This paper provides estimates of the demand for both narrow and broad monetary aggregates for the five largest industrial countries using two recent approaches: buffer stock and error correction models. The performances of these models are compared with several versions of the conventional...

Thirty-five years ago, J. W. Pratt and Robert Schlaifer published a critique of then ruling econometric techniques. Introducing a distinction between factors and concomitants in regressions, they determined that a “condition for consistent estimation stated in virtually every book on...