IN A RECENT paper,' Frederick V. Waugh argues strongly for the use of ordinary least squares in simultaneous systems. His argument is not that least squares gives unbiased estimates of structural parameters2 but that they do (as consistent structural estimators do not) give unbiased estimates of the dependent variable in the regression equation given the values of the other variables and that this is what is needed for forecasting purposes. This note argues that Waugh's argument falls on its own grounds, that, even accepting all assumptions about no structural change and the like, least squares estimates of simultaneous equations when usedforforecasting purposes do not give unbiased forecasts of the dependent variables forecasted. The requirements of forecasting imply a different procedure. Suppose that we have made a least squares estimate of a structural equation and wish to use the result for forecasting purposes. We may assume that the system is not recursive and is in fact simultaneous, as otherwise nobody would quarrel with Waugh's position. Then, aside from the dependent variable to be forecast, there is at least one other endogenous variable in the equation. In order to forecast the dependent variable, however, one must know (or be told or forecast) the values of all the variables on the right-hand side of the equation. So long as all such variables are exogenous, this presents no problem. There is no reason why forecasts of exogenous variables (such as the weather, say) cannot be given the econometrician from outside his system. This is not the case with endogenous variables, however, for the values of endogenous variables in the system will be influenced by the value of the dependent variable being forecast and thus cannot be known before the forecast is made. They must also be forecast at the same time. Waugh states in this regard :3 .. . . I see no reason why I cannot estimate the expected future value of ce [the dependent variable to be forecast] associated with any stated value, or values, of yt [the other endogenous variable]. And unless the structure has changed, I think that in the future, as well as in the past, the least squares

HIS paper presents a model of T which is an extension to n sectors of the original one-sector equilibrium paths developed by R. F. Harrod and E. D. Domar.1 Following Harrod, we employ discrete periods of time and hence a (first-order) difference equation technique. However, in order to give the model a prescriptive rather than a predictive overtone, the first differences refer to the immediate future instead of the immediate past. In addition, an allowance for depreciation is included in the model. By balanced growth we simply mean the existence of equilibrium (the equality of supply and demand) in every market in every time period. Equiproportionate of each market is a special case of as used in this paper. Prices do not explicitly enter the model. Supply in each market is an increasing linear function of the existing capital stock in that sector or industry, and hence the model refers to a one-factor economy. However, capital is not transferable from one sector to another. The single factor of production (capital) is produced by a single industry, the investment-goods industry, the input into which is also capital. Demand for the output of each industry, with the exception of the investment-goods sector, is an increasing linear function of net real income. By definition, these industries are producers of consumption goods, all of which are non-inferior from the point of view of the income-demand relation. The demand for investment goods is a mixed accelerator-multiplier relation. The solution of the system expresses net aggregate output as a function of integral values of time. The output of each sector at any time can then be determined from the structural equations of the model.

IT is widely believed that for some individuals saving may be negatively related to the rate of interest. The argument is usually put in terms of a person's desire to have a particular sum (or an annuity of a particular size) available at some future date. In such a circumstance a rise in the rate of interest will make easier (in terms of present abstention from consumption) the attainment of that particular future sum (or annuity). Therefore, the argument continues, the rise in the interest rate will reduce saving.' We do not wish to question the proposition that such perverse reaction to changes in the interest rate may adequately describe the behavior of some individuals; however, we do propose to criticize the extension of the proposition about individuals to the body of consumers in aggregate. This paper takes issue with those who contend that the aggregate saving-interest rate function for households may be perverse. 2 Our purpose is threefold. First, we wish to demonstrate that the use of the saving-for-a-fixedfuture-sum argument as support for the hypothetical negative relation between aggregate personal saving and the interest rate has unacceptable implications. In particular, it will be shown that it implies that aggregate personal saving is non-positively associated with aggregate real income.3 Second, we shall argue that a more general way to discuss a negative relation between saving and the rate of interest is in terms of the price elasticity of demand for future goods. Saving for a fixed future sum is a special case of this more general phenomenon. But third, we shall demonstrate that if the aggregate saving-interest rate relation is perverse, then the implied reaction of consumers to changes in expected future money prices would also be perverse.4 We shall treat these matters in turn after introducing the geometric tools.

Reviews the book "The Television Business: Accounting Problems of a Growth Industry," by Warde B. Ogden.