempts to estimate more efficiently the structural parameters. As the coefficients have generally been estimated by nonstochastic techniques, efficiency in this context has implied acceptable estimates at reduced cost. It is possible to distinguish at least two directions of effort. One group of analysts has sought to develop and standardize sampling techniques that would bring the cost of estimating these models within reasonable limits (cf. Miernyk, 1970; Isard and Langford, 1971). Another group has concentrated their effort on non-survey and partial survey techniques-the most widely discussed in recent years being the RAS method developed in the Department of Applied Economics at Cambridge (cf. Bacharach, 1970) and applied for the first time at the regional level by Czamanski and Malizia (1969). In an article in this REVIEW, Gerking (1976a) has argued that acceptable coefficients can be estimated using standard regression techniques. Gerking recognizes the stochastic nature of sample estimates required for the construction of input-output models, and it is argued that a rigorous examination of the value of input-output coefficients is only possible in this context. Elsewhere (Gerking, 1976b; 1976c), he has applied similar methods to the problem of sample size selection and the problem of reconciling row and column coefficients in an input-output context. It is the purpose of this note to demonstrate that the application of stochastic techniques to the estimation of regional input-output coefficients encounters difficulties that must be recognized before more serious work is done in this area. Specifically, we will argue that (1) the nature of the distribution of stochastic disturbances has not been adequately explored, (2) the unique nature of regional input-output models makes application of stochastic techniques particularly difficult, if not impossible, (3) the estimator of major interest in Gerking's article produces parameter values that are not constrained to satisfy both input-output identities, and further, that empirical application of this estimator fails because the associated finitesample distribution does not possess moments.

A TTEMPTS to ascertain the productivity of university resources have typically relied on simple regression techniques; some measure of output is regressed on variables reflecting university services with controls for student characteristics. The results of these studies can generally be described as inconclusive with respect to the questions of whether or not university inputs matter. For example, Astin (1968) failed to find any strong relationship between university resources and educational value-added, as measured by student performance on the Graduate Record Examination field test, controlling for scores on the National Merit Scholarship Qualifying Test upon entering college. However, Perl (1971) found a strong, statistically significant relationship between university expenditures per pupil and the proportion of graduates attending graduate and professional schools. Such differences in conclusions can be attributed to many factors. Various authors employ different measures for attainment, university services and the control variables. Also, differences in the levels of aggregation (e.g., university versus departmental observations) are important in rationalizing varying results. Beyond these specific differences, a deficiency common to each study is that they all treat university service flows as exogenous. Failure to account for at least student choices as to courses, major fields of study, and college or university of attendance implies that existing models are misspecified.1 Prior research has generally assumed that university resources (R) and student characteristics (X) combine to produce learning (Q):

tive demand for forward exchange. Estimation of the MT equation is reasonable only under the maintained hypothesis that at least one of the parameters (a<, /3) is finite. In conclusion, let us turn to the other case mentioned by Kohlhagen, namely, estimation of (1) when (a) prevails but real rates are not equalized. In this case one can use the middle expression of (3) to eliminate St+3e from (1), obtaining

In spite of the fact that the consumption relationship plays the central role in the Keynesian multiplier analysis of the effects of fiscal policy, economists are not in agreement about the effects government deficits have on consumer expenditures. In contrast to the popular economic policy descriptions, recent theoretical work indicates that, through adjustments in private intergenerational transfers, current government surpluses, which imply lower future tax liabilities, could have an expansionary effect on current private consumption demand. (See, for example, Barro, 1974.) In the 1968 experiment relating to this problem, the tax surcharge, which had little effect on consumption and aggregate demand, was interpreted as giving evidence in favor of the monetarists' position and against the traditional Keynesian view of policy prescriptions.-; The monetarists claimed victory based upon this experiment because national income rose with the rising money supply, and the fiscalists pleaded nolo contendere ex post since the tax surcharge was temporary in nature and, therefore, had little effect on permanent income and thus, little effect on aggregate consumption demand (Eisner, 1969). However, some macro theorists now would explain the rise in the aggregate marginal propensity to consume in this period as resulting from the lower future taxes caused by the higher current tax surcharge. Thus, rather than being evidence on the Keynes versus classical theories of the income determination controversy, the 1968 tax experiment may be evidence on the private sector's ability to perceive the effects on future tax liabilities of current fiscal actions. For, if consumers do foresee these effects, current tax increases or decreases (whether viewed by policy makers as being temporary or permanent) will have little effect on aggregate demand. As a consequence, and with the large volume of continuing discussion of the role of fiscal policy as a stabilizing tool, a closer examination of consumption expenditures in the context of changing government fiscal policies is required. II. Theoretical Issues Reviewed

This paper outlines a framework for the estimation of the opportunity cost of workers who are permanently displaced from their previous place of employment. It will also enable us to evaluate both the private and social costs of adjustment arising from labor displacement. This framework will then be applied to an empirical estimation of both the private and social opportunity cost of labor and the adjustment costs associated with workers laid off by the aircraft industry in Canada. (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.)

IN selling bills, the U.S. Treasury employs a discriminatory auction. The Treasury awards bills in the amounts and at the prices bid, beginning with the highest price and proceeding to consecutively lower prices, until the issue is allotted. A common practice -of bidders in the weekly auctions is to strip-bid; that is, to bid approximately equal amounts around the anticipated stop-out price, the lowest price at which bills are awarded. Although a number of writers have evaluated the revenue generating capabilities of the discriminatory auction, only one, Vernon Smith, attempted to do so ,through the specification of a utility maximizing model of the bidding decision.' Despite the prevalence of multiple price bidding in practice, however, Smith posited the selection of a single price bid. This paper examines the theoretical and empirical aspects of the multiple price bid in Treasury bill auctions. Section I briefly describes the weekly auctions. Section II presents a model of the bidding decision which shows that, in general, multiple price bids are optimal. Multiple price bids are examined empirically in section III. Bids that are efficient in a mean-variance sense are derived from the forecasts of actual bidders.2 In a comparison covering 75 auctions, the efficient bids had higher mean profit and lower standard deviations of profit than the dealers' actual bids on an ex post as well as ex ante basis.

Quantitative models of import demand have revolved around numerical estimates of demand elasticities for a number of theoretical and practical reasons. Especially in Latin America, much of stimulus and direction of post war development is said to have originated out of reaction to the trade constraint.

This study reformulates the National Income Accounts definitions of the government deficit and surplus and gross private saving. These new definitions are based on employing the change in the real value of government debt, due to price and interest rate changes, as a measure of the real deficit rather than the real value of the nominal debt change, as is now calculated by the Department of Commerce. The two definitions are identical if government debt were fully indexed. The major empirical differences in the revised statistics are a larger deficit during the Depression years and a much smaller deficit during inflationary periods, particularly during World War II and recent years. During the last decade the government has actually run substantial surpluses in real terms despite the cash deficits reported by the Department of Commerce. The redefined gross private saving ratio is reduced in periods of inflation and displays the same variability as the national savings rate instead of the significantly lower variability reported by the traditional statistics. In the post-War data, there is a significant negative correlation between the national saving rate and the reformulated gross private savings ratio.