Full text: Study week on the econometric approach to development planning

supply relation: 
36D) $;=1.825+0.055 p,_; — 0.097 C,_, + 0.123 g, + 4, 
price mechanism: 
(36c) P,= 0.493 (d,_, ~ 5) +0.229 w, + 0.414 c, + u,” 
with all three relations specified as eo ipso predictors, giving 
E(d|p, f)=1.580-0.390p,+ 0.520 f, 
and similarly for (36b) and (36¢c). Model (36) has the formal 
design of a CC-system, inasmuch as s, is influenced only by 
oredetermined variables, p, by s, and predetermined variables, 
and d, by p, and predetermined variables. 
These simple illustrations bring in relief the distinction be- 
tween the notion of instantaneous equilibrium and other modes 
of equilibria. In an ID-system that includes (30a), (31a) and 
f32) the instantaneous equilibrium enters among the basic as- 
sumptions of the model. In CC-systems, on the other hand, 
instantaneous equilibria have no place; instead, equilibrium 
tendencies may enter the picture by way of theoretical deduc- 
tions from the model. Thus in model (36) demand and supply 
will under general conditions of stochastic regularity be in 
stationary balance, a state of never-ceasing random fluctuations 
around a limiting equilibrium level. 
4. The general scope of vector regression and causal chain 
systems. Brief reference is made to two groups of theorems 
that establish the general scope of VR- and CC-systems. The 
theorems refer to a set of observed time series (3)-(4) that 
are conceived of as extending into the indefinite past 
(¢{-1, t-2, ...), and they have the nature of representation 
theorems that yield predictive inference under the assumption 
that the structure of the interrelations between the time series 
Wold - pag. 18

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