Book contents
- Frontmatter
- Contents
- Preface
- Acknowledgements
- Introduction
- Bibliography
- I The Emerging Role of Econometrics in Economics
- II Early Time-Series Analysis
- III Applied Econometrics and the Identification Problem
- IV The Evolution of Statistical Thinking in Econometrics
- V Dynamic Models
- VI The Tinbergen Debate
- VII Structure and Simultaneity
- 38 Economic Interdependence and Statistical Analysis (in Studies in Mathematical Economics and Econometrics – In Memory of Henry Schultz, O. Lange et al. (eds.), University of Chicago Press, Chicago, 1942, pp. 135–50)
- 39 The Probability Approach in Econometrics (Supplement to Econometrica, vol. 12, 1944, pp. 12–17, 26–31, 33–9)
- 40 The Statistical Implications of a System of Simultaneous Equations (Econometrica, vol. 11, 1943, pp. 1–12)
- 41 Statistical Estimation of Economic Relationships (read to the International Statistical Conferences, Washington, 1947. Proceedings published as a supplement to Econometrica, vol. 17, 1949, pp. 9–21)
- VIII The Probabilistic Revolution
- IX Exogeneity
- Index
38 - Economic Interdependence and Statistical Analysis (in Studies in Mathematical Economics and Econometrics – In Memory of Henry Schultz, O. Lange et al. (eds.), University of Chicago Press, Chicago, 1942, pp. 135–50)
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- Preface
- Acknowledgements
- Introduction
- Bibliography
- I The Emerging Role of Econometrics in Economics
- II Early Time-Series Analysis
- III Applied Econometrics and the Identification Problem
- IV The Evolution of Statistical Thinking in Econometrics
- V Dynamic Models
- VI The Tinbergen Debate
- VII Structure and Simultaneity
- 38 Economic Interdependence and Statistical Analysis (in Studies in Mathematical Economics and Econometrics – In Memory of Henry Schultz, O. Lange et al. (eds.), University of Chicago Press, Chicago, 1942, pp. 135–50)
- 39 The Probability Approach in Econometrics (Supplement to Econometrica, vol. 12, 1944, pp. 12–17, 26–31, 33–9)
- 40 The Statistical Implications of a System of Simultaneous Equations (Econometrica, vol. 11, 1943, pp. 1–12)
- 41 Statistical Estimation of Economic Relationships (read to the International Statistical Conferences, Washington, 1947. Proceedings published as a supplement to Econometrica, vol. 17, 1949, pp. 9–21)
- VIII The Probabilistic Revolution
- IX Exogeneity
- Index
Summary
Conditions of Inductive Study
Economic equations derived from experience, like Henry Schultz's demand curves for agricultural commodities, have, or strive to attain, this practical importance: they should make it possible to estimate the values which one of the variables, the ‘predictand’ (e.g., demand), will assume when other variables, the ‘predictors’ (e.g., income and price), are made to assume given values. There is, however, a proviso, silently admitted in this as in any other inductive work, whether quantitative or not. If we use the word ‘magnitude’ in a broad sense to include characteristics which can assume the values ‘presence’ or ‘absence’ but which cannot be measured; and if we use the words ‘observation period’ and ‘prediction period’ so as to include observations and predictions not only over time but, for example, within and between geographical areas (or any other samples), then we can formulate the proviso as follows.
Let y be the predictand, let x1, … xn be used by the investigator as predictors, and let a1, a2 … denote ‘all other magnitudes in the world’; some, but not all, of the a's enter the proposed relationship explicitly and are called its parameters. Then every a either must remain constant or its variations must have no significant influence on the value of y. This must be true both during the observation period and during the prediction period.
If the condition is not fulfilled during the observation period, the relationship between y and the x's is a ‘spurious’ one.
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- The Foundations of Econometric Analysis , pp. 427 - 439Publisher: Cambridge University PressPrint publication year: 1995
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