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are dealt with from the point of view of model building in non-
experimental situations in general, not only in econometrics.
The first point refers to the basic pluralism when it comes to
model building for different purposes. Typical in this respect
is the difference between short range and long range forecast-
ing and the ensuing differences in the model construction. To
bring the general perspective in relief, reference is made to
similarities in this respect in economics and meteorology.
Meteorology . . 24 or
Economics 6 or
Short range
forecasts
hou
ve R
months
Long range
forecasts
4 or 6 weeks
5 or 10 years
In meteorology the short term forecasts are fairly reliable
over 24 to 48 hours. The principal basis of the short term
forecasting techniques is the thermodynamic theory of cyclons
of the BERGEN school (?!). The importance of this theoretical
innovation can be read off in the gradual increase in the reli-
ability of the forecasts from 1920 or thereabout.
Meteorological forecasts over the « long range » of 4 or 6
weeks is a more recent development. Here the forecasting has
to be based on other phenomena than the cyclons and their
individual paths. The technique is still in its beginnings, and
the reliability is much lower than for the short range forecasting.
In economic forecasting, « short term » means ranges from
3 or 6 months up to 6 or 8 quarters, and the model building
here focusses on the boom-recession pulsations. « Long range »
usually means something like 5 or 10 years, and the all-
important purpose of the model is to analyze and forecast eco-
nomic growth. Hence, just as in meteorology, the subject
matter content of the economic model is radically different in
short range and long range forecasting. On the other hand
(*') J. BJERKNES (1919) is a basic reference.
of the co-founders. see T. BERGERON (105g).
For a recent review bv one
.,» Wold - pag. 39