= à 
PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 28 
I gather that the two first question marks are largely rhetoric, 
and in any case I agree with the answer he gives in the next sen- 
tence. To paraphrase, the construction of economic theories is one 
thing (namely, the theoretical part of model building), and to con- 
front it with the facts is something different (namely, the empirical 
part of model building). Thus at this point I would only emphasize 
more clearly that although the theoretical and empirical aspects of 
model building should be kept distinct, at least in principle, we 
should always keep in mind that a fullfledged scientific model is 
a synthesis of theoretical and empirical knowledge. 
As to the second group of Professor HAAVELMO’s question marks, 
it seems to me that they will get clearcut answers if the model 
builder has taken care to specify in not too vague terms for what 
broad array of facts, applications, his model is designed to be valid, 
and if the applications include policy making he should specify 
what changes in policy, if any, it is the purpose of the model to 
cover. If not for anything else, such specification is essential when 
it comes to the verification and testing of the model. Furthermore, 
the spectrum of potential changes of policy, is extremely wide, and 
the substance of a model would in many cases become too diluted 
if the model tried to cover more than a relatively small sector of 
potential changes. For example, a relation of consumer demand 
may remain the same under very different regimes of economic 
policy, whereas many other parts of economic life are quite suscep- 
tible even to small changes of policy. 
A more specific reply to the last sentence of Professor 
HAAVELMO’s comments is that in case an economic forecasting model 
‘nfluences government policy, this creates a feedback problem which 
n principle belongs under the construction of a more comprehensive 
model that includes the interaction between forecasting and policy. 
Feedback phenomena may be more or less difficult to handle, but 
even if they are difficult they do not make model building impos- 
sible. For example, feedback models are commonplace in the theory 
of servomechanisms. 
Since the argument about a change in policy has been in fre- 
2] Wold - pag. 64