Study week on the econometric approach to development planning

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Monograph

Identifikator:: 1824422792

URN:: urn:nbn:de:zbw-retromon-217476

Document type:: Monograph

Title:: Study week on the econometric approach to development planning

Place of publication:: Amsterdam [u.a.]

Publisher:: North-Holland Publ. Co. [u.a.]

Year of publication:: 1965

Scope:: XLVII, 1259 S.; graph. Darst.

Digitisation:: 2022

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Selection and implementation the econometrics of the future / Ragnar Frisch, Universitetet i Oslo - Sosialøkonomisk Institutt - Oslo- Norge

Collection:: Economics Books

SEMAINE D ETUDE SUR LE ROLE DE L ANALYSE ECONOMETRIOUE ETC. 1216 macroeconomic level, The purpose of the device is much more prag- matic, in the direction of clarifying the problem, articulating different political views by specifying alternative targets and alternative instru- ments, targets and instruments that can be modified from time to :ime, the limited aim not being solutions of absolute optimality, but rather solutions that make workable compromises. If I understand correctly, Professors DorrFMAN and FriscH both adopt this prag matic view. Thus it is seen that the pragmatic approach is far from uniform, and that it leaves room for widely divergent views about fundamental problems. Coming to my second point, I am not altogether happy about ‘he points in Professor FRISCH’s papers and his presentation where ne limits himself to deterministic approaches. It is always necessary to simplify in model building, and it is also granted that deterministic assumptions are sometimes adequate; however, I feel uncomfortable when Professor FRISCH says that deterministic assumptions are a dash forward — I think it is a dash backward. It is an illusion if you selieve that you can get rid of difficulties in economy-wide models by supposing that you are so precise that there are no unexplained residuals in your approach. To reduce the residuals you must stratify in great detail so as to obtain homogeneous cells in your statistical tables; when the cells become small, however, the law of large num- bers ceases to work and instead of more deterministic regularity you will run into more randomness and irregularity. The problem of the model builder is to strike a sound balance between the gain in infor- mation given by a finer stratification, and the loss in information when the law of large numbers is weakened. In a sense the residuals are the back side of the medal of large numbers; they will however do no harm if they are treated as stochastic variables, and if the model takes them into account in such manner that the operative use of the model is in accordance with the mathematical rules for operat- ing with random variables. This last principle takes care of the pitfalls when a deterministic model is stochasticized. Now as far as I can see the deterministic models considered by Professor FRISCH are not in the danger zone in this respect. At least for ordinary input “17] Frisch - pag. 23

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