Velocity variance comparisons under alternative policy regimes

Conclusion This paper has shown that it is dangerous to make recommendations, concerning which money supply to control, based on a comparison of velocity variances which occurred during one historical policy regime. The policy recommendation could be sensitive to what the historical policy regime was, and in a wide variety of circumstances the policy recommendation could be wrong.An additional point should be made. Since interest rates were excluded from the model, it has not been analyzed for whether mistaken policy advice could be drawn from a velocity variance comparison on data observed during a regime of targeting short-term interest rates rather thanM1 orM2 (such as the pre-1970 period). Cagan [1982], Fellner [1982], and Kopcke [1983], for instance, make such comparisons. Given the results of this paper, however, it seems very likely that such an analysis would reinforce the strong cautionary point of this paper. Furthermore, if the historical regime did not involve an exclusive focus on one tool, but rather was a hybrid regime involving an ill-defined mixture of concern withM1,M2, and a short-term interest rate, then the cautionary point is further reinforced.Given the essentially negative result of this paper, that one cannot make a regime choice based on a simple velocity variance comparison, how can one choose the appropriate money supply to control? It would seem that there is no substitute for the use of a complete structural empirical model.     

Comparative labor supply of black and white women

Conclusions The presence of young children decreases women’s labor supply as shown by the LFPRs for women with young children (which are always considerably lower than those for women without young children). Also, the number of young children is almost always negatively related to annual hours of labor supplied (significantly so in half the regressions). Black and white women are found to have an inelastic labor supply, but with increasing elasticity from 1969 to 1974. There is a statistically significant difference in the estimated regression coefficients of the labor supply model for black and white married women in 1969 and 1974 in both the arithmetic and logarithmic forms. The husband’s earnings are significantly negatively related to white married women’s annual hours of work in 1974, while the relationship is not significant for black married women. Crosselasticity terms show that white married women decrease their annual hours of work in response to an increase in husband’s earnings to a greater extent than black married women in 1971 and 1974. These results are consistent with the hypothesis that black women do not rely on their husband’s earnings to as great an extent as white women.     

Estimating the autocorrelated error model with trended data

A Monte Carlo study of the small sample properties of various estimators of the linear regression model with first-order autocorrelated errors. When independent variables are trended, estimators using Ttransformed observations (Prais-Winsten) are much more efficient than those using T–1 (Cochrane–Orcutt). The best of the feasible estimators isiterated Prais-Winsten using a sum-of-squared-error minimizing estimate of the autocorrelation coefficient ?. None of the feasible estimators performs well in hypothesis testing; all seriously underestimate standard errors, making estimated coefficients appear to be much more significant than they actually are.     

Mauritania: The cost-effectiveness of EEC food aid

The value of EEC food aid to Mauritania is assessed. Given such factors as poor record keeping, political instability as a unique import/export situation, the authors conclude that only one of the three commodities supplied under the 1978 EEC programme could be considered cost effective.     

the lloyd's phoenix

Will insurance markets in general, and Lloyd's in particular, recover from the low rates and natural disasters that brought them so low in the late 1980s? Martin Mitchell, manager of the Lloyd's planning department, takes an optimistic view.