Forecasting economies in transition: The case of Romania

Structural change is endemic in the Eastern European economies and the newly emerging Commonwealth of Independent States yet conventional econometric modelling techniques proceed under the assumption that there is a structurally stable ‘true’ economy to be discovered. This paper extends the analysis of Hall (1993) by exploring the consequences of endemic structural change for forecasting and building structural econometric models. We propose a model formulation which makes the econometric model itself able to adjust its parameters in the light of economic change using the Kalman Filter. The paper then illustrates this approach by building a small model of Romania and investigating its forecasting properties.     

Book reviews

M.B. Hayne, The French Foreign Office and the Origins of the First World War 1898-1914 (Oxford: Clarendon Press, 1993) £35. ISBN 019-820270-9.

Keith Hamilton, Bertie of Thame: Edwardian Ambassador (Woodbridge/Suffolk: Boydell Press 1990 (= Royal Historical Society Studies in History, No. 60)), ix + 436 pp. ISBN 0-86193-217X. £35.

Anita Inder Singh, The Limits of British Influence: South Asia and the Anglo-American Relationship, 1947-56 (Pinter, 1993) pp. 309. £45.

Robert H. Ferrell (ed.), Truman in the White House: The Diary of Eben A. Ayers (Columbia: University of Missouri Press, 1991) $37.50. ISBN 0-8262-0790-1.

Robert Pearce (ed.), Patrick Gordon Walker: Political Diaries 1932-1971 (London: The Historians Press, 1991) £20. ISBN 1-872273-05 X.

Richard J. Aldrich (ed.), British Strategy and the Cold War, 1945-51 (London: Routledge, 1992) £40. ISBN 0-415-07851-2.

Timothy Garton Ash, In Europe's Name. Germany and the Divided Continent (London: Jonathan Cape, 1993) £25. ISBN 0-224-02054-4.     

An economic assessment of the social costs of highway salting and the efficiency of substituting a new deicing material

The use of salt for deicing roads results in costs estimated at more than $800 per ton—including the costs of repair and maintenance of roads and bridges, vehicle corrosion costs, and loss of aesthetic value through roadside tree damage. Additionally, there are probable health costs related to elevated sodium levels in drinking water. The new Surface Transportation Act of 1991 appears to replace the previous federal funding policy that was biased against the use of calcium magnesium acetate (CMA) with a new subsidy for its purchase that may lead to inefficient overuse.