CARRYING FORWARD THE TINBERGEN INITIATIVE IN MACROECONOMETRICS

Abstract

This chapter highlights the Tinbergen initiative in macroeconometrics. A primary objective of Keynesian economics was to explain the main economic magnitudes in the near term for use in contemporary policy formation. That objective makes heavy demands on forecasting, although this may be denied by many Keynesian economists. His work built on the contributions of J.M. Keynes to macroeconomic theory and Simon Kuznets to the design of accounts to measure national income and product. Wassily Leontief's input–output models helped to extend the effort to many industrial sectors. Other economic theorists and statisticians also made important contributions in the 1930s and 1940s. A breakthrough has been the arrival of the electronic computer. Many seemingly impossible tasks are now quite easy. Among the many approaches to economic forecasting, policy analysis, and cyclical analysis, macroeconometric modeling stands out as the most accurate and insightful. The present thrust of model building has extended beyond Professor Tinbergen's original work at the national level. World models of economic interdependence are now operational in many international centers.