Tests of Significance: What They Mean and How To Use Them

Abstract

flexibility of wages cannot really be considered an important factor in business cycles. Price rigidity or price stabilization would increase the violence of the fluctuations. A further conclusion in a more detailed discussion is that the role of stocks of consumption goods is very important. If stocks were constant, this would lead to a greater reduction of business fluctuations in time. All these conclusions of course are subject to many qualifications regarding the assumptions under which the relationships were derived, and especially the doubtful reliability of the statistical results. The final chapter discusses critically some business cycle theories as stated by Haberler. The remarks regarding the so-called agricultural theories of the business cycle are of interest. Tinbergen comes to the conclusion that the influence of farm prices on business fluctuations is not very large. They fluctuate mainly because of changes in demand and their fluctuations are only about onefifth reflected in the prices of finished consumers' goods. The results appear to confirm Haberler's remarks that the demand for consumers' goods is more stable than the demand for all goods, and the demand for consumers' goods of agricultural origin still more stable. Finally harvest fluctuations may have some influence on general business fluctuations, although this seems impossible to establish definitely with the material available. The agricultural economist with a little training and understanding of mathematics and statistics could read Tinbergen's pioneer work with great profit. At least some of the methods and techniques developed are likely to prove very important for further research in the agricultural field. GERHARD TINTER Iowa State College