In a recent paper, Rati Ram (1986a) derived an equation for economic growth from two separate production functions, one for the government sector and the other for the nongovernment sector.' Three different specifications of the growth equation were estimated using data for 115 countries covering the period 1960-80. International cross-section regressions for 1960-70 and 1970-80 as well as time-series regressions for individual countries were considered. The following were the main results (Ram, 1986a, pp. 191-92): (1) the overall impact of government size on growth is positive in almost all cases; (2) the (marginal) externality effect of government size is generally positive; (3) compared with the rest of the economy, factor productivity in the government sector appears to be higher, at least during the 1960s; and (4) there is a broad harmony between the estimates obtained from crosssection and time-series data. From a policy standpoint, Ram's results, if widely accepted, have important implications, especially in regard to the economic development of the lowand middle-income developing countries. For instance, the results can be interpreted to favor a relatively large role for governments in the economies of developing countries, especially if the factor productivity in the government sector is higher than in the nongovernntent sector. The results of Ram, however, are in contrast to the findings of Daniel Landau (1986). Landau used a regression model within the framework of a pooled cross-section (65 LDCs) and time-series (1960-80) to assess the impact of a wide variety of government expenditure variables on the rate of economic The regressors included not only measures of government expenditure but also the level of per capita product, indicators of international economic conditions, human and physical capital variables, the structure of production, historical-political factors, geo-climatic factors, and others. On the impact of government on economic growth, Landau's (1986, p. 68) conclusions are: consumption expenditure' excluding military and educational expenditure... appears to have noticeably reduced economic Military and transfer expenditures do not appear to have had much impact on economic Governmental educational expenditures seem to be inefficient at generating actual education.... Government capital development expenditure appears to do nothing to accelerate economic growth. The conclusions of Ram and Landau are in sharp contrast to each other largely due to significant differences in their models and in the specification of government-size variables. Ram's model has a better theoretical foundation compared to the multiple-regression approach of Landau. On the other hand, Landau used a variety of government expenditure components as against aggregate government consumption which Ram used. Their models and results, therefore, need to be carefully evaluated in further research on the subject. This paper is an attempt in that direction and is aimed at a critical review of Ram's model and reexamination of his results. *Department of Economics and Statistics, National University of Singapore, Kent Ridge, Singapore 0511. The author is grateful to Ganesha and Sai Gayathri for inspiration, to Koh Lin Ji for computing assistance, and to Basant Kapur, Tse Yiu Kuen, Dudley Luckett, and Mukul Asher for comments and advice. Special thanks are due to the four referees of the Review for substantial comments on the earlier versions of this paper. IRam adapted the two-sector growth model of Gershon Feder (1983). Feder examined the relationship between exports and economic

[This article studies an asymmetric information game with "type convergence," in which, under some realizations of a common uncertainty, inducing informed agents to reveal their types through self-selection by contract choice is either costly or impossible. Under other realizations, self-selection permits costless distinctions between informed agents. I obtain sufficient conditions under which contracting with options prior to the realization of the common uncertainty leads to the existence of a perfectly separating, costless Nash equilibrium. Applications to variable rate loan commitments and life insurance contracting are discussed.]

This paper provides an algebraic basis of accounting transactions, procedures and bookkeeping activities in a framework that supports various financial and nonfinancial reports and accounting views. The development is based, on a set of accounting matrix operators. This approach, when combined with database technology, provides for a new level of control and security of accounting information, and minimizes the processing required for information distribution on a “need‐to‐know” basis. The procedural accounting matrix captures the essence of a complete accounting procedure; it is independent of any chart of accounts. Moreover, the order in which matrix operators are combined into the procedural matrix implicitly defines the chart of accounts for the related procedure and the accounts' balances. Consequently, it provides an environment in which alternative charts of accounts, and their financial and accounting implications, can be investigated. This approach, though not yet tested for operational efficiency, thus promotes multiple accounting views, such as GAAP, tax, and managerial accounting, that are all based on the same set of basic accounts, and simplifies their reconciliation. Résumé. Les auteurs suggèrent une base algébrique pour les opérations comptables, les precédés comptables et la tenue des livres dans un cadre approprié à divers rapports financiers et non financiers et à diverses optiques comptables. La mise au point de cette base se fonde sur un ensemble d'opérateurs comptables matriciels. Cette méthode, lors‐qu'elle est combinée à la technologie des bases de données, mène à un niveau accru de contrôle et de sécurité de l'information comptable et minimise le traitement requis pour la distribution de l'information sur une base sélective. La matrice comptable de mode opératoire recouvre l'essentiel du procédé comptable complet; elle est indépendante de tout plan comptable. De plus, l'ordre dans lequel les opérateurs matriciels sont combinés dans la matrice de mode opératoire définit implicitement le plan comptable pour le procédé qui s'y rattache et les soldes des comptes. Par conséquent, la matrice est propice à l'analyse des plans comptables de rechange et de leurs conséquences financières et comptables. Cette méthode, bien que l'efficience de son fonctionnement n'ait pas encore été mise à l'épreuve, se prête ainsi à différentes optiques comptables, telles celles des P.C.G.R., de la fiscalité et de la comptabilité de gestion, qui s'établissent toutes sur le même groupe de comptes fondamentaux, et simplifie leur rapprochement.

We provide a rationale for the presence of points in mortgage loan contracts. Our analysis builds on two key features. First, insurance markets are unavailable for labor income. Second, the “due-on-sale” clause allows banks to offer loan contracts which partially insure against fluctuations in labor income. If explicit prepayment penalties are prohibited by law, points serve effectively as prepayment penalties. We also examine environments where such penalties are not prohibited and show that points will be used if interest rates cannot depend on the size of the loan.

[Prediction is one of the most important aspects of investment decision making. This study provides evidence that investors' predictive earnings judgments can be systematically influenced as a consequence of the combined effects of "output interference" and "availability," and that the use of financial accounting information in the prediction process seems to provide limited benefit in terms of reducing this effect. Output interference is a psychological concept that implies that whatever is thought about first interferes with, and thus inhibits, later thoughts about an issue. An availability-based prediction strategy is one in which the decision maker uses the relative number of pro versus con reasons generated, and/or the ease with which such reasons can be generated, as cues in judging the likelihood of future events. Fifty-eight investors participated in an experiment that demonstrated that the order in which they considered opposing arguments regarding the possibility of reaching a specified level of earnings had an impact on both their ability to generate supporting and opposing reasons and their subsequent probability judgment that earnings would actually reach the specified level. The outcome for which the investors were able to generate the most supporting reasons was judged more probable. Investors were able to think of more reasons supporting a particular outcome, not because there were more such reasons in the objective environment, but rather as a consequence of output interference. The systematic effect on judgment, although perhaps slightly reduced, persisted when investors had access to financial statements while considering the company's earnings prospects.]

W. V. Harlow, Ramesh K. S. Rao, Asset Pricing in a Generalized Mean-Lower Partial Moment Framework: Theory and Evidence, The Journal of Financial and Quantitative Analysis, Vol. 24, No. 3 (Sep., 1989), pp. 285-311