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PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 2§

the reduced form (21) cannot be obtained from the primary
form (18) by iterated substitutions. This last feature is closely
related to the fact that ID-systems are not bi-expectational :
the predictor specification (13) of the primary form (12) of
CC-systems has no parallel in ID-systems (18). The lack of
parallel to (13) in (18) is clearly a stochastic feature of the
models, for it would not appear if the ID-systems (18) were
deterministic in the sense of disturbance-free relations; in fact,
the left-hand members of (23) would then be nothing else than
the component variables y, and (23) would be precisely the
same system of relations as (21).
[n the much-discussed dualism between CC- versus IDsystems
 it has been a veritable stumbling block that ID-systems
are not bi-expectational (%). As briefly noted above, this key
feature results from the merging of two lines of generalization,
namely from VR- to CC- and ID-systems on the one hand,
and from deterministic to stochastic specification of the models
on the other. We shall return to this matter in section 2 for
a more detailed review.

3. Accounting identities vs. equilibrium relations. To summarize
 the argument, accounting identities make no incentive
in the generalization from VR- or CC-systems to’ ID-systems,
whereas the incorporation of equilibrium relations into the
model is one of the main incentives in the generalization from
CC- to ID-systems (7).
The argument will be illustrated by simple cases in point.
A typical accounting identity is given by

a

Y,=C, +8,

(°) See, also for further references, Refs. 16 to 18 and Ref. 30. ;
() The exposition makes systematic use of eo ipso predictors; otherwise
‘he argument of this subsection is well known.

2,

Wold - pag. 14