The aggregate implications of the permanent-income/life-cycle hypothesis (PILCH) are derived rigorously. Virtually all empirical rejections of PILCH based on aggregated data are shown to result from misspecifications or from characteristics of aggregate data that have been overlooked. Valid aggregate tests are proposed. Those based on a properly formulated aggregate consumption function may be superior to those based on Euler-equation methods.

This interview with Wassily Leontief is the first to appear in Macroeconomic Dynamics. Other interviews of importance to the history of economic thought will appear occasionally in this journal. Since this journal prizes the openness that characterizes the scientific method, the views expressed by economists interviewed in this section may span a broad range and will not necessarily represent the views of the journal's editorial board or the primary focus of the journal. However, in all cases in which Macroeconomic Dynamics publishes an interview, the journal thereby evidences its deep respect for the scholar whose interview we publish.

The Internet has greatly expanded the way in which large-scale structural macroeconometric models can be used and disseminated. This note describes a site that has been created for this purpose: http://fairmodel.econ.yale.edu.

This survey article is the first to appear in Macroeconomic Dynamics. Other surveys that are relevant to the objectives of the journal and are of unusual technical sophistication will occasionally appear in this journal in its new MD Surveys section.

Wassily Leontief is one of the central creators and shapers of twentieth-century economics. He invented input-output theory and the techniques for constructing input-output tables from economic and technological data and was responsible for making input-output tables the most powerful and widely used tool of structural economic analysis. The theory of input-output matrices played an important role in the clarification of general equilibrium theory in the 1940's and 1950's as well. Leontief has also made fundamental and seminal contributions to the theories of demand, international trade, and economic dynamics. His research interests include monetary economics, population, econometric method, environmental economics, distribution, disarmament, induced technical change, international capital movements, growth, economic planning, and the Soviet and other socialist economies. Leontief has played a vigorous part in formulating national and international policies addressing technology, trade, population, arms control, and the environment. He has also been a well-informed and influential critic of contemporary economic method, theory, and practice. Leontief received the Nobel Memorial Prize for Economics in 1973.

I met Wassily Leontief on April 14, 1997, at his apartment high above Washington Square Park in New York City. Leontief reclined on a sofa in the living room, with Mrs. Leontief going about her business in the background, occasionally asking after Leontief's comfort. Leontief's voice on the tape ranges from an assertive forte to a whispery piano. He is by turns animated, thoughtful, puzzled, inspiring, and charming. A chiming clock marking the passage of quarter-hours and characteristic New York street noise occasionally obscure his words on the tape. I have edited the transcript for continuity and clarity.

This paper is the first part of a two-part survey reviewing some basic concepts and methods of the modern theory of dynamical systems. The survey is introduced by a preliminary discussion of the relevance of nonlinear dynamics and chaos for economics. We then discuss the dynamic behavior of nonlinear systems of difference and differential equations such as those commonly employed in the analysis of economically motivated models. Part I of the survey focuses on the geometrical properties of orbits. In particular, we discuss the notion of attractor and the different types of attractors generated by discrete- and continuous-time dynamical systems, such as fixed and periodic points, limit cycles, quasiperiodic and chaotic attractors. The notions of (noninteger) fractal dimension and Lyapunov characteristic exponent also are explained, as well as the main routes to chaos.

David Cass is undoubtedly one of the central contributors to modern dynamic economics. His fundamental contributions include work on optimal growth problems, overlapping-generations models, sunspot equilibria, and general equilibrium models with incomplete markets. His research has shaped in profound ways the manner in which we do both micro- and macroeconomics. From laying the foundations of real business-cycle theory via the Cass-Koopmans model, to providing us with general tools and techniques to analyze dynamic economic models, to furthering our understanding of monetary economics, to making fundamental contributions to the economics of extrinsic uncertainty, Cass's work has played a major part in the development of much of modern macroeconomic theory. In addition to being a first-class scholar, Cass is also truly his own man and a free spirit of the highest order.

In this interview, we tried to gain some insights into the story of David Cass and his approach to economic theory. Also, given the title as well as the intended readership of Macroeconomic Dynamics, we made a real effort to get him to discuss modern macroeconomics and the influence his work has had on its development. We edited out some parts of the discussion in the interests of space, but what remains is essentially unedited. As most readers will know, David Cass has collaborated extensively with Karl Shell over the years. We talked to Shell a few weeks after talking to Cass, and that interview is scheduled to appear in a future issue.

We met with Dave in his office at the University of Pennsylvania's Economics Department just before noon. Amid the boxes and piles of articles, books and CD's, he sat in his standard jeans and T-shirt, looking about as disheveled as he usually does. We chatted there for a while, went out and continued over lunch, and then returned to complete the interview several hours later. It was an unseasonably warm day in February, and Friday the 13th to be exact. That is traditionally an unlucky day, but one that turned out in this case to be a real treat, at least for us! We hope that you get as much out of this conversation with Dave as we did.

This book is an ambitious effort by three well-known and well-respected scholars to fill an acknowledged void in the literature—a text covering the burgeoning field of empirical finance. As the authors note in the preface, there are several excellent books covering financial theory at a level suitable for a Ph.D. class or as a reference for academics and practitioners, but there is little or nothing similar that covers econometric methods and applications. Perhaps the closest existing text is the recent addition to the Wiley Series in Financial and Quantitative Analysis. written by Cuthbertson (1996). The major difference between the books is that Cuthbertson focuses exclusively on asset pricing in the stock, bond, and foreign exchange markets, whereas Campbell, Lo, and MacKinlay (henceforth CLM) consider empirical applications throughout the field of finance, including corporate finance, derivatives markets, and market microstructure. The level of anticipation preceding publication can be partly measured by the fact that at least three reviews (including this one) have appeared since the book arrived. Moreover, in their reviews, both Harvey (1998) and Tiso (1998) comment on the need for such a text, a sentiment that has been echoed by numerous finance academics.