Full text: Study week on the econometric approach to development planning

and the number of models is rapidly increasing (¥). The models 
are huge and complex systems, with scores of relationships, 
and up to hundred or more variables, and often with shifts of 
emphasis in the design that render it difficult or impossible to 
make comparative studies on a theoretical basis. In this situa- 
tion predictive tests are at a premium because they bring the 
models on the same line in comparing the forecast performance. 
In the present stage of development the need for predictive 
testing is especially urgent. Once a model is in permanent use 
the ensuing forecasts will in due course automatically give ma- 
terial for predictive tests. As yet, however, very few, if any, 
of the published models are going concerns, and therefore it 
takes a nonautomatic decision — not to speak of the courage — 
to plan and carry through predictive tests. 
In view of their key importance I wish to make a plea 
for the systematic use of predictive tests in the construction 
of dynamic macroeconomic models. This last section of my 
report will have fulfilled its main purpose if it can stimulate 
to a joint move in this direction by the participants of the 
Study Week. 
In making this plea I wish to emphasize that the entire area 
of dynamic model building is as yet in an early stage of deve- 
lopment. It is perhaps too early as yet to expect forecasts 
that look neat in the sharp light of a predictive test. So much 
the more pressing, however, is the need for predictive tests 
for the guidance of research in the many branching complexi- 
ties of macroeconomic model building. 
3.1. The pluralism in model building for different purposes. 
The rest of this report takes up some few specific aspects 
of the techniques of predictive testing. The various questions 
(*) The many-faceted and rapid developments are well pictured in M. NEr- 
LOVE’s survey, Ref. 40 
Wold - pag. 38

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