Accepted model choice procedures are characterized. Problems concerning the determination of significance levels for multiple tests, Type II errors for specification error tests, and the use of point null hypotheses are reviewed. The potential gains from greater reliance on sensitivity analysis,...

Firms view inventory/sales ratios as main decision variables. These ratios are also important in forecasting business activity. Understanding these ratios seems particularly relevant since many U.S. firms are beginning to implement the “just-in-time” production and inventory system that some...

Economists have devoted considerable effort to analyzing wage effects on labor supply behavior. This research has broad policy implications since many government tax and transfer programs alter the wage rates that workers receive, or alter their perception of the value of the wages received....

We first consider the performance of the Wu (1973), Hausman (1978) (W-H) specification error test as a test for the existence of ordinary least squares (OLS) bias. We discuss power properties of the test under alternative null hypotheses, one of which has not previously been considered. We next...

In Lintner's model of the dividend behavior of firms the change in dividends is a function of current earnings and the lagged dividends. We show that under a rational expectations hypothesis of management behavior the change-in-dividends equation should include lagged earnings as an additional...

Monte Carlo methods are used to investigate the relationship between the power of different pretests for autocorrelation, and the Type I error and power of the significance test for a resulting two-stage estimate of the slope parameter in a simple regression. Our results suggest it may be...

Most micro-labour supply models presented in the literature embody the implicit assumption that the coefficients of the explanatory variables are stable over the range of variation for annual hours of work. In this paper we discuss reasons why this may not be true. A two-stage consistent...

The usual procedures for testing the significance of sample correlations between pairs of independently normally distributed series are not appropriate for testing sample correlations between pairs of autocorrelated series. We present sampling evidence supporting our hypothesis that the...

The Innovation Union initiative of the European Union focuses on product and process innovation for tangible goods. The authors argue that it is essential to extend the scope of the initiative to include innovation for financial sector products, processes, and regulatory approaches. They make...

Japanese firms expanded their outward foreign direct investment (FDI) rapidly in the emerging economies in Asia in the post-1990 period. The Japanese public feared that companies would increasingly rely on cheaper foreign workers and that large numbers of home country workers would find their...