. In particular, portfolios have been de- composed into broad assets categories and the changes in asset compositionover time have been examined. In these models it is frequently assumed that the equilibrium holdings of all assets are homogeneous of degree one in dollar magnitudes. If ao = 0, then both (1) and (2) are consistent with this assumption and we must choose between them on statistical grounds. The paper is organized as follows. Section 2 is devoted to a discussion of the tests and Section 3 presents and discusses some experimental results concerning the power of the tests.
2