This paper presents a precise characterization of the bias of least squares in two limited dependent variable models, the Tobit model and the truncated regression model. For the cases considered, the method of moments can be used to correct the bias of OLS. For more general cases, the results provide approximations which appear to be relatively robust. 13, and o, . In this paper we present a precise characterization of that bias for the particular case in which xt, as well as -,, is normally distributed. We also show that the bias of the OLS slope estimator can be corrected by dividing each estimate by the sample proportion of nonlimit observations. Other structural parameters can be consistently estimated in a similar fashion. We present some evidence on the effect of nonnormality with respect to the predictions obtained in the normal model. The case in which the sample contains only nonlimit observation (the truncated regression model) is considered elsewhere (Olsen (7)). We analyze the relationship between his results and ours, and derive some predictions of the normal model with respect to the seriousness of truncation bias.

The authors obtain expressions for the restricted least squares estimator and its covariance matrix in the classical regression model when the matrix of regressors is not necessarily of full rank. The standard expressions for the restricted least squares estimator are not usable in the short rank case because they rely on the unrestricted estimator. But, in the presence of restrictions, the restricted least squares estimator may be computable even if the unrestricted estimator is not. The authors' derivation produces some additional, useful algebraic results for least squares computation.

We estimate economies of scale for U.S. firms producing electric power. Cross-section data for 1955 and 1970 are analyzed using the translog cost function. We find that in 1955 there were significant scale economies available to nearly all firms. By 1970, however, the bulk of U.S. electricity generation was by firms operating in the essentially flat area of the average cost curve. We conclude that a small number of extremely large firms are not required for efficient production and that policies designed to promote competition in electric power generation cannot be faulted in terms of sacrificing economies of scale.

The roughly 9.1% of all U.S. families that are without some type of transaction account (unbanked) are disproportionately represented among minorities. The unbanked often must rely on alternative ways to carry out basic financial transactions such as cashing payroll checks and paying bills. This study analyzes unique survey data and finds that a consumer's decision to patronize check-cashing businesses is jointly made with the decision to be unbanked. For the unbanked, these businesses are an important source of financial services. Attributes that contribute to these decisions, however, vary with the racial/ethnic group. Latent preference effects are also observed to influence this joint decision for blacks and Hispanics. These findings may explain in part why the provisions of the Debt Collection Improvement Act (DCIA) of 1996 have not been more successful in bringing unbanked federal benefits recipients into the financial mainstream. Consumer participation in mainstream financial markets can improve their ability to build assets and create wealth, can protect them from theft and discriminatory, predatory, or otherwise unsavory lending practices, and may promote economic stability and vitality in the communities where they reside. By more fully understanding consumers' financial decisions, policies can be better directed to improve the effectiveness of legislation such as the DCIA of 1996 in encouraging mainstream financial market participation.

The roughly 9.5 percent of all U.S. families that are without some type of transaction account (unbanked) are disproportionately represented by minorities.The unbanked often must rely on alternative ways to carry out basic financial transactions such as cashing payroll checks and paying bills.This study analyzes unique survey data and finds that a consumer's decision to patronize check-cashing businesses is jointly made with the decision to be unbanked.For the unbanked, these businesses are an important source for financial services.Attributes that contribute to these decisions, however, vary for each racial/ethnic group.Latent preference effects are also observed to influence this joint decision for Blacks and Hispanics.These findings may explain in part why the provisions of the Debt Collection Improvement Act (DCIA) of 1996 have not been more successful in bringing unbanked federal benefits recipients into the financial mainstream.Consumer participation in mainstream financial markets can improve their ability to build assets and create wealth, protect them from theft and discriminatory, predatory or unsavory lending practices, and may promote economic stability and vitality in the communities where they reside.By more fully understanding a consumer's financial decisions, policies can be better directed to improve the effectiveness of legislation such as the DCIA of 1996 in encouraging mainstream financial market participation. The Importance of Check-Cashing Businesses to the Unbanked:Racial/Ethnic Differences