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

vice of consistent projections which concerns itself both with 
social objectives and with practical possibilities, individual 
forecasts are likely to be unduly conservative. For example, a 
realisable plan might require the output of a particular industry 
to double in a decade, but if no such plan exists the industry 
in question can hardly be expected to try to double its output 
in the next decade if in the past its market has been expand- 
‘ng at a slower rate. 
As to the second point, in operating a system that is not 
Jeterministic, adjustments of one kind or another are constantly 
needed at all stages. There are costs, not to say dangers, in 
requiring all decisions to be referred to a central authority. 
Accordingly, we should examine carefully the sources of in- 
formation in the system, the costs of transferring information, 
and the rules needed to ensure that centralised and decentralised 
decisions will not conflict. 
- & 
The main discussion of this paper will centre round a com- 
putable model of the economic system. Before we come to the 
general features of such models and to the particular example 
that I shall give, which is a revised version of that described 
in [7], it may be useful if I try to set an economic model in 
its environment, that is, relate it to the objectives it is intended 
to serve, the administrative arrangements needed to make it 
work and the general experience of economic life which it mo- 
lifies and by which in turn it is modified. 
Following the treatment in [37], the essence of the situation 
as I see it can be represented graphically as in diagram 1 below. 
The combination of theories with facts gives rise to a model. 
Since economics is largely concerned with quantities, the model 
must be quantitative: and since we need to know not onlv how 
"1 Stone - pag. 

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