The Cost of High Unemployment

In response to R. A. B. Leaper's challenge in the last issue of this journal we present a report which we have just prepared for the BBC North-East. We believe that a better understanding of the costs of high unemployment to the country is needed to inform decisions on how much we can afford to pay to tackle the problem. In the final section of the paper we show how this evidence can be of value in costing policy options.
The last detailed costings of unemployment were published in 1982 for the financial year 1981/82. In February 1982 it appears that a political decision was taken not to publish the latest Treasury estimate updating their 1981 calculations. Since then numerous parliamentary questions on the subject have received very limited answers disputing the validity of the whole exercise.     

Polymorphic fundatrices in thimbleberry aphid — ecology and maintenance

The thimbleberry aphid,Masonaphis maxima (Mason) lives on patches of plants that support 3,4 or 5 generations depending on site and weather. The life cycle requires sexual females and males to produce overwintering eggs. The eggs hatch in the spring to produce the first ’fundatrix’ generation; subsequent generations are produced parthenogenically. Males and other morphs are produced by wingless virginoparae, but sexual females are produced by ’gynoparae’, a winged morph that is specialized to produce only sexual females. The fundatrices have no indication of the number of generations that the plants will support in the current year. There are two fundatrix types that coexist in different ratios depending on the number of generations supported by the patch the previous year. One type produces sexual females in generations 3 and 5, and males in generations 4 and 5; the other type produces sexual females in generations 4 and 5, and males in generations 3, 4 and 5. The dimorphism adapts the aphid to its heterogeneous and somewhat unpredictable environment. The role of sex in the maintenance of the dimorphism is discussed. This is the first report of fundatrix polymorphism and consequent differential sex expression in aphids.     

A general method of constructing E(s2)-optimal supersaturated designs

There has been much recent interest in supersaturated designs and their application in factor screening experiments. Supersaturated designs have mainly been constructed by using the E ( s ²)-optimality criterion originally proposed by Booth and Cox in 1962. However, until now E ( s ²)-optimal designs have only been established with certainty for n experimental runs when the number of factors m is a multiple of n-1 , and in adjacent cases where m = q ( n -1) + r (| r | 2, q an integer). A method of constructing E ( s ²)-optimal designs is presented which allows a reasonably complete solution to be found for various numbers of runs n including n ,=8 12, 16, 20, 24, 32, 40, 48, 64.     

Non-Gaussian Ornstein–Uhlenbeck-based models and some of their uses in financial economics

Non-Gaussian processes of Ornstein–Uhlenbeck (OU) type offer the possibility of capturing important distributional deviations from Gaussianity and for flexible modelling of dependence structures. This paper develops this potential, drawing on and extending powerful results from probability theory for applications in statistical analysis. Their power is illustrated by a sustained application of OU processes within the context of finance and econometrics. We construct continuous time stochastic volatility models for financial assets where the volatility processes are superpositions of positive OU processes, and we study these models in relation to financial data and theory.     

GNR, MGR, and exact misspeclfication testing

The Gauss-Newton regression (GNR) is widely used to compute Lagrange multiplier statistics. A regression described by Milliken and Graybill yields an exact F test in a certain class of nonlinear models which are linear under the null. This paper shows that the Milliken-Graybill regression is a GNR. Hence one interpretation of Milliken-Graybill is that they identified a class of nonlinear models for which the GNR yields an exact test.     

The peculiar shrinkage properties of partial least squares regression

Partial least squares regression has been widely adopted within some areas as a useful alternative to ordinary least squares regression in the manner of other shrinkage methods such as principal components regression and ridge regression. In this paper we examine the nature of this shrinkage and demonstrate that partial least squares regression exhibits some undesirable properties.