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...

Non-nested hypothesis tests provide a way to test the specification of an econometric model against the evidence provided by one or more non-nested alternatives. This paper surveys the recent literature on non-nested hypothesis testing in the context of regression and related models. Much of the...

This paper describes a new approach to the solution of models of spatial price equilibrium. This approach makes use of a type of algorithm which has been used to compute Kakutani fixed points and non-spatial economic equilibria. The algorithm is very different from most employed in the past. It...

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...

The qualitative restrictions implied by the first-order conditions of the optimal tax problem are generally so weak that little can be said as to what constitutes an optimal set of taxes. It is therefore desirable that one have available a technique for computing optimal taxes in a full general...

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...

Maximum likelihood estimation of equation systems with first-order autocorrelation should, in principle, take into account the first observation and associated stationarity condition. In the general case, this leads to computational difficulties compared with conventional procedures, which...

The literature on disequilibrium econometrics has so far dealt only with markets which are always out of equilibrium. This paper proposes two related models of markets which may be in equilibrium in some time periods but out of equilibrium in other periods. The source of the disequilibrium is an...

This paper proposes computationally convenient methods for estimating linear regression models with first-order moving average, or MA(1), error structures. Conditional on alpha, the parameter of the MA(1) process, estimates of the regression coefficients may be obtained by ordinary least...

This paper develops a technique for estimating linear models with second-order autoregressive errors, which utilizes the full set of observations, and explicitly constrains the estimates of the error process to satisfy a priori stationarity conditions. A nonlinear solution technique which is new...