Knowledge that Transforms

In this paper four alternative quarterly econometric models of investment behavior are fitted to a common set of data for individual manufacturing industries in the United States. Goodness of fit and absence of autocorrelation of errors are used as a basis for comparison of the performance of the alternative models. The econometric models are compared with each other and with alternative explanations of data on investment based on surveys of anticipated investment and on mechanical forecasting schemes. The four econometric models included in our study are those of Anderson [2], Eisner [15], Jorgenson and Stephenson [38], and Meyer and Glauber [46]. On the basis of our comparison, the ranking of the alternative models is as follows: (1) Jorgenson-Stephenson, (2) Eisner, (3) Meyer-Glauber, (4) Anderson. Anticipatory data give a better fit to data on investment expenditures than that provided by any of the econometric models. Mechanical forecasting schemes provide a fit that is superior to the Anderson and Meyer-Glauber models. These schemes are slightly inferior to the Eisner model and clearly inferior to the Jorgenson-Stephenson model. The alternative econometric models included in our comparison differ in specification of the time structure of the investment process and in the role ascribed to specific determinants of investment behavior. Both aspects of an econometric model affect its performance so that it is difficult to discriminate among alternative determinants of investment behavior on the basis of our results.

We study a standard n-commodity model in which equilibrium positions are characterized by specified inequalities between society's marginal rates of transformation in production and a single consumer's marginal rates of substitution in consumption; these inequalities are exemplified by, but not limited to, excise and subsidies. We explore circumstances under which certain increases in these taxes and subsidies can be said to decrease welfare. In order to do so, we look for conditions under which the equilibrium consumption vector is well defined by a specification of the and subsidies, and find that the conditions required are stringent. Among our conclusions is the proposition that the validity of consumers' surplus measures for analyzing such problems may depend on assumptions that are more strict than their users have realized.

[The results of A. K. Sen and P. K. Pattanaik on sufficient conditions for the transitivity of simple majorities are extended to the case where it is not assumed that the individual's indifference relations are transitive.]

in the two sectors. Theorem 2 summarizes the discussion on this subject. The proofs of the proposition leading to Theorems 1 and 2 are illustrated graphically. In order to analyze the effect on the sign of the supply function in this economy, the ES of products with respect to their prices is expressed in terms of the parameters of the individual production functions. The expression shows clearly the augmentation effect observed by Johnson [1] (i.e., in the absence of distortion, the ES between products is larger than those which exist between factors). Finally, Theorem 3 states conditions under which the supply function is increasing, declining, perfectly elastic, or a combination of these.

[It is often argued that discount rate changes have a "psychological" impact on the public's expectations about the future course of the economy; it is alleged that such changes affect economic activity by influencing the expectations of businesses, financial institutions, and other economic actors. This study attempts to assess the veracity of the notion that there is such an effect of expectations. We begin with the premise that any change in expectations about future net cash accruing to business enterprises really reflects changes in expectations about future economic conditions in general, and that changes in expectations about future cash flows will be reflected in the discounted present value of business firms and hence the market value of equity shares. After removing systematic components from such data, and analysis of the random component strongly suggests that there is an "announcement effect" on expectations associated with discount rate changes, and that there seems to be a consensus as to what the inferred information content of such changes portends for future economic conditions. Also, on days immediately preceding discount rate decreases, there seems to be come evidence of anticipation of the change.]

[Machines produce a constant flow of output when operating, and break down in a random process. The task of workers is to repair the broken machines. Servicing time is also a random process [2]. The limiting steady state probabilities and the relation between output and inputs are derived, and fitted to a Cobb-Douglas production function.]

In this paper a distribution sampling study consisting of four major experiments is described. The L1 norm is employed in two new estimating techniques, direct least absolute (DLA) and two-stage least absolute (TSLA), and these two are compared to direct least squares (DLS) and two-stage least squares (TSLS). Four experiments testing the normal distribution case, a multicollinearity problem, a heteroskedastic variance problem, and a misspecified model were conducted. Two small sample sizes were used in each experiment, one with N = 20 and one with N = 10. In addition, conditional predictions were made using the reduced form of the four estimators plus two direct methods, least squares no restrictions (LSNR) and another new method known as least absolute no restrictions (LANR). The general conclusion was that the L1 norm estimators should prove equal to or superior to the L2 norm estimators for models using a structure similar to the overidentified one specified for this study, with randomly distributed error terms and very small sample sizes. BEGINNING WITH the method developed by Haavelmo [11] for solving the problem of single equation bias, econometricians have devoted considerable effort to developing additional methods for estimating the structural parameters of simultaneous equation models [2,12,20,24]. While it has been fairly easy to develop the asymptotic properties of these estimators, a distinguishing characteristic of econometric models is that they are invariably based upon small samples of data and thus, the asymptotic properties of the various estimators are not