due to linear interpolation used to generate missing prewar data. Monte Carlo simulations that support this view generate … large standard-errors, making such inference imprecise. We assess analytically the effect of linear interpolation on a … nonstationary process. We find that interpolation indeed reduces shock-persistence, but the interpolated series can still exhibit …

investment. In this paper, we implement a well-known approximation method of Lagrange polynomial interpolation. We use it in …