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Published online by Cambridge University Press: 26 March 2020
page 75 note (1) The numerical estimates obtained depend on whether B or X is taken as the dependent variable. Since presumably both the balance and the index are subject to random error as compared with the ‘true’ movement in output, neither is a theoretically correct method of estimating the assumed relationship. For a forecasting equation it seems appropriate to choose the method which would have led to the best ‘forecasts’ in the past.