Jan Tinbergen Research Articles

A micro foundational episode of the early history of macroeconomics: a 1932 debate on Walrasian economics and multiple equilibria

This paper documents an early fork in the development of macroeconomics, by examining a debate between the Dutch economists Jan Tinbergen and Johan Koopmans. In a 1932 paper, Tinbergen argued that two firms could be stuck in a “bad” equilibrium in the absence of a coordinated action to incrase employment. Koopmans replied with a paper demonstrating that multiple equilibria in an exchange economy could not be ranked on the basis of their productive efficiency. This debate contributed to a larger turn away from dynamising the general equilibrium model, towards the new field of macrodynamics, with long-ranging consequences for the field.

Jan Tinbergen and the Limits of Expertise

As part of a book symposium on his Jan Tinbergen (1903–1994) and the Rise of Economic Expertise (2021), Erwin Dekker responds to commentaries by Mariana Mortágua and Francisco Louçã, Thomas Kayzel, Jon Murphy, Michele Alacevich, Mauro Boianovsky, and William Peden.

COBWEB THEORY, MARKET STABILITY, AND PRICE EXPECTATIONS

Contributors to cobweb theory include many leading economists of the twentieth century. From early beginnings in 1930, cobweb theory played a key role in evolving perceptions of market stability arising from recursive linear models with endogenous dynamics. The focal point of this evolution in cobweb theory is the transition from naive to adaptive to rational price expectations. After a review of the prehistory, this paper examines the first wave of linear cobweb theory initiated by Jan Tinbergen, Henry Schultz, and Umberto Ricci and proceeds to consider the evolution of price expectations in the second wave of cobweb models associated with endogenous cycles in commodity markets. The role of modern cobweb theory in discussions about the stability of market equilibrium and the connection to processes with rational expectations is assessed.

Ambiguity of Superiority and Authority

As part of a book symposium on Erwin Dekker's Jan Tinbergen (1903–1994) and the Rise of Economic Expertise (2021), Jon Murphy reflects on Tinbergen's and Keynes's differing views on the role of experts underlying the Tinbergen-Keynes debate.

Reading Tinbergen Through the Lens of Max Weber

As part of a book symposium on Erwin Dekker's Jan Tinbergen (1903–1994) and the Rise of Economic Expertise (2021), Thomas Kayzel reflects on Tinbergen being the 'ideal Weberian scientist' while also combining politics with science.

Social Engineers Changing the World

As part of a book symposium on Erwin Dekker's Jan Tinbergen (1903–1994) and the Rise of Economic Expertise (2021), Mariana Mortágua and Francisco Louçã reflect on the context of Tinbergen’s evolution and, more specifically, his change(s) of focus on how to engineer social progress compared to that of the closest of his colleagues, Ragnar Frisch.

Probability and Statistics in the Tinbergen-Keynes Debates

As part of a book symposium on Erwin Dekker's Jan Tinbergen (1903–1994) and the Rise of Economic Expertise (2021), William Peden reflects on shared views on the objectivity and nature of statistics between Tinbergen and Keynes underlying the Tinbergen-Keynes debates.

Jan Tinbergen’s Fallacy

As part of a book symposium on Erwin Dekker's Jan Tinbergen (1903–1994) and the Rise of Economic Expertise (2021), Michele Alacevich reflects on Tinbergen's vision of economic expertise as a-political.

Laws and Models at the League of Nations: Econometrics in Geneva, 1930–1939

Economists began using models between the First and Second World Wars. The first econometric model of the United States was produced by Jan Tinbergen at the League of Nations. Modeling was a methodological solution to the political problems of the interwar period. International norms of cooperation and governance had to be reconciled with new demands for national autonomy in economic affairs, with a new understanding of the nation-state's capacity to make and remake the economy. Models possessed a composite, ambiguous character that appealed to both nationalist and internationalist sympathies. Models combined fact and theory, the particular and the general, the local and the global. The practice of modeling contrasted with and largely displaced an older, universalizing discourse of scientific law, predominant in the nineteenth century. Modeling reflected the nation-state's ascendance as a legitimate arbiter of economic policy, situated uneasily within a regime of international norms and institutions.

