Edited by L.H. Klaassen, L.M. Koyck and H.J. Witteveen, Presented on the occasion of his 25 years jubilee as a professor at the Netherlands School of Economics at Rotterdam. (With a bibliography of professor Tinbergen's work).

IN REGRESSION ANALYSIS most empirical economists use the well-known Durbin-Watson (DW) procedure [1] to test the hypothesis of no autocorrelation among the disturbances of a linear regression model against the hypothesis of a first-order autocorrelation. The use of this procedure is compromised by the fact that it is a bounds text and, hence, cannot discriminate between the two competing hypotheses for a range of intermediate values of the test statistic. This shortcoming can be eliminated by determining the distribution function [5] for the Durbin-Watson test statistic and enumerating it for a given level of significance and a particular regression matrix. The authors have written a FORTRAN IV program for finding the probability that the DW test statistic is less than the observed value if the null hypothesis of no autocorrelation were true. The program enables the investigator to perform the DW test for either positive or negative correlation by comparing the above probability to a specified level of significance. This procedure provides a conclusive test for first-order autocorrelation. The procedure begins with a transformation of the Durbin-Watson test statistic stated as

A wide body of empirical evidence finds that around 25 percent of fiscal stimulus payments (e.g., tax rebates) are spent on nondurable household consumption in the quarter that they are received.To interpret this fact, we develop a structural economic model where households can hold two assets: a low-return liquid asset (e.g., cash, checking account) and a high-return illiquid asset that carries a transaction cost (e.g., housing, retirement account).The optimal life-cycle pattern of portfolio choice implies that many households in the model are "wealthy hand-to-mouth": they hold little or no liquid wealth despite owning sizeable quantities of illiquid assets.They therefore display large propensities to consume out of additional transitory income, and small propensities to consume out of news about future income.We document the existence of such households in data from the Survey of Consumer Finances.A version of the model parameterized to the 2001 tax rebate episode yields consumption responses to fiscal stimulus payments that are in line with the evidence, and an order of magnitude larger than in the standard "one-asset" framework.The model's nonlinearities with respect to the size of the rebate, its degree of phasing-out, and aggregate economic conditions have implications for policy design.

[This paper develops a model of labor supply for married women which takes into account both the joint decision on participation and hours, and the nonlinear shape of the budget constraint due to taxation. The model can explain the absence of observations of the tax kink by assuming the existence of optimization errors in addition to errors capturing taste variation. The estimates of the model, which are obtained with British micro data, suggest that the overall wage elasticity is about 2 and that participation is more responsive to wages than hours of work.]

The sequential nature of activities like research, development, or exploration requires optimal funding criteria to take account of the fact that subsequent funding decisions will be made throughout the future. Thus, there is a continual possibility of reviewing a project's status, based on the latest information. After setting up a model to capture this feature, optimal funding criteria are investigated. In an important special case, an explicit formula is derived. As well as throwing light upon the nature of development activities, the analysis is also relevant to the general theory of information gathering processes.