There has been considerable controversy about the role of financial factors as determinants of savings in developing countries. This paper explores the importance of two such factors, namely, real interest rate and financial intermediation. Using pooled time- series, cross-section data, a model of savings is estimated for Asia, Latin America, and for the total sample. Particular attention is paid to the error structure in estimation. The results suggest that pooling is not justified. Further, there is no unequivocal support for the effect of either of the two factors; some qualified support is found for Asia but none for Latin America.

Recently, Watson and Engle (1985) considered the problem of testing for a constant regression coefficient against the alternative hypothesis that the coefficient follows a stationary first-order autoregressive process. This alternative is the return to normalcy model proposed by Rosenberg (1973). Watson and Engle observe that the unknown autoregressive parameter is not identified under their null hypothesis and they suggest the use of the test procedure proposed by Davies (1977) for such situations. Davies' approach involves applying Roy's Union-Intersection Principle to the class of test statistics one gets by assuming the non-identified parameter takes a known value. Unfortunately, Watson and Engle's test statistic has no closed form and is approximated by maximisation using a grid search. Furthermore, both its finite sample and asymptotic distributions are unknown under the null hypothesis although they do provide a method of calculating a critical value whose asymptotic size can be bounded from above. In this note we suggest a different approach that helps overcome these problems. Rather than testing for zero variance in the autoregressive process as Watson and Engle suggest, we propose testing for lack of variation in the regression coefficient over time. This allows the construction of a locally best invariant (LBI) test using the results of King and Hillier (1985). Because the resultant test statistic is a ratio of quadratic forms in normal variables, standard computational techniques can be used to calculate exact and approximate critical values. A further advantage of this alternative test is that it is also LBI against the hypothesis that the coefficient follows a random walk process.

Socialist enterprises in Yugoslav agriculture show higher levels of productivity than private producers. The author examines the sources of these differences with total factor productivity estimates based on sectoral aggregate Cobb-Douglas production functions which permit separation of environmental, policy, and organizational effects. The results support the following conclusions: cooperative socialist enterprises are not inherently inefficient and can even outperform private producers; both types of producers were responding to their environment and their differential rates of technological change reflect the different constraints they faced; and socialist enterprises exhibited technology adoption behavior similar to nonsocialist enterprises elsewhere.

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.

Until recently, estimates of demand functions for public goods were obtained (either with aggregate or micro survey data) using single equation estimation techniques. However, demand estimates may be biased when in dividuals' choices of communities are dependent upon the quantity and quality of public good provided. This paper spells out the nature of this bias (called Tiebout bias) and suggests an improved maximum-likelihood estimation technique. The technique is applied to a data set involving local public education in Michigan.

Two p roportional hazard models are used to investigate the differingeffects of marke t structure variables on the conditional probabilityof a firm initially adoptin g the new technology of optical scanners as the innovation spreads through the f ood store industry. During the early stage, leading firms with large average sto re size which are not members of chains and which operate in less concentrated m arkets with higher incomes and wage rates, tend to adopt scanners sooner. Later on, differences in seller concentration, market share, and size become less impo rtant as other firms follow prior adoptions.

Some of the most fundamental assumptions of economics are utility maximization and weak separability of the arguments in the represen tative consumer's utility function. This paper contains results from nonparametric tests of these assumptions about consumer behavior. The authors find that quarterly per capita data on consumption goods, le isure, and monetary assets are consistent with utility maximization. Further, consumption goods and leisure meet necessary and sufficient conditions for weak separability. Additionally, one grouping of relat ively liquid monetary assets meets the necessary conditions for weak separability. They also test and find no evidence of homothetic prefe rences.

Kenneth E. Train, Daniel L. McFadden, Andrew A. Goett, Consumer Attitudes and Voluntary Rate Schedules for Public Utilities, The Review of Economics and Statistics, Vol. 69, No. 3 (Aug., 1987), pp. 383-391

Varouj A. Aivazian, Jeffrey L. Callen, M. W. Luke Chan, Dean C. Mountain, Economies of Scale Versus Technological Change in the Natural Gas Transmission Industry, The Review of Economics and Statistics, Vol. 69, No. 3 (Aug., 1987), pp. 556-561