ABSTRACT
In this chapter we wish to try to bring together our findings from Chapter 5 into a more coherent framework. We can recall that we specified individual demand equations for six asset groupings as if they were separate decisions. Whilst we were in effect also indicating the interdependence among these assets either directly (use of yield gaps, issues data, adjusted income series) or indirectly (by recognising that the assets possessed different characteristics essential to the portfolio), we did not at that stage attempt to formalise those equations into a comprehensive model. Nor did we attempt to use our demand equations to test for their predictive power outside of the sample period. The purpose of this chapter is to take up these two points. In Section 6.2 we indicate the predictive power of the summary equations from Chapter 5 for the period 1975–6 (eight quarters), as well as giving the overall results for the extended sample period. In Section 6.3 we indicate the problems of attempting to combine these equations into an overall model and we give a summary of our ‘best’ attempts. We again test for its predictive power, and then we re-estimate the whole model for the extended data series 1963–76.
