Die deutsche Wirtschaft

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Monograph

Identifikator:: 1689946490

URN:: urn:nbn:de:zbw-retromon-101093

Document type:: Monograph

Title:: Die deutsche Wirtschaft

Place of publication:: Berlin

Publisher:: Hobbing

Year of publication:: 1926

Scope:: 528 Seiten; Illustrationen

Digitisation:: 2020

Collection:: Economics Books

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PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA count, and their effect on the broad pattern of consumption is not very noticeable; but in accounting for the detailed pattern they may well be important. In such cases it may be useful to follow a hierarchical principle. Thus we might start by estimating how, in given circumstances, total consumption would be divided among its main constituents, namely food, clothing, household expenses etc. We might then try to estimate how the expenditure on each of these groups would be divided among the group’s components and what specific influences, if any, might affect each component. And so on. As we got into greater and greater detail, however, we should expect any manageable system of demand relationships to break down. At this point we should have reached a position where our demand model was no longer specific enough and where, accordingly, we needed outside help, as in the case of the input-output relationships discussed above. What I have just said brings out the fact that with the information at our disposal there is a limit to the amount of detail we can handle. It is sometimes argued that if only we could increase the size of our models we should get correspond- ingly better results. I do not think this is true. If, for example, we were to multiply the number of industries we distinguish, and were to represent each industry in the detail necessary to operate it, we should have to make the relationships of our model altogether more sophisticated. In practice we could not do this. I suggest therefore that the proper way to introduce great detail into a model of the economy is not to expand that model beyond a certain point, but to set up separate sub- models for different industries, related to the general model but established and operated by the industries themselves with all the expert knowledge that this would make possible. The final outcome would result from an iteration between the general model and the industry models, somewhat on the following lines. The general model would indicate the output levels re- quired and the distribution of these outputs over uses. The [1] Stone - pag. 14

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