Moving dynamics beyond business cycles: Jan Tinbergen’s first macrodynamic model (1934–1936)

As soon as 1932, Jan Tinbergen proposed an explanation of the Great Depression based on a specific treatment of unstable processes and multiple equilibria. After his involvement in the early meetings of the Econometric Society, he worked on different dynamic models accounting for this instability. In 1934, he built a macrodynamic model generating new types of economic movements that did not return to a stationary state. This led him in 1936 to consider the possibility of having two equilibria, with damped or self-sustained cycles around the high equilibrium and a collapse around the low equilibrium. Tinbergen saw these models, with reference to Irving Fisher’s 1933 paper, as a way to interpret the potential of a crisis to trigger the collapse of the economy. In the end, it turns out that Tinbergen managed to extend the perspective for the study of the business cycle mechanism to non cyclical behaviours which, strikingly, remains almost totally ignored in most histories of macroeconomics and econometrics.

Navigating Determinants of India’s Business Relations with GCC Countries : Evidence from the Gravity Model Theory

This research paper examined the determinants of India’s business relations with Gulf Cooperation Council countries from 1995 – 2019 using the gravity model theory based on the theoretical underpinning of Nobel Laureate Jan Tinbergen. The study focused on identifying variables that influenced India’s trade with GCC countries along with predicting the trade potential. The empirical findings were obtained through the random-effects model and fixed effects model. The Hausman test suggested that the random-effects model was more appropriate than the fixed effect model. The findings of the study stated that the GDP of India, GDP of Gulf countries, the population of Gulf countries, India’s economic integration with the world, India’s economic integration with GCC, trading affinity, and diaspora had a positive and significant impact on India’s bilateral trade relations with GCC, while foreign direct investment had a positive and insignificant impact. The analysis further revealed that distance, terms of trade, exchange rate, and language had a negative and significant effect on bilateral trade relations. The market size of the host country had a negative but insignificant impact on India’s trade with GCC. India has trade potential with Bahrain and Kuwait, while India has overtraded other GCC countries. The negative value of the coefficient of convergence of actual trade and potential trade indicated a lack of equilibrium in India’s estimated trade flows with GCC countries, but the insignificant p-value did not support the argument. A strong economic tie with GCC will boost the Indian industry and offer a strategic edge internationally.

An “Ordo-Thinker” on the Left: Jan Tinbergen on the National and International Economic Order

Abstract Thinking in terms of order is believed to be a feature of several liberal economic schools, most famously the ordoliberal school. This article demonstrates that the work of Jan Tinbergen provides a good example of “thinking in orders” on the left. His analysis of the national and international economic system is conducted in terms of order, and he believed that economic stability was primarily the result of the institutional order of an economy. This article shows that these ideas were shaped in discussions over the Plan of Labor (comparable to the New Deal) in the Netherlands as well as during his period in Geneva at the League of Nations. Crucial in Tinbergen's work on order is the optimal set of institutions, a so-called optimal order, that specifies the right level of centralization and decentralization in economic decision making. This focus on order is an important move away from the equilibrium-focused work on econometric studies of the business cycle theories of the 1930s. By showing the importance of the discussions in Geneva for Tinbergen's work, the article also problematizes Slobodian's recent argument that the Geneva school was neoliberal in nature. Instead, we demonstrate that it is better understood as internationalist and bipartisan.

Philippines - ASEAN Trade Potential: An Application of Intra-ASEAN Augmented Gravity Model

ASEAN has made great progress toward economic unification and free trade in the area. With the objectives of creating a unified market, expanding intra-ASEAN trade and investment, and attracting foreign investment, ASEAN has been a cornerstone of the Philippines' diplomatic and commercial policies, which is evident in the Philippine policy of creating a more prosperous, secure, and free Southeast Asia through a variety of measures in politics, economics, international trade, and functional cooperation. The researchers revisit Jan Tinbergen’s Gravity Theory by using the adjusted augmented gravity model in a panel data of bilateral trade flows between the Philippines and the ASEAN member countries from 1995 to 2019 at the national level using the Poisson-Pseudo Maximum Likelihood estimator and Ordinary Least Squares, both with fixed effects, in a model-comparison approach. Using the fitted trade values from the PPML estimates and the standardized real values of exports and imports of the trading countries through the index of Average Standardized Trade Potential, it was found that the bilateral trade between the Philippines and other ASEAN member countries has been efficiently performing over the past decades, except for Brunei Darussalam, Cambodia, Lao PDR, and Myanmar. Hence, a dynamic and more inclusive approach should be adopted by both the Philippines and its trading partners to reach the optimum bilateral trade potential in the nearest future.

