Econometric model building is concerned mainly

with statistical inference of such behavioural

economic relationships as the consumption and in­

vestment functions, wage equations and the pro­

duction function. The econometric methods em­

ployed to estimate economic relationships often

assume that the regression coefficients do not

change from observation to o b s e r v a t i o n . The

assumption that the coefficients are fixed is

restrictive and s o m e t i m e s even u n n e c e s s a r y .

Consider, for example, the r e g r e s s i o n of the