Knut Wicksell, A Pioneer of Econometrics

Abstract

THE progress of economic science from the Tableau e6conomique of Quesnay up to the Synthetic Economics of Moore may be symbolized by a tree gradually growing higher. The tree trunk is strongly rooted and its nature was determined by the place where it grew. Signs of a fresh orientation have become increasingly frequent during the last ten years, but, as yet, we do not see clearly which method to follow to unite the economics of yesterday to that of tomorrow. In the meantime, we can observe how minute inquiries into economic cycles, the laborious statistical determination of demand curves, and similar studies, are constantly opening up new perspectives of the fundamental economic problems. The classical theory was essentially that of Ricardo, and any effort to build up a theory conforming to modern economic life and modern scientific conceptions must, therefore, be in conflict with the Ricardian edifice. The classical, Ricardian theory is an economic theory of static equilibrium. Any attempt to look for assumptions more true to economic life will more or less become an economic theory of Time. It is a remarkable fact that most economists who have attempted an exhaustive analysis of these economic factors, in which time is necessarily involved, have found themselves at variance with the classical economic theory of Equilibrium. Two names must be mentioned in this connection: Stanley Jevons and Knut Wicksell. In this short account of the latter I shall take up only a single aspect of his work, and try to show why and how he may be called a pioneer of econometrics. With regard to Wicksell's life and work in general, I shall content myself with the brief statement that he was born in 1851 and died in 1926, and that his three principal works were published at the age of 42 to 47 years, that is to say, between 1893 and 1898: Ueber Wert, Kapital und Rente (Jena, 1893), Finanztheoretische Untersuchungen (Jena, 1896), and Geldzins und Giuterpreise (Jena, 1898). He was a professor of Political Economy at Lund University, Sweden, from 1900 to 1916, and two volumes of Lectures appeared during this period, one of which is a theory of money (1906), and the other a theory of value based on the principle of marginal utility (1913). A synopsis of Wicksell's econometric works can be given under the following five heads: 113