Offering a unifying theoretical perspective not readily available in any other text, this innovative guide to econometrics uses simple geometrical arguments to develop students' intuitive understanding of basic and advanced topics, emphasizing throughout the practical applications of modern theory and nonlinear techniques of estimation. One theme of the text is the use of artificial regressions for estimation, reference, and specification testing of nonlinear models, including diagnostic tests for parameter constancy, serial correlation, heteroscedasticity, and other types of mis-specification. Explaining how estimates can be obtained and tests can be carried out, the authors go beyond a mere algebraic description to one that can be easily translated into the commands of a standard econometric software package. Covering an unprecedented range of problems with a consistent emphasis on those that arise in applied work, this accessible and coherent guide to the most vital topics in econometrics today is indispensable for advanced students of econometrics and students of statistics interested in regression and related topics. It will also suit practising econometricians who want to update their skills. Flexibly designed to accommodate a variety of course levels, it offers both complete coverage of the basic material and separate chapters on areas of specialized interest.

Estimation and Inference in Econometrics

Criticism and the Growth of Knowledge. Edited by I. Lakatos and A. Musgrave. Pp. viii, 282. £3·50, paperback £1. 1970. (Cambridge University Press.)

Beginning with Emlen (1966) and MacArthur and Pianka (1966) and extending through the last ten years, several authors have sought to predict the foraging behavior of animals by means of mathematical models. These models are very similar,in that they all assume that the fitness of a foraging animal is a function of the efficiency of foraging measured in terms of some "currency" (Schoener, 1971) -usually energy- and that natural selection has resulted in animals that forage so as to maximize this fitness. As a result of these similarities, the models have become known as "optimal foraging models"; and the theory that embodies them, "optimal foraging theory." The situations to which optimal foraging theory has been applied, with the exception of a few recent studies, can be divided into the following four categories: (1) choice by an animal of which food types to eat (i.e., optimal diet); (2) choice of which patch type to feed in (i.e., optimal patch choice); (3) optimal allocation of time to different patches; and (4) optimal patterns and speed of movements. In this review we discuss each of these categories separately, dealing with both the theoretical developments and the data that permit tests of the predictions. The review is selective in the sense that we emphasize studies that either develop testable predictions or that attempt to test predictions in a precise quantitative manner. We also discuss what we see to be some of the future developments in the area of optimal foraging theory and how this theory can be related to other areas of biology. Our general conclusion is that the simple models so far formulated are supported are supported reasonably well by available data and that we are optimistic about the value both now and in the future of optimal foraging theory. We argue, however, that these simple models will requre much modification, espicially to deal with situations that either cannot easily be put into one or another of the above four categories or entail currencies more complicated that just energy.

Citation classic - optimal foraging - a selective review of theory and tests

Knowledge Management

Econometric policy evaluation: A critique

Hayek's Challenge: An Intellectual Biography of F.A. Hayek, Bruce Caldwell. The University of Chicago Press, Chicago, London (2004), , 55.00, ISBN 0-226-09191-0

The papers collected here were written for the second biennial Wirth conference on Austrian Economics. The Wirth Institute for Austrian and Central European Studies sponsored the conference in cooperation with the University of Toronto in Mississauga. The conference was held from 17 to 18 October 2008 in Mississauga. The Wirth Institute has a natural home in Edmonton on the campus of the University of Alberta, which is a leading center for Central European Studies. The fact that the Institute has received support not only from government of Austria, but also from the governments of the Czech Republic, Hungary, Poland, Slovakia, and Slovenia reflects its historically minded recognition of the unique intellectual milieu of the Habsburg Empire. This intellectual milieu lasted beyond the breakup of the empire right through to the Anschluss in 1938. It is this milieu that shaped the Austrian school of economics and helped shape the context for the conference.

Introduction: Regrettably exciting times

We develop and apply a set of hypothesis tests with which to study changes in the angular distribution of points in delay space. Crack and Ledoit (1996) plotted daily stock returns against themselves with one day's lag. (This might be described as a plot in delay space). The graph shows these points collected along several rays from the origin. They correctly attribute this compass rose pattern to discreteness in the data. Asset prices move in discrete ticks. Our testing procedures allow one to test for changes in Crack and Ledoit's compass rose pattern. Our case study gives an example of such a change in distribution being caused by a change in regime. We plot the number of points along a given ray of the compass rose against the angle of that ray. This creates a theta histogram which describes the angular distribution of the points in delay space. We compare this distribution to a standard theta histogram created by a simple bootstrap procedure. The chi-square test is then performed in order to estimate quantitatively the consistency of the actual data with the standard theta histogram. Extensions of this technique are discussed. We apply our technique to an important episode of Russian monetary history. In the late nineteenth century, the credit ruble was a floating currency unlinked to precious metals. Generally, the finance ministry actively intervened to influence the ruble exchange rate. The one exception was during Nicolai Bunge's tenure as finance minister. Bunge's successor, Ivan Vyshnegradsky, was an unusually vigorous interventionist. The shift in regime from Bunge the non-interventionist to Vyshnegradsky the interventionist produced a marked change in the behavior of the ruble exchange rate. The angular distribution in delay space of the ruble's exchange rate against the German mark shifted dramatically under Vyshnegradsky. Hypothesis tests support the view that Vyshnegradsky's activism caused a disproportionate number of points of the compass rose to accumulate on the main diagonals in delay space. The theory of Big Players (Koppl and Yeager 1996) helps to explain why. Our results are consistent with those of Broussard and Koppl (1996) who use a GARCH(1,1) model.

The Angular Distribution of Asset Returns in Delay Space

Darwin, Darwinism and social Darwinism: What do we learn from Darwin's theory of social evolution?

We use a simple combinatorial model of technological change to explain the Industrial Revolution. The Industrial Revolution was a sudden large improvement in technology, which resulted in significant increases in human wealth and life spans. In our model, technological change is combining or modifying earlier goods to produce new goods. The underlying process, which has been the same for at least 200,000 years, was sure to produce a very long period of relatively slow change followed with probability one by a combinatorial explosion and sudden takeoff. Thus, in our model, after many millennia of relative quiescence in wealth and technology, a combinatorial explosion created the sudden takeoff of the Industrial Revolution.

Roger Koppl

Papers

Hayek's Challenge: An Intellectual Biography of F.A. Hayek, Bruce Caldwell. The University of Chicago Press, Chicago, London (2004), , 55.00, ISBN 0-226-09191-0

Introduction: Regrettably exciting times

The Angular Distribution of Asset Returns in Delay Space

Darwin, Darwinism and social Darwinism: What do we learn from Darwin's theory of social evolution?

A Simple Combinatorial Model of World Economic History