Journal Article Economic Theory and Business Behaviour Get access D. C. Hague D. C. Hague University College, London Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 16, Issue 3, 1949, Pages 144–157, https://doi.org/10.2307/2295916 Published: 01 January 1949

Given a sufficient number of instrumental variables significantly correlated with the investigational variables, consistent estimates of the coefficients of the linear relations can be determined (if they exist), without knowledge of the disturbance variances. The estimates are discussed from the viewpoint of probability convergence. In the case of two investigational and one instrumental variable, all three variables distributed on the normal surface, the distribution of the estimate of the coefficient is found exactly for all sample sizes, on certain hypotheses. The distribution function is remarkably simple. The applicability of the theorem to economic time series is discussed by (a) comparing the probability inferences derived from this Model A with those for the simplest stationary time-series model, termed Model B, and (b) by comparing the large-sample variances on several models. It is found that the theory can be used with confidence when the series are not too short and the error variances not too large. The theory is applied to a particular time series, showing that the accuracy of the estimate of the coefficient depends on the correlation between the instrumental variable and the two investigational variables. The theory to which reference is made in Sections II, III, and IV, relating to the two-investigational-variable case, is extended to many variables and tests are given, applicable when samples are not small, for determining the significance of coefficient estimates.

Abstract The article presents comments of the author on an article by scholar Gordon W. Stead. The article by Stead is an interesting analysis of accounting ideology accompanied by a preliminary charting of idea interrelations. At the top of the chart stands integrity. It is the author's intention to show how the successive aspects of doctrine derive from this one fundamental concept, it being his view that this dependency is the direction of causation. It will be no detraction from his constructive contribution to the development of the concept of an integrated body of accounting thought to try here for a supplementary pattern one leaning toward a line of discussion he avoids when he chooses to show that rules of conduct derive from immutable principles. In this supplementary pattern it will be the view that principles may have been slowly distilled out of actions. This view would help to express the idea that accounting rules having first been fruits of tentative actions, grew in significance until they became guides to pre-determined actions. As these accounting actions grew increasingly diverse and complex, so did the attendant rules, customs, practices.