My colleagues at Williams, especially Thomas McCoy, James Halstead, Thomas Tietenberg, and Donald Keesing, gave me invaluable criticism on this paper. At an earlier stage, Mark Perlman 's comments were particularly helpful as were those of Roger Bolton, Stephen Lewis, William Gates, Helen Hughes, Earl McFarland and Francisco Thoumi. A Ford Foundation grant (720-0234), the Williams College Center for Development Economics and the World Bank Capital Utilization Research Project made important contributions to this work. Opinions and errors of fact or interpretation are, of course, all mine.

A relationship between money supply and stock prices is fairly well recognized in the literature. More recently the studies of Hamburger and Kochin [7], Modigliani [12], Keran [9], and Homa and Jaffee [8] have attempted to specify the short- and long-run nature and the direct and indirect nature of these relationships. Also, these studies have focused on determining the transition variables through which the money-supply effect is transmitted to stock prices. A more pragmatic approach is that of Sprinkel [17 and 18] and Palmer [14] who have attempted to analyze the money-supply and stock-market relationships to see if the former can be a predictor of the latter. More reliable forecasts of future market movements, if available, could be extremely useful for individual and institutional investors. At one extreme, information could be used to time the investment in and out of the market portfolio. Alternatively, the investor could more profitably use the B information on market volatility of stocks available from the capital-asset pricing model, relating expected rate of return on a security, E(Ri), with that on the market portfolio, E(Rm). Accordingly, the prediction of the market would indicate when to shift the composition of the portfolio from relatively low to high or from relatively high to low β stocks and cash.

Professor Mendelson's interesting paper reaches one conclusion with which I have no quarrel. Under his “most likely” future scenario, he argues for the need for the individual investor in the stock market to enhance the external equity capital-raising abilities of corporations. However, on the way to that conclusion, he dispenses a number of inconsistencies and confusing points.

Journal Article On Collective Rationality and a Generalized Impossibility Theorem Get access Peter C. Fishburn Peter C. Fishburn The Pennsylvania State University Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 41, Issue 4, October 1974, Pages 445–457, https://doi.org/10.2307/2296696 Published: 01 October 1974

I. Subset choice conditions, 320. — II. Methods for computing C, 323. — III. Two examples, 325. — IV. Discussion, 326.

Introduction and summary, 143. — The firm, 143. — The economy, 146.

[Arrow's impossibility theorem can be viewed as requiring that each subset of two social alternatives be a potential feasible subset or environment, with transitive and complete social choices over these subsets for each profile of individual preference orders. The feasibility assumption for every two-alternative subset is relaxed with consequent changes in the social ordering condition. An Arrow-type impossibility result still obtains when the set of social alternatives is the union of two disjoint sets, each of which has two or more elements, and when \{x, y\} is feasible whenever x is from one set and y is from the other. Variants of the basic theorem are included, one of which requires that strict binary social choices be acyclic.]

Certainly, the concept of skewness of returns and its role in the context of portfolio analysis has gained increasing attention in recent literature. Witness the studies by Alderfer and Bierman [1], Arditti [2, 3], Jean [4], and Simonson [5]. Each of these studies has treated skewness as the third moment of a series expansion—accordingly, skewness has been measured and interpreted as a logical extension of the traditional two-dimensional return-versus-standard deviation analysis of security evaluation.

Gordon C. Winston, Thomas O. McCoy; Investment and the Optimal Idleness of Capital12, The Review of Economic Studies, Volume 41, Issue 3, 1 July 1974, Page

When a continuous time model is estimated from its non-recursive discrete approximation, the presence of identities and exogenous variables in the system does not preclude the use of standard procedures. However, if we wish to use the exact discrete model for estimation purposes, the treatment of identities and exogenous variables is not so straightforward. It is found that the procedure based on the exact discrete model is unlikely to be affected by the presence of identities, but when exogenous variables occur in the system some sort of approximation is usually necessary before the model can be estimated with discrete data. An approximate model is constructed to deal with the latter case and the asymptotic properties of estimators derived from this model are investigated. UNDER CERTAIN CONDITIONS, a stochastic model represented by a system of continuously distributed lags can be regarded as the solution of a system,of linear stochastic differential equations. Two general approaches are available if we wish to estimate the parameters of such a system by conventional methods and with discrete data.2 The first approach (see [1 and 2]) is to take a discrete approximation to the model and estimate the approximate model by standard methods. The second approach makes use of the discrete model which is known to correspond to the continuous time model in the sense that observations at equidistant points in time that are generated by the latter system also satisfy the former. The main advantage of the second approach is that no specification error is involved, so that it is possible in some cases to obtain consistent and asymptotically efficient estimators of the parameters in the model. In addition to the arguments of asymptotic theory, the results of a previous study [8] have given some recommendation to the second approach on the basis of small sampling performance. However, the model used in the sampling experiment of this study was relatively simple and it is the aim of the present paper to discuss the use of the second approach in more complicated models. The complications with which we will be concerned are the presence of identities and exogenous variables; both these complications may be expected to occur in more realistic economic, models. Before the procedure is viable when there are identities in the model, we must ascertain whether the disturbance in the exact discrete model has a non-singular