The "{, represent year-to-year fluc

The "{, represent year-to-year fluctuations in macroeconomic conditions that influence all business-units equally. The oil represent industry­ specific year-to-year fluctuations in return. Finally, there is an E;k, associated with each observation. Although these effects have been named 'error', they may equally well be thought of as year-to-year variations that are specific to each business-unit.