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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Title:: Dynamic structure and estimation in economy-wide econometric models / FranklinM. Fisher, Massachuetts Institute of Technology - Cambridge, Mass. - U.S.A.

Collection:: Economics Books

306 PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 28 does not become consistent when one changes a current endo- genous variable to a recent past value of the same variable even if triangularity of the A matrix is achieved in this way. The assumptions which lead to the consistency of least squares re- quire more than this and all the same difficulties will still be encountered even if they go unrecognized. 2.4. The Proximity Theorem and Near-Consistency As already remarked, however, the issue of the use of ordinary least squares (or indeed of any particular estimator) is not whether the assumptions thereof are precisely satisfied. Rather the crucial question is that of how closely they are satisfied, of how those assumptions stand up as approximations rather than as exact statements. The problem is not a discrete one; rather it is continuous. Moreover, the question of good- ness of approximation is itself dependent on the sensitivity of the properties of the estimator to variation in the assumptions thereof. In general, the less sensitive is an estimator, the greater the tolerable deviation from the strict conditions under which it has desirable properties. In the present instance, our discussion has largely run in terms of consistency. Consistency, however, is a rather weak, although desirable property. Since ordinary least squares has several other attractive features, we might plausibly be willing to tolerate small inconsistencies to gain, for example, compu- tational ease, small variance around probability limits, and so forth. Tt is thus not sufficient to ask whether the assumptions under which ordinary least squares is consistent are satisfied; we must ask whether the fact that they are not generally satis- fied in economy-wide econometric models is likely to be of much Importance. This question is formally answered by the Proximity Theo- ‘61 Fisher - pag. 12

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