## ABSTRACT

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