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Some Recent Econometric Developments*

Published online by Cambridge University Press:  07 November 2014

T. M. Brown
T. M. Brown*
Affiliation:
Ottawa
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Extract

This paper is an attempt to give the interested economist who is not an econometrician a general picture of some of the developments in the specialized field of econometrics. It is hoped thereby to enable him to see how this field is related to the general science of economics, and how he may be able to make use in his own work of the results obtained in econometrics. The implications of the current rapid innovations in the field of electronic computers are stressed, since these may soon help to produce an ever increasing flow of econometric results.

In an address given in 1897, Alfred Marshall suggested that economics should develop not only as a quantitative science in many of its aspects, but also as a numerical science. Professor Schumpeter, in appraising Marshall's advice, observes that it follows the line of development begun by Sir William Petty in his Political Arithmetick of 1672. Schumpeter came down firmly on the side of this prescription himself. He too emphasized the importance of economics' being able to “figure out results.” Professor Pigou also reveals how Marshall, well aware as he was that much in economics cannot be described by numbers, hoped to see the areas that could be so described brought to the same stage as physics, where the amount of an effect produced by a cause can be estimated by numerical methods, using statistical data.

Type
Articles
Information
Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 25 , Issue 1 , February 1959 , pp. 23 - 33
Copyright
Copyright © Canadian Political Science Association 1959

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Footnotes

*

This paper is a revision of one presented at the annual meeting of the Canadian Political Science Association in Edmonton, June 5, 1958. The writer is indebted to Mr. V. J. Macklin of the Department of Trade and Commerce, and to Mr. J. A. McDonald, Canadian National Railways, as well as to many others, for helpful criticism and advice. The author alone is responsible for any opinions expressed.

References

1 Schumpeter, Joseph A., “Alfred Marshall's Principles: A Semi-Centennial Appraisal,” American Economic Review, XXXI, no. 2, 06, 1941, 247 Google Scholar; also Ten Great Economists (New York, 1951), 107.Google Scholar

2 Pigou, A. C., Alfred Marshall and Current Thought (London, 1953), 14.Google Scholar

3 Tinbergen, J., An Econometric Approach to Business Cycle Problems (Paris, 1937)Google Scholar; and Statistical Testing of Business Cycle Theories, I, II (Geneva, 1939).Google Scholar

4 Keynes, J. M., “Professor Tinbergen's Method,” Economic Journal, XLIX, no. 195, 09, 1939, 558.Google Scholar

5 Cf. e.g. Klein, L. R., “The Empirical Foundations of Keynesian Economics” in Kurihara, K. K., ed., Post-Keynesian Economics (New Brunswick, N.J., 1954).Google Scholar

6 Cf. the “meaningful theorems” of Samuelson, P. A., Foundations of Economic Analysis (Cambridge, Mass., 1947).Google Scholar

7 To bring the two into complete agreement it would also be necessary to know the distribution of micro units and classes within an aggregate for each period of time.

8 Klein, L. R. and Goldberger, A. S., An Econometric Model of the United States, 1929–1952 (Amsterdam, 1955), 55–62.Google Scholar Also Klein, L. R., ed., Contributions of Survey Methods to Economics (New York, 1954).Google Scholar

9 Koopmans, T. C., ed., Statistical Inference in Dynamic Economic Models (New York, 1950).Google Scholar Also, Hood, Wm. C. and Koopmans, T. C., eds., Studies in Econometric Method (New York, 1953).Google Scholar

10 Research on the discovery of simpler statistical methods has begun again, and similar new results have been reached independently by H. Theil, “Estimation and Simultaneous Correlation in Complete Equation Systems,” Centraal Plan-Bureau, The Hague, June 23, 1953 (mimeo.), and by Basmann, R. L., “A Generalized Classical Method of Linear Estimation of Coefficients in a Structural Equation,” Econometrica, XXV, no. 1, 01, 1957.Google Scholar The new method looks interesting, and the author hopes to give it a rough efficiency test as soon as possible.

11 See his Economic Fluctuations in the United States, 1921–1941 (New York, 1950).Google Scholar

12 Brown, T. M., “Habit Persistence and Lags in Consumer Behaviour,” Econometrica, XX, no. 3, 07, 1952.Google Scholar

13 Keynes, J. M., The General Theory of Employment, Interest and Money (London, 1947), 97, first par.Google Scholar

14 Klein and Goldberger, An Econometric Model of the United States.

15 Brown, T. M., “Standard Errors of Forecast of a Complete Econometric Model,” Econometrica, XXII, no. 2, 04, 1954 Google Scholar; also “Theory of Economic Models for Forecasting and Policy,” Ph.D. thesis, Australian National University, Canberra, 1957.Google Scholar

16 von Neumann, J. and Morgenstern, O., Theory of Games and Economic Behavior (2nd ed., Princeton, N.J., 1947).Google Scholar

17 A similar suggestion was advanced by Dr. D. J. Daly, who felt that a short-run forecast needed to be accompanied by a middle-run forecast, to enable policy to encompass both spans of time.