This paper provides a simple explanation for the observed positive relationship between savings rates and inflation rates in modern Western economies. We argue that this relationship arises because, in times of inflation, measured income and savings overestimate the corresponding real...

This paper discusses statistical techniques to test the validity of a possibly nonlinear and multivariate regression model, using the information by estimating one or more alternatives on the same data set. The procedures suggested by Pesaran and Deaton (1978) are not the only ones which may...

We study several tests for the coefficient of the single right-hand-side endogenous variable in a linear equation estimated by instrumental variables. We show that all the test statistics--Student's t, Anderson-Rubin, Kleibergen's K, and likelihood ratio (LR)--can be written as functions of six...

We investigate how owners of durable goods respond to a once-for-all unanticipated shock in a housing market that was in a stationary state prior to, and after the shock. We determine the circumstances under which the landlord will: 1) abandon his building immediately; 2) run down his building...

The first note treats the transition from a barter economy to a monetary one from the viewpoint of the theory of clubs. The second note demonstrates the possibility that in general equilibrium the use of a less costly means of exchange man not be beneficial to every agent. The third note shows...

This paper develops an extremely general procedure for performing a wide variety of model specification tests by running artificial linear regressions. Inference may then be based either on a Lagrange Multiplier statistic from the procedure, or on conventional asymptotic t or F tests based on...

This paper discusses several statistical techniques which can be used to test the validity of a possibly nonlinear and multivariate regression model, using the information provided by estimating one or more alternative models on the same set of data. The techniques we propose can be regarded as...

This paper investigates the small-sample properties of several forms of the Lagrange Multiplier test. We find that alternative variants of the LM test, which can be easily computed from artificial linear regressions, perform very differently in small samples. One variant appears to be acceptably...

This paper develops a general procedure for performing a wide variety of model specification tests by running artificial linear regressions and then using conventional significance tests. In particular, this procedure allows us to develop non-nested hypothesis tests for any set of models which...

Several procedures are proposed for testing the specification of an econometric model when one or more models purport to explain the same phenomenon. These procedures are closely related, although not identical, to non-nested hypothesis tests proposed by Pesaran and Deaton, and have similar...