The purpose of this article is to produce a conservative estimate of how often traditionally conceived seasonal components are present in prices of individual Dow Jones industrial stocks. A careful estimate is needed to resolve some of the current confusion on the question and to provide basic information along lines suggested by Smidt [27, p. 238]: “… investigations of the random walk hypothesis would be most fruitful if they were conducted in the spirit of attempting to determine the size and extent of systematic tendencies that may exist in price series” (italics added).

One of the phenomena on Wall Street during the sixties was the new issues market. During the decade new issues became a popular investment alternative, particularly in the bull markets of 1962, 1966, and 1968. The height of enthusiasm occurred in the hot new issues market of the fiscal year 1968–1969 when 2, 171 issues were offered to the public. This interest in new issues was followed by studies such as Reilly and Hatfield [12], McDonald and Fisher [9], the SEC [13], and others, all of which show that there is a downward bias in the issue price of new issues. Why this downward bias is present was treated later by Logue [5]. Although these studies also suggest that there is a difference in the pricing behavior by individual underwriters, none of the previous studies has addressed itself specifically to this point.

Journal Article Some Equivalence Theorems Get access M. Ali Khan M. Ali Khan Johns Hopkins 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 549–565, https://doi.org/10.2307/2296705 Published: 01 October 1974

Journal Article Generalized Errors in Variables Regression Get access M. C. Casson M. C. Casson University of Reading Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 41, Issue 3, July 1974, Pages 347–352, https://doi.org/10.2307/2296754 Published: 01 July 1974

IN his Economics and Information Theory, Theil (1967) developed a theorem which states that under certain conditions the covariance between the variation in the demand for two goods, holding constant prices and income, would measure the substitutability of the two goods (more precisely, will measure their Slutsky-Hicks substitution effect up to a negative scaler) (chapter 7). This theorem and the framework behind it have subsequently been used in further studies of commodity preferences and substitution (Barten (1968), Phlips (1971), and Phlips and Rouzier (1972)). If the covariance measure of substitution could be usefully applied to asset substitution, it could prove to be a valuable supplement to the more traditional measure of asset substitution, i.e., the estimation of relations between asset demand and asset yields. Theoretically, the measure can be applied to time-series or crosssection data. The measure might have a wider applicability to cross-section data than the traditional asset demand-yield measure since the latter can only be applied to assets with regional markets (e.g., deposits). Moreover, to some extent, it can be expected that errors or biases that might arise in the covariance measure would be independent of those incurred in using the traditional measure of asset substitutability. This paper will attempt to apply the covariance measure to estimating asset substitution among households. Part I considers the theoretical underpinnings of the covariance measure and its theoretical relation to the asset demandasset yield measure of substitutability. In part II an empirical formulation of the covariance measure is developed and applied to cross-section asset data for households and the results analyzed. The results are then compared to two earlier, and more limited, asset studies which used essentially a covariance type measure to assess substitutability. The results are also compared to those of household studies which have used the traditional method for estimating substitution among assets. Findings and suggestions for further study are summed up in the conclusion.

FISHER and TEMIN (1973) have argued recently that many empirical studies1 re-lating to the Schumpeterian hypothesis are in-appropriate for testing that hypothesis. They

W OULD a movement from fixed to flexible exchange rates increase or decrease the stability of economic activity? This paper presents calculations of how increased responsiveness of exchange rates to balance-of-payments pressures would have affected macro-economic stability for most of the world's developed nations in the recent past. It also tries to assess how openness affects the optimum responsiveness of the exchange rate to these pressures from the standpoint of macro-economic stability, an important issue in the debate over what constitutes an optimum currency area.' Our point of departure is the model which J. L. Stein (1963) built over a decade ago in order to relate macro-economic stability to the exchange-rate system. He argued that a balanceof-payments deficit under fixed exchange rates would cause currency depreciation if the exchange rate were flexible and depreciation stimulates output. Also, noting that the reverse is true for a surplus under fixed rates, he observed that in order to foster the stability of real absorption in a Keynesian economy,2 one would want the domestic currency to depreciate (appreciate) during periods when the level of output is below (above) normal. Thus, he concluded, Keynesian economies should opt for flexible or fixed exchange rates according to whether or not fluctuations in output under fixed rates (Y) and fluctuations in the excess supply of foreign exchange under fixed rates (i.e., the balance of payments surplus) (s) tend to have the same sign. In other words, Stein's rule prescribes a flexible rate for any Keynesian economy in which cov (Y, s) > 0. However, as this paper shows, if maximization of the stability of output is the goal, a better rule prescribes a flexible rate for only those economies in which the variance of what output would be under flexible rates is less than what the variance of output would have been under fixed rates. This latter rule is superior to Stein's version because there may be only a weak correlation between what output would have been under fixed rates and the state of the foreignexchange market; when the correlation is weak, the effect of induced changes in the exchange rate will be just like that of any other random disturbance: namely, to increase the variance of output. Thus, even if the covariance is positive, if the correlation is less than one, adoption of a flexible exchange rate may still increase the variance of output.3' 4

I. The resource allocation problem, 341. — II. Commodity flow equilibrium, 344. — III. Transportation sector and land constraints, 345. — IV. The dual problem and producer and consumer equilibrium, 346. — V. A numerical example, 347. — VI. Concluding remarks, 350. — Appendix, 351.