In a recent article in this Review, Alex Cukierman and Paul Wachtel (henceforth C-W) develop a theoretical relationship between the cross-sectional variance of expectations about inflation and the variance in aggregate demand and in the inflation rate over time. They also present some empirical evidence in support of these linkages. The purpose of this comment is to indicate several weaknesses in their analysis. First, an error in C-W's theoretical analysis leads to an error in their Proposition 3(b). A correction renders the set of conditions for the variance in expected inflation as they define it to move together with the variance in actual inflation even more complex than their Proposition 3 suggests. Second, C-W use the Livingston data in some tests of their Propositions 2 and 3, which link the variance of expected inflation as they define it to aggregate demand variance and to the variance of inflation. In doing so, they misinterpret the Livingston Survey in the context of their model. Actually, the model has much more straightforward implications for the variance in the Livingston inflation forecasts than those derived by C-W. Third, upon closer examination, their empirical evidence from the Livingston Survey data is not consistent with these implications of their model. This is because a minor C-W data mistake makes their preliminary evidence look more striking than it actually is, and because their regressions are marred by extreme serial correlation correcting for which alters their results.

Abstract ABSTRACT: This paper examines the account book of an Italian firm operating in London in the early 14th century. The existence of the book is well known to accounting historians, but it has not previously been carefully studied by them. The history of the firm and of the book are discussed, followed by an examination of the treatment of cash and non-cash entries and of opening and closing procedures. The presence of accounts for joint-ventures, petty cash, expenses, profit, and capital; the use of a single monetary unit; the consistent method of recording; and the achievement of balance at the end of an accounting period are features that may justify a claim that this account book was part of a double-entry system.

T. W. Anderson, Naoto Kunitomo, Takamitsu Sawa, Evaluation of the Distribution Function of the Limited Information Maximum Likelihood Estimator, Econometrica, Vol. 50, No. 4 (Jul., 1982), pp. 1009-1027

ABSTRACT This paper presents evidence that the yield differential between revenue bonds and similar general obligation bonds varies contracyclically with the level of economic activity. The evidence also indicates that significant investor‐borrower induced market segmentation exists in the municipal bond market. An increase in the relative demand by commercial banks for tax‐exempt securities and/or an increase in the supply of revenue bonds relative to the supply of general obligation bonds increase the yield spread between the two classes of debt. These findings were the result of a series of empirical tests with both macroeconomic and microeconomic data.

This paper presents evidence that the yield differential between revenue bonds and similar general obligation bonds varies contracyclically with the level of economic activity. The evidence also indicates that significant investor-borrower induced market segmentation exists in the municipal bond market. An increase in the relative demand by commercial banks for tax-exempt securities and/or an increase in the supply of revenue bonds relative to the supply of general obligation bonds increase the yield spread between the two classes of debt. These findings were the result of a series of empirical tests with both macroeconomic and microeconomic data.

This paper presents a parametric example of a one-asset exchange economy in which the asset price is endogenously determined. It is demonstrated that the volatility of the asset's price uniformly violates the theoretical upper bound implied by the present value relation. In addition, the variance bounds may be violated by a significant margin at the same time the asset's price is almost a random walk. The example has a dual interpretation as a consumption function, and under this interpretation it is demonstrated that the permanent-income hypothesis does not necessarily restrict the time-series properties of consumption.

[The estimation and testing of a singular equation system in the context of a general dynamic specification is considered. In an application to factor demand equations, hypotheses suggested by economic theory are expressed in terms of the long run structure of the system under alternative dynamic specifications. Variations in the dynamic specification are found to have a significant impact upon the inferences that can be made about the long run structure.]