Knowledge that Transforms

[All over the world economists are busy evaluating major road proposals and other transport projects. But this work is largely confined to rural areas because the methods used are inappropriate for evaluating big transport schemes in towns, where traffic congestion is a dominating consideration. This paper discusses congestion as an economic problem of demand and supply, expressed as simple functions of the cost of travel, in time and money, to the road user. Road expansion in congested cities often seems to achieve nothing but more congestion. This paper demonstrates how this arises as a process of market equilibrium, and how one can assess the benefits of the road expansion in this situation. The paper then considers how the evaluation of road schemes would be affected if direct road pricing were introduced into cities as a means of controlling congestion.]

A. L. Nagar, Y. P. Gupta, The Moment Matrix of the Two-Stage Least-Squares Estimator of Coefficients in Different Equations of a Complete System of Simultaneous Equations, Econometrica, Vol. 38, No. 1 (Jan., 1970), pp. 39-49

[Two stage least squares methods are used to estimate a postwar quarterly model of U.S. labor demand, supply, and wage adjustment. Analytical techniques are used to derive the long-run equilibrium properties of the estimated model. Short run properties are obtained by approximating the model in the form of two simultaneous difference equations. Simulation methods show the response of the model to an increase in the size of the armed forces.]

This article shows how to transform residuals from regression on an arbitrary set of k regressors to a set of values having the same joint distribution as the residuals from regression on a different set L of k regressors. Let d′ denote the value of the statistic <tex-math>$\Σ (z_t-z_t-1)^2/\Σ z_t^2$</tex-math> calculated from these values. It is shown that for a suitable choice of L the distribution of d′ is the same as that of <tex-math>d_U</tex-math>, the significance values of which are tabulated in [1].

[This paper begins by formulating a finite horizon linear programming model for economic development. The formulation allows for heterogeneous capital goods and for nonnegativity constraints upon investment in each sector. It is then proved that a certain set of conditions are sufficient to ensure that an optimal solution to this T period, finite horizon plan will also coincide with an optimal solution during the first T periods of an infinite horizon plan. Among the restrictive conditions imposed to prove this sufficiency theorem are the following: gradualist consumption paths, no primary factors that cannot themselves be produced within the economy, a Leontief technology, and a characterization of the optimal finite horizon solution as one in which the terminal investment and output levels are positive. An illustrative numerical example is provided.]