Numerous studies in recent years have emphasized the importance of accounting properly for abandoment value in capital budgeting (see [1], [4], [7], [10], and [11]). For a variety of reasons, a project need be neither physically exhausted nor have negative cash flows to be abandoned. Robichek and Van Home [10] suggested that a project should be abandoned in any period in which the present value of future cash flows does not exceed its abandonment value. In a modification of this rule, Dyl and Long [4] proposed that the firm give consideration to all possible future abandonment opportunities. They argued that abandonment need not occur at the earliest possible date that the abandonment condition is satisfied, but rather at the date that yields the highest NPV over all future abandonment possibilities. A generalization of these models was offered by Bonini [1], who developed a dynamic programming model to analyze investment projects with abandonment possibilities and uncertain cash flows. More recently, Gaumnitz and Emery [7] compared the abandonment decision to the like-for-like replacement decision and noted that the correct model for a particular case depends on the suitability of the assumptions.

The purpose of this research is to explain municipalities' voluntary participation in the MFOA Certificate of Conformance Program (CCP) during 1976–1980 as a function of the economic incentives of municipal officials. Our operational model predicts that cities with more debt, CCP participation prior to 1976, professionally active municipal officials, and a manager form of government are more likely to participate. In addition, cities in states with GAAP (non-GAAP) reporting requirements were expected to be more (less) likely to participate. Taken as a whole, the empirical results are consistent with the proposed model of the CCP participation decision.

[This paper examines the effect of the capital gains tax on investors' optimal consumption and investment behavior and on equilibrium asset prices in an intertemporal economy. It explictly considers the fact that capital gains and losses on stock are taxed only when the investor sells the stock. Ownership of stock then confers upon the investor a timing option which enables him to realize capital losses immediately and defer capital gains. This option is a large fraction of the total benefit which accrues to the stockholder, and is the prime reason for the novel implications of capital gains taxation, discussed in this paper.]

This paper presents the necessary and sufficient conditions for determining the signs of the solution variables of a system of linear equations based only upon a knowledge of the signs of the coefficient matrix and the signs of the right hand side variables. This problem was initially formulated in economics due to the idea that the signs of an equation's derivatives might have a stronger empirical basis than that of a particular functional form. A new interest in qualitative problems has arisen in connection with the need to develop analytic measures in order to better manage the understanding and use of large, computer-based mathematical systems. The conditions for the qualitative determinancy of nonhomogeneous systems are developed in terms of a small number of necessary conditions which are jointly sufficient. Algorithmic approaches are given for testing a given system for qualitative determinancy. For nonhomogeneous systems algorithms are given for constructing all possible qualitatively determinate systems of a given size. For the homogeneous case conditions are also given for the qualitative invertibility of the (irreducible) coefficient matrix. These conditions are then related to the problem of partially qualitatively determinate systems and the signs in the qualitative inverse of a matrix.

[Under the assumption that demand behavior depends on intertemporal preferences as well as (point) expectations concerning future prices, it is demonstrated that under plausible conditions rationality imposes no observable restrictions on the demand function and expectations and preferences are observationally indistinguishable.]

Price elasticities are estimated for telephone calls and minutes of conversation using data from a experiment in central Illinois conducted by General Telephone and Electronics. The experiment charges separately for calls and for minutes. Using a model that is consistent with the theory of telephone demand, the authors estimate the effects of both prices. The nonlinear generalized least squares estimates of the elasticities are fairly small-about 0.1 or less in absolute value at experimental price levels-but they are estimated with high precision. The report briefly considers the application of these results to predict the effects of introducing measured service telephone rates in other cities. RESIDENTIAL TELEPHONE SUBSCRIBERS in the United States typically pay a flat monthly rate for with no extra charge for calls within the area. The alternative of explicitly charging for calls, commonly referred to as usage-sensitive pricing or local measured service, is of increasing interest to U.S. telephone companies and regulatory commissions (Cosgrove and Linhart [5]; Garfinkel and Linhart [8]; Baude, ed. [2]).3 Charging for calls that are now free clearly holds promise of increasing economic efficiency (Alleman [1]; Mitch

The U. S. economy is found to be sufficiently open to make the balance on foreign transactions an essential part of the equilibration process between saving and investment. Specifically, over the past two decades, changes in the national saving rate have increasingly been matched by changes in net foreign rather than domestic investment. Thus, it would be counterfactual to assume in policy discussions that measures to raise the national saving rate add fully to the stock of productive capital in the United States, barring only Keynesian complications. Conversely, a stimulus to domestic investment could be validated in part by drawing on foreign saving.

T HE dietary choice of households near subsistence levels of nutrient intake is one of obvious policy importance. In many countries, such as Bangladesh, national goals are set in terms of nutritional intake and there is heavy intervention in the markets for foods. However, little is known about the manner in which food preferences vary with food expenditure and nutrient intake. The design of efficient programs to aid nutritionally deficient households in attaining minimal levels of nutrient intake requires information on all ownand cross-price elasticities for both target and non-target groups. The net effect of a food price subsidy on the consumption of food nutrients cannot be predicted without knowledge of the complete elasticity matrix. Results presented below demonstrate that substitution effects can be so strong that the subsidization of certain foods quite often reduces nutrient consumption. In this study, demand equations for nine foods which allow for extremely flexible consumer price response are estimated from the individual budgets of 5,750 rural Bangladeshi households. Estimation at the household level is preferred because it more readily permits the incorporation of household composition variables into the demand analysis, such as household size, occupation and employment status, that are typically lost in aggregation. There is also a greater range and variation in expenditure levels than found in grouped data. This is of particular importance in the study of nutritional well-being as it is the poorest households which are of special interest. Moreover, the household sample provides sufficient degrees of freedom to estimate a simple varying parameter model which requires the estimation of 270 parameters. Previous econometric analysis of income-class specific dietary choice has been limited and not altogether satisfactory. Pinstrup-Anderson, de Londono and Hoover (1976) estimated complete sets of price elasticities for different income strata using Frisch's scheme in order to study the impact of changes in relative prices on nutrient consumption. Their results are suspect because of the assumption of want independence necessary for this methodology to be valid. Alderman and Timmer (1980), who were also concerned with studying the relationship between food price policy and nutrient intake by income classes, econometrically estimated separate price coefficients for each income group by including slope dummy variables in their demand equations for rice and cassava in Indonesia. The inclusion of these dummy variables revealed surprisingly large differences in compensated price response across income groups. Although their results support the notion that poorer households respond differently to prices than the rich, the limitations of their data constrained them to consider only two foods and to specify changes in price response which are discontinuous with respect to income. I The formulation and estimation of the food demand equations is discussed in section II below. Section III presents the results of the estimation and discusses the nutritional implications of movements in relative food prices and other exogenous variables. Section IV summarizes our findings.