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

a long time, as witnessed by the debate on « the choice of 
regression » in the 1920’s and 1930’s. Such is also the situation 
in multirelation systems with regard to predictive inference 
from the primary form and the reduced form. In VR-systems 
this dualism does not arise since the two forms coincide; in 
CC-systems both forms can be specified in terms of eo ipso 
predictors thanks to the substitutional design of the primary 
form; but the design of ID-systems is too general to allow this 
bi-expectational specification. The situation makes a genuine 
dilemma for the ID-approach, for if the primary form with 
its behavioural relations cannot be specified in terms of eo ipso 
predictors and thereby as cause-effect relations subject to ran- 
dom disturbance, the operational meaning of the entire mode! 
comes in doubt. 
The dilemma of ID-systems is reflected in the debate on 
the rationale of « simultaneous equation systems » in the 1940’s 
and 1950’s. In hindsight, what has made the controversial 
and partly confused debate on « the choice of regression » and 
« simultaneous equation systems » so persistent is the old and 
strong tradition of deterministic model building in economics, 
combined with the fact that empirical treatment of the models 
and thereby the need for their stochastization came into the 
picture at a relatively late stage. In the research literature the 
need for stochastic models was fully recognized in the early 
1930’s, but in economic textbooks the deterministic models still 
dominate the scene. Specific reference is made to the determi- 
nistic cobweb model of 1930, in the simplest case given by (4) 
supply relation 
demand relation 
instantaneous equilibrium 
(*) See M. EzEKIEL (1938) for an excellent review. Cf also H. SCHULTZ 
1938), pp. 77-80 
21 Wold - pag. 20

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