^{note 1 in page 10} For some evidence on this see the Bank of England Quarterly Bulletin, September 1983, pp. 332-334.

^{note 2 in page 10} The adjustments we have made to our equation are similar to last time (see the August Review, p. 12).

^{note 1 in page 12} 90 and 14 per cent, respectively, of the falls in the output measure in 1980 and 1981 and 55 and 58 per cent, respectively, of the rises in 1982 and 1983.

^{note 2 in page 12} Actual minus predicted values as a percentage of the former.

^{note 1 in page 14} The reasons for this difference are obscured by a large ‘balancing item’ in the accounts.

^{note 1 in page 17} Our forecasts have often been qualified by the reminder that the current balance is the difference between two large aggregates, so that relatively small percentage changes to either side of the account can make a large difference to the balance. This point is of particular significance when considering forecasts over long periods: a 1 per cent change in the annual rates of growth of exports and imports, volumes or prices, changes the current balance by the order of £6-7 billion after five years.

^{note 1 in page 22} Real average earnings rise slightly more slowly than in the central case. This result depends on the assumption that the trend in the wage equation, representing‘ target’ real wage growth, is unchanged. It is possible that faster productivity growth, and the consequent transfer to profits, wouid create pressure for higher annual increases in real earnings.

^{note 2 in page 22} A fuller account of optimal control analysis is given in an article in the last (August 1983) issue of the Review, ‘Policy trade- offs in the NIESR model: exercises using optimal control’, by Simon Brooks, Brian Henry and Elias Karakitsos. The exercises reported there applied techniques developed by the PROPE group at Imperial College; those described here use the National Institute model solution program.

^{note 1 in page 23} Figures from 1972 are from the latest Blue Book. Figures for earlier years are from Economic Trends October 1976, and have been linked on to the 1980 price series. Although figures for net investment in constant prices for manufacturing are still published, no figures on the level of the net capital stock in manufacturing have been published for some years. The series shown in chart 1 is our derived estimate.

^{note 2 in page 23} It is thought that replies to this question largely relate to the firm's capital stock rather than its labour force.