Despite the critical analysis of Pagan (1984) and several subsequent applied studies, empirical models characterized by expectations are often estimated with regressor proxies that are treated as ordinary nonstochastic This paper offers a Generalized Least Squares estimator designed to cope with the nonscalar disturbance matrix precipatated by generated The approach is designed as a natural extension of Pagan's analysis and the author demonstrates how it may be applied to multi-equation models. Experimentation with numerical examples reveals the potential severity of ignoring the problem. These results also suggest an easily calculated indicator of potential inference distortion in models that fail to account for regressors.

Dennis W. Carlton, The Location and Employment Choices of New Firms: An Econometric Model with Discrete and Continuous Endogenous Variables, The Review of Economics and Statistics, Vol. 65, No. 3 (Aug., 1983), pp. 440-449

Nonlinear modeling has become popular in applied macroeconomics. Successful attempts include Beaudry and Koop's CDR (current depth of the recession) model of real GNP, and various STAR (smooth transition autoregression) models of industrial production. However, these models have not been directly compared. We compare CDR and STAR models of U.S. real GNP and industrial production. We find (i) within sample, the CDR model fits slightly better than the STAR model; (ii) out of sample, the CDR model forecasts better than the STAR model; and (iii) the CDR model generates very different dynamics than the STAR model.

A central question in industrial organization is why profit rates differ so dramatically across firms and industries. One of the many explanations offered for this phenomenon is the failure of conventional accounting methods to adjust for intangible capital stocks, i.e., it is argued that profit rates do not differ dramatically when capital stocks are correctly calculated to include intangible R&D and advertising capital. To test this hypothesis individual advertising capital stocks are calculated for firms in the toys, distilled beverages, cosmetics, and pharmaceuticals industries, and R&D stocks are calculated for the pharmaceuticals firms. The adjustments do not eliminate the wide dispersion in profit rates.

THIS paper models and estimates import demand and demand for export functions for 19 industrial countries. Although primary emphasis is placed on the period of generalized floating exchange rates, 1972 through 1980, estimates are also provided for the fixed exchange rate years (1957-1970), thus making possible a comparison between the two eras. Aside from the conventional income and price variables, the paper assesses the effect of variations in the exchange rate and in the expected exchange rate, on real trade flows. Additionally, it estimates an unrestricted lag structure of the effect of price and exchange rate variations on imports.

This study investigates the stability of long-run log-linear demand functions for narrowly defined monetary aggregates (M1, Monetary Base) in the U.S. during the post World War II period. The hypotheses that the individual time series which appear in such equations (real M1, real Monetary Base, real Personal Income and short-term and long-term nominal interest rates) all have unit roots cannot be rejected. The primary conclusion of this study is that with proper attention to the time series properties of the available data, there exists strong evidence in support of a stable equilibrium demand function for real balances in the post-World War II U.S. economy. The hypothesis of a unitary equilibrium real income elasticity (a velocity function) cannot be rejected. Further, the estimates of equilibrium interest elasticities are approximately -.5 to -.6 for real M1 and -.4 to -.5 for real monetary base. The estimated interest elasticities are significantly different statistically depending on whether long- term or short-term interest rates are used, but the observed differences in these estimates are not of economic significance.

In recent years, nursing home care expenditures have approached one percent of GNP. Their growth is a major contributor to the escalating costs of health care. In this article, the authors analyze a sample of nursing homes from Wisconsin to determine the characteristics of the efficiently operated nursing homes. Data envelopment analysis is used to calculate efficiency scores for the various nursing homes in the sample. The authors then use regression analysis to investigate the determinants of efficiency, holding constant the characteristics of the output. They find that for-profit firms have significantly higher efficiency scores.

Dennis L. Hoffman, Don E. Schlagenhauf, An Econometric Investigation of the Monetary Neutrality and Rationality Propositions from an International Perspective, The Review of Economics and Statistics, Vol. 64, No. 4 (Nov., 1982), pp. 562-571

Tham V. Truong, Dennis N. Gash, Less-Developed Countries' Taxable Capacity and Economic Integration: A Cross-Sectional Analysis, The Review of Economics and Statistics, Vol. 61, No. 2 (May, 1979), pp. 312-316