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

Collection:: Economics Books

120 PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 28 5.5. Implications for the Use of Lagged Endogenous Variables Of course, assuming (5.19) to hold is not sufficient to yield consistency when lagged endogenous variables are treated as predetermined. We have already seen that unless V(6)=o, the decomposability of the dynamic system must be assumed in addition to (5.19) to secure such consistency. We argued above, however, that such decomposability was rather unlikely in an interconnected economy, although the fact that (5.19) is likely to hold approximately makes it important to look for near-decomposability and thus secure near-consistency (**). Even if such near-decomposability of the dynamic system does not occur, however, (5.19) has interesting consequences for the treatment of lagged endogenous variables as predetermined. To these we now turn. Consider the expression for W(1) given in equation (2.6). Writing out the first few terms of the sum, we obtain: (5.20) W(1)=DV(1)+ DBDV(2)+(DB/DV(3) … . Since D is block-triangular and V(1) block-diagonal by (5.19), the first term in this expansion is also block-triangular. Hence even if the dynamic system is not decomposable, endogenous variables lagged one period are approximately uncorrelated in the probability limit with disturbances in higher-numbered sectors (but not in the same or lower-numbered sectors), to the extent that the right-hand terms in (5.20) other than the first can be ignored. In what sense is it legitimate, then, to assume that such terms can in fact be ignored? Assume that the matrix DB is (*) Near-decomposability of a dynamic system has a number of interest- ing consequences in addition to this. Se ANDo. FTSHER, and SrMoN [3] especially Anpo and Frsuer 2] 61 Fisher - pag. 26

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