1000 PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 28 
Thus, an error Ai has the same effect as Ayly® that is we must 
compare y2A: with Ay. Thus the error in y can be 0.1 and the 
error in ¢ can be 0.015 but 
v2A; =O.I5 . 
It can thus be seen that the influence of an error in ; can be great 
and as you know it is very difficult ot estimate the pure rate of 
interest. 
We con derive the same conclusion in another way. For the 
United States. we can calculate the theoretical value of : 
where ©, is the average value 4.12 found for ®_,. Thus we find 
the following table 
ITnited State 
t88o-190C 
rf rr 
107° 
FOSO-TOGEH 
Periods 
Estim-*-d value |theoretical value 
ty 
difference 
Ai = i —iT 
[.2I 
- 08 
5 
2.232 
Thus, for the period 1880-1956, the differences A: are quite 
small and do not exceed 1.5%. But for 1950-1956, the difference 
is very great. The reason is, in my opinion, the fact that American 
monetary policy has maintained the rate of interest on bonds at an 
ir] Allais - pag. 304