452 PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 
IR 
properties: one does not design a model in order that it should have 
minimum delay; one does not design a model so that it will be an 
eo 1pso predictor. One designs a model so that it represents someth- 
ing that one believes to be true about the real world. After the 
model has been designed, and not before, one asks: What properties 
does it have? And what properties can I give the estimates of the 
model by using different estimating techniques? 
Now, indeed, there are always several ways in which a given 
real phenomenon can be represented in a model. Given two of these 
which we believe to be equally valid in terms of economic theory, 
we would of course choose the one which had better properties in 
terms of forecasting or in terms of the properties which the estimat- 
ion techniques appropriate to the model will have. Frequently, how- 
ever, that is not in fact the primary question. In general, we are 
not indifferent between two representations and the choice between 
models does not come on the question: « Will one be recursive and 
the other simultaneous? » The crucial question is rather that of 
which model represents what we believe to be true about the real 
world and which model and estimation technique is appropriate to 
the use which we intend to make of the results. 
THEIL 
A question of clarification. Do you intend to split up a large 
equation system into subsystems and construct principal components 
of the predetermined variables in each subsystem? 
FISHER 
Professor THEIL wishes to know whether I recommend splitting 
up a large equation system into subsystems and constructing prin- 
cipal components of the predetermined variables in each subsystem. 
This is not what I recommend, although similar procedures have in 
61 Fisher - pag. 68