Recently in this Review, John Pencavel and P. J. Lloyd have given insights into the measurement of real wages. Their work is an application of the concepts of true cost of living indices to a joint labor supply and commodity demand decision. Pencavel (1977) and Lloyd (1979) offer several forms of real wage indices which are derived from explicit functional forms for utility. This paper examines the theory of real wage indices in a more general setting and derives bounding indices which are independent of the functional form for utility.

This paper generalizes the Durbin-Watson type statistics to test the OLS residuals from the fixed effects model for serial independence. Also generalized are the tests proposed by Sargan and Bhargava for the hypothesis that the residuals form a random walk. A method for efficient estimation of the parameters is also developed. Finally, an earnings function is estimated using the Michigan Survey of Income Dynamics in order to illustrate the uses of the tests and the estimation procedures developed in this paper.

Dennis L. Hoffman, Don E. Schlagenhauf, An Econometric Investigation of the Monetary Neutrality and Rationality Propositions from an International Perspective, The Review of Economics and Statistics, Vol. 64, No. 4 (Nov., 1982), pp. 562-571

Recently, a debate has developed in both the theoretical and applied statistical literature regarding the appropriateness of various techniques in analytical models with limited (particularly, 0-1) dependent variables. In financial research, limited dependent variable models usually arise in one of two ways:1. classification (or discrimination)--assigning observations to discrete, a priori determined groups, or2. regression--relating a qualitative dependent variable to one or more independent variables (which may or may not be qualitative).