Econometric Business Cycle Research
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Also published in: G. Haberler (Ed.), Readings in Business Cycles Theory, Blakiston, Philadelphia, 1944, pp. 61-86, in: Adrian C. Darnell (Ed.), The History of Econometrics, Vol. 2, Edward Elgar, Aldershot, 1994, pp. 230-247 and in: David F. Hendry and Mary S. Morgan (Eds), The Foundations of Econometric Analysis, Cambridge University Press, New York, 1995, pp. 399-406
In recent years various attempts have been made to construct econometric models of the business cycle mechanism.l Some of them are very simple, others more complicated ; some pay more attention to the mathematicoeconomic set-up, others give special care to a statistical determination of the coefficients involved. The latter group is notable for, in particular, the model by Radice of the post-war United Kingdom that by De Wolff of post-war Sweden and my own attempts for the Netherlands and the United States. As far as I am myself concerned, a " model under construction " is that for the United Kingdom between 1870 and 1914. An essential feature of an econometric model is, I think, that it combines mathematico-economic treatment with statistical measurement of some type. The 'ultimate objectives of these models are the same as of any system of business cycle research, viz. (i) to explain historical events ; (ii) to forecast future developments under certain conditions ; and (iii) to indicate the probable consequences of measures of business cycle policy. Within the framework of these ultimate objectives, one may distinguish more proximate objectives. These may be separately stated for the economic and the statistical parts of the task.
- business cycle theory