‘Autonomy’ in econometics

24 Aug, 2017 at 22:50 | Posted in Statistics & Econometrics | 2 Comments

The point of the discussion, of course, has to do with where Koopmans thinks we should look for “autonomous behaviour relations”. He appeals to experience but in a somewhat oblique manner. He refers to the Harvard barometer “to show that relationships between economic variables … not traced to underlying behaviour equations are unreliable as instruments for prediction” … His argument would have been more effectively put had he been able to give instances of relationships that have been “traced to underlying behaviour equations” and that have been reliable instruments for prediction. He did not do this, and I know of no conclusive case that he could draw upon. There are of course cases of economic models that he could have mentioned as having been unreliable predictors. But these latter instances demonstrate no more than the failure of Harvard barometer: all were presumably built upon relations that were more or less unstable in time. devoidThe meaning conveyed, we may suppose, by the term “fundamental autonomous relation” is a relation stable in time and not drawn as an inference from combinations of other relations. The discovery of such relations suitable for the prediction procedure that Koopmans has in mind has yet to be publicly presented, and the phrase “underlying behaviour equation” is left utterly devoid of content.

Rutledge Vining

Guess Robert Lucas didn’t read Vining …

2 Comments

  1. I would like to know more of the story — if there is one — of the Harvard Barometer. Google has given me very little, beyond that some Harvard professors tried to run a kind of business forecasting service in the 1920’s. (I suppose like so many businesses in the 1920s, it did not end well.)

    Comment by Bruce Wilder— 26 Aug, 2017 #

  2. “He refers to the Harvard barometer “to show that relationships between economic variables … not traced to underlying behaviour equations are unreliable as instruments for prediction” … His argument would have been more effectively put had he been able to give instances of relationships that have been “traced to underlying behaviour equations” and that have been reliable instruments for prediction.”

    Always be wary of economists who use the verb “show”. Usually they dust of a model from the shelf which apparently “shows” what happens. This is just laziness. They should be going through the primary (quantitative and non-quantitative) evidence to find out what really did happen. A good example of this type of exercise is Krugman’s 1998 paper where he does not give us the real causes of the liquidity trap – only that it can be “shown” by the ISLM and other such models.

    These models have the least interesting things to say about what we need to know, if they say anything at all.

    Comment by Nanikore— 25 Aug, 2017 #


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