Knowledge that Transforms

ten Raa, Chakraborty and Small (1984) rule out industry technology based input-output coefficients in favor of a construct based on the commodity technology model. The latter, however, produces negative coefficients. This note shows that the negatives cannot be ascribed to errors of measurement. The very framework of deriving unique technical coefficients matrices from the black-box of a single pair of input and output flows must be abandoned.

In the analysis of econometric disequilibrium models, it is common to test the n ull hypothesis of "equilibrium" against the "disequilibrium" alternat ive. This paper tests the null hypothesis of "all-excess-demand"-tha all observations correspond to (positive) excess demand-against the alternative that permits excess demand of either sign. The auth ors use a test due to Rogers (1984), which their Monte Carlo experime nts suggest performs well in small samples, as well as a "quasi-like lihood ratio test, " which is a suggestive heuristic procedure. The da ta are from the aggregate consumption goods market in Poland 1955-80, and the paper is, thus, a test of J. Kornai's assertion that "chroni c shortage" characterizes such CPEs. The results conclusively reject the "all-excess-demand" hypothesis for the Polish case, and the Rogers test promises to be of considerable practical use. Copyright 1988 by MIT Press.

Frances Antonovitz, Terry Roe, A Theoretical and Empirical Approach to the Value of Information in Risky Markets: A Reply, The Review of Economics and Statistics, Vol. 70, No. 3 (Aug., 1988), pp. 545-547

Existing tests of the neutrality hypothesis focus on aggregate level economic activity. However, failure to examine disaggregate level effects can lead to incorrect inferences concerning anticipated and unanticipated money growth impacts. Disaggregate level testing of neutrality is limited. Also receiving inadequate attention is the impact upon test inferences of the use of in the widely used two-step estimation procedure. This research tests neutrality across eleven manufacturing industries and aggregate GNP, incorporating a correction for generated regressors into GLS estimation. The research finds non-neutrality of anticipated money at the disaggregate level under two general money forecasting specifications.

Randal R. Rucker, Keith B. Leffler, To Harvest or Not to Harvest? An Analysis of Cutting Behavior on Federal Timber Sales Contracts, The Review of Economics and Statistics, Vol. 70, No. 2 (May, 1988), pp. 207-213

The substitutability between free and slave labor is examined, and the permissibility of aggregating the two in to a single labor variab le is investigated, using a translog production function. Slaves on large cotton farms worked in gangs; free labor was not observed to do so. Despite this, previous research has aggregated free and slave labor, and employed functional forms imposing strong restrictions on substitution. Estimation of the translog function shows that simple additive aggregation is not acceptable; on large farms, slaves and free labor were complements, while on small, nongang farms, they were substitutes. Copyright 1988 by MIT Press.