- Overview
ECONOMETRIC MODELS-TECHNIQUES AND APPLICATIONS, Edited by
K.Puttaswamaiah, (Foreword by Jan Tinbergen), Indus Publishing Company, New
Delhi, 308.
The book under review has sixteen papers selected from various articles published in various issues of the Indian Journal of Applied Economics. The papers cover research methodology, economic surveys, linear regression models and other econometric functions. First Chapter deals with Latent Structure Analysis. This analysis seeks to examine the existence of two latent classes (underdeveloped and developed). The Indicators used in this analysis are Bank Offices per 10,000 population, railway length per 10,000 sq.km., and
telephones per 1000 population. The merits and limitations of latent structure analysis application is also explained very well by Balakrishna. Second Chapter presents the importance of data collection, analysis and presentation in survey research. This chapter is found to be very useful to the Researchers as Gupta explained all aspects relating to research. More specifically he explains the purpose(s) of conducting research, alternative ways of measuring a variable, time series versus cross section and primary versus secondary data, steps involved in collecting primary data, and data presentation and analysis. He also points out that interpretation of results must perform at least the following.
1. Are the results consistent with the theory?
2. Are the results statistically significant?
3. Do the results meet the objectives of the research? And
4. What do results imply for decision/making?
This chapter is very useful to the Research Scholars. The procedures required to
improve timeliness of reporting the final results and the quality of survey data have been discussed by Tares Maitra in third Chapter. A brief review of the theory of relative deprecitionships with income inequality have been examined by Satya Paul in Chapter Four. He proposes a generalization of Gini-Index based on a new deprivation function which is more sensitive to income transfers at the lower side of the distribution and less so at the middle and upper stretches of the distribution. Gupta attempted to generate money supply (quantity of money in circulation) forecasts using the statistical methods, viz., Box Jenkins Method (Also known as the Auto Regressive Integrated Moving Average Method), decomposition method, exponential smoothing methods (Brown's double exponential smoothing method and Hoit-Winter's Non-Seasonal, additive seasonal and multiplicative seasonal exponential smoothing methods). This empirical study is based on quarterly data for the period 1970 to 1992 on the broad concept of money (M3) and provides forecasts on M3 for the period 1993 (first quarter) Through 1995 (fourth quarter). While comparing the
forecasts the author states that "the regression forecasts could be taken as superior to all other forecasts, for the former are based on sound economic theory". As per the results obtained through alternative methods the money supply in India will lie somewhere between Rs.4,764 billions and Rs.5,814 billions by the end of 1995 (fourth quarter). While comparing the forecasts the author states that " the regression forecasts could be taken as superior to all other forecasts, for the former are based on sound economic theory". As per
the results obtained through alternative methods the money supply in India will lie somewhere between Rs.4,764 billions and Rs.5,814 billions by the end of 1995 (fourth quarter). It is well known fact that the money supply, whatever value it takes, would have a significant impact on the level of GNP, price, foreign exchange rate and international trade.
These methods can also be applied to other economic variables for the purpose of forecasts. This exercise is very useful to the scholars as this throws light in generating money supply forecasts using more appropriate statistical methods. A frame work for estimating the attitudes towards risk and some promising directions of future research are presented by Rammohan Rao in Sixth Chapter. Estimation of inequality bound coefficients in linear regression models is presented by Srinivastava and Praveen Shukla in Seventh Chapter. The authors' efforts certainly provide a meaningful direction. In eight chapter Krishnakumar and Markmann discuss the estimation of probability density functions with an econometric application. In this paper the authors review the statistical literature on estimating density functions.
The authors review the statistical literature on estimating density functions,summerise the findings and elaborate on the usefulness of various methods in econometric research. In Chapter Nine Srivastava attempted So construct a theoretical framework for explaining the decision making process. He selected eight variables for micro economic analysis of the behavious of work avoiders. From the analysis of results it is concluded that the workers is general and work avoiders in particular must be put under constant thereat of loss of income receipt. In Chapter Ten, Sivakumar and Bala Baiavia tried to argue that price signals by themselves do not tell anything about how allocation of resources. Anoop Chaturvedi and Sheel Asthana present the
Basian Analysis of a multiple linear regression model in Chapter eleven. Surjith Sinha examined the Schurnpeterian Hypotheses using the data on innovative activities of firms in Canada, For this purpose he used various variables. His study results show that large firms are more innovative than small firms in the industries under study.
In Chapter Thirteen Iyengar and Nadigmanjula attempted to estimate lasticities of expenditure for a larger number of household items form Survey Data for the rural and urban sectors in the State of Karnataka. While reviewing the literature relating to expenditure elasticities the authors state that all studies illustrate that elasticities for milk and milk products are highly variables across regions and also over time. They also state that no attempt was made
in any of the studies reviewed to estimate the margin of errors in elasticity estimates. Realizing the importance of standard errors and limitations of point estimates, Iyengar derived some useful theoretical expressions. The estimates reveal that for most item of expenditure, the rural elasticities were found to be higher. The major contribution of their study is setting up of confidence limits for elasticity estimates of mil and milk products, which had not been attempted buy any scholar before. This methodology can also be easily applied for estimating
the elasticity of expenditure in respect of other commodities. Srivastava and Tiwari described the model specification and present the estimators for the coefficient vector of an identifiable structural equation of the model in Chapter Fourteen. Baskara Rao reported estimates of an aggregate goods market model for the USA for 1946 91 with a this aggregated disequilibrium models in Chapter Fifteen. On the basis of results the author concluded that aggregate supply in the short run is elastic and the rate of inflation is highly sluggish. In the last chapter Samantala Hettihewa examined the external debt problem of
Sri Lanka from 1973 to 1988 and implications of the debt problems to evaluate possible remedial measures for the future. In this study lagged variables were not used in analysing the debt crisis as the issue of lag period was not considered in this study. Barring a few papers, most of the papers included in this book maintained the proper balance between techniques and real applications. The scholars in the area of Econometrics could have been benefited if the index (subject and Author) had been given at the end of this book.
The scholars benefit from the references cited at the end of each chapter if they wish to look for more details. Prof. Jan Tinbergen, the first Noble Laureate in Economics, in his foreword writes that "A good book does not need an explicit recommendation. The book reflects the high status of India in the world. The present book consists of an impressive set of original contributions of economic thinking in applied version". This reflects the importance of this book. The authors of the different papers who are specialists in their fields need to be congratulated for their contribution. The Editor Prof. Puttaswamaiah must be commended for his painstaking effort in bringing this well organised scholarly valuable book.
He crisply presents the importance of econometrics in the preface. This book will be very useful to all Economists, Econometricians, and Scholars in the Universities and other Institutions who are interested in Applied Economics.
Department of Economics M. Upender
Osmania University Hyderabad