Bayesian comparison of several continuous time models of the Australian short rate

This paper provides an empirical analysis of a range of alternative single‐factor continuous time models for the Australian short‐term interest rate. The models are nested in a general single‐factor diffusion process for the short rate, with each alternative model indexed by the level effect parameter for the volatility. The inferential approach adopted is Bayesian, with estimation of the models proceeding through a Markov chain Monte Carlo simulation scheme. Discrimination between the alternative models is based on Bayes factors. A data augmentation approach is used to improve the accuracy of the discrete time approximation of the continuous time models. An empirical investigation is conducted using weekly observations on the Australian 90 day interest rate from January 1990 to July 2000. The Bayes factors indicate that the square root diffusion model has the highest posterior probability of all models considered.     

Spoilage with a Production Function

The traditional accounting for spoilage has been somewhat ad hoc since there has been no general theory of how spoilage occurs or can be controlled. This paper uses an economic analysis to model the determinants of spoilage in the production process and to show how normal spoilage can be chosen in a cost minimisation program. The model also generates an expanded variance analysis of spoilage which provides guidance in the investigation and interpretation of abnormal spoilage. It is argued that this approach results in both optimal and flexible product decisions.     

Territorial Differentiation and Societal Change in the United States and Canada *

Abstract A theory based on four stages of social and cultural changes for large territorial units is presented and three hypotheses are deduced linking territorial differentiation to societal change. The stages are measured by die degree to which the territorial units of a society display similar characteristics, and whether the units are diverging or converging from one another. Hypothesis I asserts that the form of societal change among territorial units over time is curvilinear. Hypothesis II maintains that changes in technological efficiency lead to changes in territorial differentiation on selected social and cultural characteristics. Finally, according to Hypothesis III, changes in territorial differentiation on technological efficiency are directly related to changes in territorial differentiation on selected social and cultural characteristics. The hypotheses are tested in terms of changes in the United States and Canada and receive strong support from the direction and magnitude of the relations.