Introduction, 245. — Model I — the framework, 250. — Model I — rivalry and speed of innovation, 253. — Model II — the framework. 255. — Model II — rivalry and speed of innovation, 256. — Summary and conclusions, 258. — Appendix, 259

Reviews the book "Accounting Education: An Innovative Approach," by Sunion Theodore Hong

Richard V. Eastin, Financial Innovation and the Mortgate Marget: The Possibilities for Liability Management by Thrifts: Discussion, The Journal of Finance, Vol. 31, No. 2, Papers and Proceedings of the Thirty-Fourth Annual Meeting of the American Finance Association Dallas, Texas December 28-30, 1975 (May, 1976), pp. 441-443

The concept of "economically rational" expectation formation is developed for a regime in which the acquisition and use of some information sets are nonnegligible. The concept provides a middle ground between "autoregressive" expectation formation and "rational" expectation formation. A necessary condition for the use of nonnegligible cost information sets is that such sets serve as leading indicators or more formally satisfy the causality conditions of Granger (1969). Using a time series modeling identification methodology developed by Box and Jenkins (1970) and Haugh (1972), we test the causal relationship between the rate of inflation and various monetary and fiscal aggregates. Surprisingly, we cannot reject the hypothesis that the rate of inflation is independent of the monetary and fiscal aggregates considered. Since the proposed leading indicator series contain no incremental predictive power once the information contained in the past history of inflation is efficiently utilized, we conclude that autoregressive expectation models may indeed represent economically rational price expectation formation.

The concept of "economically rational" expectation formation is developed for a regime in which the acquisition and use of some information sets are nonnegligible. The concept provides a middle ground between "autoregressive" expectation formation and "rational" expectation formation. A necessary condition for the use of nonnegligible cost information sets is that such sets serve as leading indicators or more formally satisfy the causality conditions of Granger (1969). Using a time series modeling identification methodology developed by Box and Jenkins (1970) and Haugh (1972), we test the causal relationship between the rate of inflation and various monetary and fiscal aggregates. Surprisingly, we cannot reject the hypothesis that the rate of inflation is independent of the monetary and fiscal aggregates considered. Since the proposed leading indicator series contain no incremental predictive power once the information contained in the past history of inflation is efficiently utilized, we conclude that autoregressive expectation models may indeed represent economically rational price expectation formation.

For the past three years Harvard has been experimenting with self-paced instruction (SPI) in several sections of its introductory economics course, Economics 10. This paper is a report of the what, how and for of that experiment: what the benefits (and costs) of SPI have been, how SPI changes the learning process, and for whom among our students it has been particularly helpful. The reader will note the lack of the evangelicalism often found in descriptions of educational innovations. This is not intended to suggest that self-paced instruction is without merit; indeed our evidence suggests quite strongly that under the circumstances, the marginal product of SPI is a 10-20 percent increase in scores and that it inspires students to take more courses in economics. However, it is also true that producing the right circumstances is initially rather costly in time and energy; that the distribution of the benefits is not uniform; and that after an initial period of enthusiasm, students are not happier in self-paced courses than in conventional courses. In short situations in which an SPI system would not dominate a conventional course are plausible. I. Some Background on the Harvard Experiment