Travelers' Tales: Their Values and Virtues

Travelers' Tales: Their Values and Virtues

Tinbergen in Turkey: Exporting Institutions

AbstractThis paper analyzes the political-economic context of Jan Tinbergen's work as development planning expert in Turkey between 1960 and 1966. Tinbergen was brought in against the will of the Turkish government in early 1960, at the urging of the OECD and the IMF. After the military coup later that year he played a key role in the founding of the State Planning Organization as well as its institutional design. The organization was meant to represent neutral expertise above political parties, along the lines of a similar planning organization in the Netherlands. This article argues that from the very start the organization was a contested and politicized institution within Turkish politics, as well as within the international political context. It traces Tinbergen's only partially successful effort to navigate these tensions and create some autonomy for the organization. The article concludes with some reflections on how Tinbergen learned from his experiences in Turkey.

Does an Empirical Economic Relation Have a Life?

Does an Empirical Economic Relation Have a Life?

Book Review on Prof. Dr. Erwin Dekker (2021). Jan Tinbergen (1903-1994) and the Rise of Economic Expertise

Jan Tinbergen was the first Nobel prize winner in economics. He shared that honor with Ragnar Frisch. The focus of their research that earned the Nobel prize, was “pioneering work in the field of econometric, the field at the intersection of statistics, mathematics, and economic theory” (p. 125). Erwin Dekker, a cultural economist provides this very comprehensive book about Jan Tinbergen. Dekker is on the faculty of Erasmus University, in Rotterdam, Netherlands.

Застосування гравітаційних моделей для аналізу торгівлі між Україною та ЄС

This article presents the application of gravitation models in bilateral trade in agricultural products such as wheat, corn and barley between Ukraine and the European Union. The power of influence of factors related to the process of globalization on the volume of trade flows of agricultural products between countries is shown. These determinants were considered as an alternative to the physical distance between countries in the equation of gravity proposed by Jan Tinbergen. Trade relations between the EU and Ukraine are of interest in influencing the functioning of the entire sector of the economy. The weight of these ties is especially important if we take into account such sensitive markets as, e. g., market of agricultural products. In this case, trade and its results are affected by complex agricultural policies, including diversified support instruments or rules applicable in the EU and in Ukraine. Disparities in the scale of financial support for individual markets and their impact on the level of domestic prices have led to a diversification of the impact on trade turnover. This phenomenon also explains the lack of mutual attractiveness of economies in terms of trade flows. In the traditional gravitation model, the value of trade between any two countries is proportional (all other things being equal) to the GDP gain of these countries and inversely proportional to the distance separating them. In today’s global economy, physical distance between countries is no longer such a significant brake on international trade, and thus the distance in the gravitation model can be understood as the degree of similarity between economies trading with each other.

The importance of multiple equilibria for economic policy in Jan Tinbergen’s early works

This article provides a comprehensive view of Tinbergen’s macrodynamic models developed during the 1930s and early 1940s, showing how the economist’s concerns evolved from problems of instability to the idea of reaching higher positions of equilibria. Tinbergen built these ideas in the framework of nonlinear models, which he used to shed a new light on several policy problems: wage changes, government expenditure and its relation to pump-priming, and the regulation of purchasing power. This work on multiple equilibria was complementary to the macroeconometric models developed in the late 1930s, where linearity was justified by the assumption of small shocks.

The Case against “Indirect” Statistical Inference

How to infer from uncontrolled data the numerical values of the parameters of an econometric model? In interwar econometrics, this problem of statistical induction was tackled in various ways. Wassily Leontief’s inter-industry method offers a case study of a nonprobabilistic approach to this problem of the statistical determination of a model’s parameters. Leontief was an outspoken critic of the probabilistic approach to econometrics and presented his interindustry device as an alternative. Focusing on his book published in 1941, The Structure of American Economy, 1929–1929, which gathered a decade of works since 1932, I show how it offered an original answer to the inferential problem of the parameters’ statistical determination. Between what Jan Tinbergen called, in the same period, the “historical method,” based on regression techniques applied to time series, and the “structural method,” relying on direct measures from cross-sectional data and controlled experiments, Leontief engaged in the latter in an ambitious project of “expansion of the field of direct observation.” This laid the statistical foundations of what he called the “direct induction” approach to empirical modeling.