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
