Economic models: the past, present and future?

Notes and references

• See for instance . 1997 . “Economic forecasting and economic policy: what economic forecasters can do for government” . Robert Evans, paper presented at the 10th Anniversary Congress of the Tinbergen Institute, Amsterdam, 14–16 May 1997
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• Wynne , Brian . 1995 . Managing Technology in Society: The Approach of Constructive Technology Assessment Edited by: Rip , rie , Misa , Thomas J and Schot , Johan . London and New York : Pinter . “Technology assessment and reflexive social learning: observations from the risk field”, in A pages 15–36: quotation at page 33; replaced word was originally “technical”
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• For more on Tinbergen's model see: . 1990 . The History of Econometric Ideas Cambridge UK : Cambridge University Press . Mary S Morgan,(chapter 4. Tinbergen's own account is given in: Jan Tinbergen, An Econometric Approach to Business Cycle Problems (Hermann and Cie, Paris, 1937)
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• Tinbergen , Jan . 1939 . Statistical Testing of Business Cycle Theories, Vol I: A Method and its Application to Investment Activity, Vol II: Business Cycles in the United States of America, 1919–1932 Geneva : League of Nations .
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• Morgan , Mary S . See, reference 3, page 115
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• Tinbergen , Jan . 1951 . Business Cycles in the United Kingdom 1870–1914 Amsterdam : North-Holland .
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• Klein , Lawrence R . 1950 . Economic Fluctuations in the United States 1921–1941 New York : Cowles Commission Monograph 11, Wiley .
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• Lawrence , R , Klein , RJ , Hazlewood , Ball A and Vandome , P . 1961 . An Econometric Model of the United Kingdom Oxford : Oxford University Press .
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• The Economic and Social Science Research Council is the Government-funded body charged with distributing funds for social science research in the UK .
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• The London Business School Model had 16 equations .
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• Ormerod , Paul , ed. 1979 . Economic Modelling London : Heinemann . The model used by the Bank of England was originally ‘acquired’ from the London Business School in 1973, although by 1978 it had been “variously re-estimated, amended and extended [so that its ‘pedigree’ was] scarcely recognisable”. Source: A R Latter, “Some issues in economic modelling at the Bank of England” in pages 25–39 (quotation at page 26)
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• For an independent review of the Bureau see: . 1990 . International Journal of Forecasting , 6 : 301 – 309 . Ron Smith, “The Warwick ESRC Macro-economic Modelling Bureau: an assessment”
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• Gregory Mankiw , N . 1990 . Journal of Economic Literature , 28 “A quick refresher course in macroeconomics”, December pages 1645–1660 (quotation from page 1646)
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• “Macroeconomic modellers multiply” . 1995 . Social Sciences: News from the ESRC, ESRC Newsletter , 27 April page 2
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• See reference 14 .
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• A summary and comparison of the forecasts . the exact number of which may vary, is made available in PDF format on the UK Treasury world-wide web (WWW) site at: http://www.hm-treasury.gov.uk/pub/html/forc/comp/main.html
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• Kay , N and Dunlop , S . 1990 . “The business economist” . Business Economist ,
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• This section closely follows Kenneth F Wallis, “Macroeconomic forecasting: . 1989 . The Economic Journal , 99 : 28 – 61 . a survey”, March pages. It is in this sense a summary of an internal history rather than a sociological analysis. Like the introduction, it provides background and context rather than detailed discussion
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• Lucas , Robert J . 1976 . The Phillips Curve and Labor Markets , Carnegie-Rochester Series on Public Policy, 1 Edited by: Brunner , Karl and Meltzer , AH . 19 – 46 . Amsterdam : North Holland . “Econometric models: a critique”, in
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• Lucas , Robert J . See, reference 19: quotation at page 20; words replaced by [are] were “will be”
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• See, for example, the reply to Lucas by Robert J Gordon . Edited by: Brunner , Karl and Melstzer , AH . 47 – 61 . “Can econometric policy evaluations be salvaged?—a comment?”, in, reference 19
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• For a description of the major UK models of 1972/73 see: . 1975 . Modelling the Economy Edited by: Renton , GA and Ormerod , Paul . London : Heinemann Educational Books . reference 11. (For discussion of the state of the art in 1978 see
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• This episode is discussed in more detail in Martin Greenberger . 1976 . Models in the Policy Process: Public Decision Making in the Computer Era New York : Russell Sage Foundation [distributed by Basic Books] . Matthew A Crenson and Brian L Crissey
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• See, for example: J E Davidson, D F Hendry, F Serba and S Yeo . 1978 . Economic Journal , 95 : 661 – 692 . “Econometric modelling of the aggregate time-series relationship between consumers” expenditure and income in the United Kingdom”
