Standard autocorrelation corrections applied to cointegrating regressions can lead to erroneous first-differencing. Such outcomes are shown to be possible under a range of environments, including cases with autocorrelation coefficients substantially less than 1. First-differencing of a cointegrating regression results in estimates that may bear little relation to the parameters in the original untransformed relation, resulting in misinterpretation of the parameter estimates. These results are proved analytically and demonstrated with simulations and empirical examples.

The strength of the relationship between schooling and the logarithm of earnings at different levels of experience can be measured by coefficients of determination or by residual variances. For tracking unobserved post-school investments in cross-sections, the latter are clearly preferable; the greater reliance on the former in the literature is misplaced. If the fraction of earning capacity devoted to postschool investment is uncorrelated with earning capacity at school-leaving, the relationship between schooling and the logarithm of earnings should be strongest at overtaking, which would plausibly be placed in the first decade of work experience. Mincer reported coefficients of determination which followed this pattern, at least for full-year workers. An analysis of more recent data failed to detect this pattern for coefficients of determination, but found more favorable evidence for residual variances using weekly (but not hourly)

One of the validity of a scientific hypothesis its forecasting accuracy. Thus one of the hypothesis that the market can be used to allocate manpower to defense, as to any other occupation, its ability to predict voluntary enlistments. In our earlier paper, a simple model of accessions and enlistments to the U.S. armed forces was estimated, the conclusion being that the allvolunteer force (A VF) is an experiment in market economics which, far from having failed, has not yet been put to the test (McNown et al., 1980, p. 130). Although one may not be particularly sanguine about the prospects for testing the market experiment itself, one can at least expose the hypothesis to further scrutiny. This paper reports the results of an accuracy analysis of forecasts generated by the model, and, since the results on the whole are encouraging and the topic remains of considerable interest to the public and to policymakers alike,1 also presents updated estimates of the personnel supply elasticities. I. A Military Personnel Supply Model

In this paper, the authors present evidence that neither large differences in inflation nor long time periods are necessary for a finding favorable to purchasing power parity. Evidence from cointegrating regressions and tests of the real exchange rate indicate that purchasing power parity held as a long-run constraint between the United States and Canada for the period 1950:10 to 1961:5. The authors also find that government intervention can distort purchasing power parity over a finite period. Once the data were extended beyond the period of the free float, the evidence is no longer favorable to purchasing power parity.