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• See, for example: A S Deaton . 1977 . American Economic Review , 67 : 899 – 910 . “Involuntary saving through unanticipated inflation”
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• Barker , TS . 1985 . Journal of Forecasting , 4 : 133 – 151 . See:, “Forecasting the economic recession in the UK 1979–1982: a comparison of model based ex ante forecasts”
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• By “general theoretical framework” Wallis is referring implicitly to the influential work of David Hendry . Edited by: Ormerod , Paul . Hendry advocates a “general-to-specific” econometric modelling methodology in which the modellers begin with the most general form of the equations and, using a battery of econometric tests, derive the specific form from this general representation. A key idea which follows from this is that of ‘encompassing’ by which it is meant that some, more general forms of an equation can contain as a special case other more specific forms. In these cases, the more general equation is said to ‘encompass’ the more specific alternative. For an early exposition of this view see: David Hendry, “Predictive failure and econometric modelling in macroeconomics: the transactions demand for money”, in, reference 11
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• Wallis , Kenneth F . 1988 . Australian Economic Papers , 27 ( supplement ) : 7 – 25 . “Some recent developments in macroeconometric modelling in the United Kingdom”, vol
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• The Government joined the European Exchange Rate Mechanism (a European agreement between member states to keep their exchange rates fixed within certain bands) as part of an anti-inflationary policy designed to control the rising inflation which accompanied the consumer boom of the 1980s An important part of the economic rationale for joining was not just that economic models forecast that it would have the desired effects, but that, in addition, by entering into such a public and formal agreement, the credibility of the Government's policy would be enhanced because of the high cost of reneging on an international treaty
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• The Panel's terms of reference were: “To report to the Chancellor of the Exchequer three times a year on the current position of and future prospects for the UK economy. The members of the Panel will be free to publish their own individual forecasts at any time. The reports to the Chancellor will reflect both the central tendency and the range of views of the Panel members. Members will also be invited to comment on policy developments and to provide recommendations. Any comments and recommendations will be Included in the report.” Its original members were: Andrew Britton (National Institute of Economic and Social Research); Professor Tim Congdon (Lombard Street Research Ltd.); Professor David Currie (London Business School); Gavyn Davles (Goldman Sachs International Ltd.); Professor Wynne Godley (Kings College, Cambridge); Professor Patrick Minford (Liverpool University and Cardiff Business School); Andrew Sentance (Confederation of British Industry)
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• See, for example, the Treasury Select Committee Report . “Accountability of the Bank of England”. This is available on the WWW at: http://www.parliament.uk/commons/sel-com/treahonne.htm
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• A description of the economic research carried out by the Bank of England (which is “largely directed at the maintenance and development of a quarterly model . 1990 . Economic Modelling at the Bank of England Edited by: Henry , SGB and Patterson , KD . London : Chapman and Hall . which is at the centre of the production and forecasts and advice on macroeconomic policy issues”) can be found in (: quotation at page xi
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• Evans , Robert . 1997 . Social Studies of Science , 27 ( 3 ) : 395 – 348 . “Soothsaying or science? falsification, uncertainty and social change in macroeconomic modelling”
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• Defensible as economics, though not politics, as Chancellor Lamont found out .
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• MacKenzie , Donald N . 1990 . Inventing Accuracy: A Historical Sociology of Nuclear Missile Guidance Cambridge , Mass : MIT Press .
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• Collins , HM . 1985 . Changing Order: Replication and Induction in Scientific Practice London : Sage . See:
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• with Robert Evans , Compare and Shackley , Simon . “Conference report: ESRC workshop (10–11 April 1997 on The Use of Models in Policy: Towards a Comparison and Evaluation of Experiences” . Technoscience , 10 ( 3 ) 7 – 10 . Fall 1997
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• This sort of approach is more developed in the Technology Assessment literature . Edited by: Rip . See for example:, reference 2
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• The Panel's reports were made available for other user groups by subscription and later the WWW .
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• Wren-Lewis , Simon . 1992 . “Macroeconomic theory and UK econometric models: another failed partnership?”, Discussion Paper no 9, International Centre for Macroeconomic Modelling, University of Strathclyde
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• Evans , Robert . see reference 33
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• This is a particularly dear example of what Harry Collins has called the “Experimenters Regress” . which arises when experimenters are unable to decide when an experiment has worked, because they cannot agree on what the correct result should be. See H M Collins, reference 36
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