Econometrics as a Pluralistic Scientific Tool for Economic Planning: On Lawrence R. Klein's Econometrics

Lawrence R. Klein (1920-2013) played a major role in the construction and in the further dissemination of econometrics from the 1940s. Considered as one of the main developers and practitioners of macroeconometrics, Klein's influence is reflected in his application of econometric modelling " to the analysis of economic fluctuations and economic policies " for which he was awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 1980. The purpose of this paper is to give an account of Klein's image of econometrics focusing on his early period as an econometrician (1944-1950), and more specifically on his period as a Cowlesman (1944-1947). Independently of how short this period might appear, it contains a set of fundamental publications and events, which were decisive for Klein's conception of econometrics, and which formed Klein's unique way of doing econometrics. At least four features are worth mentioning, which characterise this uniqueness. First, Klein was the only Cowlesman who carried on the macroeconometric programme beyond the 1940s, even if the Cowles had already abandoned it. Second, his pluralistic approach in terms of economic theory allowed him not only to use the Walrasian framework appraised by the Cowles Commission and especially by T.C. Koopmans, but also the Marxian and Keynesian frameworks, enriching the process of model specification and motivating economists of different stripes to make use of the nascent econometrics. Third, Klein differentiated himself from the rigid methodology praised at Cowles; while the latter promoted the use of highly sophisticated methods of estimation, Klein was convinced that institutional reality and economic intuition would contribute more to econometrics than the sophistication of these statistical techniques. Last but not least, Klein never gave up what he thought was the political objective of econometrics: economic planning and social reform

Macroeconometric modeling as a "photographic description of reality" or as an "engine for the discovery of concrete truth" ? Friedman and Klein on statistical illusions

This paper discusses a longstanding debate between two empirical approaches to macroeconomics: the econometrics program represented by Lawrence R. Klein, and the statistical economics program represented by Milton Friedman. I argue that the differences between these two approaches do not consist in the use of different statistical methods, economic theories or political ideas. Rather, these differences are deeply rooted in methodological principles and modeling strategies inspired by the works of Léon Walras and Alfred Marshall, which go further than the standard opposition of general vs. partial equilibrium. While Klein’s Walrasian approach necessarily considers the economy as a whole, despite the economist’s inability to observe or understand the system in all its complexity, Friedman’s Marshallian approach takes into account this inability and considers that economic models should be perceived as a way to construct systems of thought based on the observation of specific and smaller parts of the economy

A critical regard to the history of econometrics

Econometrics has become such an obvious, objective - almost natural - tool that economists often forget that it has a history of its own, a complex and sometimes problematic history. Two works - Morgan (1990) and Qin (1993) - constitute the Received View of the history of econometrics. Basing our analysis on Leo Corry's methodological (and historiographical) framework of image and body of knowledge, the main purpose of this dissertation is to provide a critical account of the Received View. Our main criticism is that historians of econometrics have a particular image of knowledge that stems from within econometrics itself, generating a problem of reflexivity. This means that historians of econometrics would evaluate econometrics and its history from an econometrician point of view, determining very specific criteria of what should be considered as "true", what should be studied or what should be the questions that the scientific community should ask. This reflexive vision has conducted the Received View to write an internalist and funnel-shaped version of the History of Econometrics, presenting it as a lineal process progressing towards the best possible solution: Structural Econometrics and Haavelmo's Probability Approach in Econometrics (1944). The present work suggests that a new history of econometrics is needed. A new history that would overcome the reflexivity problem yielding a certainly messier and convoluted but also richer vision of econometrics' evolution, rather than the lineal path towards progress presented by the Received View

Reacting to the Lucas critique: The Keynesians’ replies

In 1976, Robert Lucas explicitly criticized Keynesian macroeconometric models for their inability to correctly predict the effects of alternative economic policies. Today, most contemporary macroeconomists and some historians of economics consider that Lucas’s critique led forcefully to animmediate disqualification of the Keynesian macroeconometric approach. This narrative is based on the interpretation of the Lucas critique as a fundamental principle for economic reasoning that was (and still is) logically unquestionable. We consider that this narrative is problematic both in terms of historiography and the effects that it can have in the field as a way of assigning importance and credit to particular macroeconomists. Indeed, the point of view of the Keynesian economists is missing despite the fact that they were the target of Lucas’s paper and that throughout the 1970s and 1980s they produced a fierce reaction against it. In this article we analyze the reactions by a broad set of authors (which we label “Keynesians”) that disputed the relevance of the critique. In spite of their diversity in methodological, theoretical, and policy issues, these reactions were characterized by their common questioning of the empirical and practical relevance of the Lucas critique

La construction d'un système statistique : Le cas des statistiques du commerce intérieur en France de 1945 à la fin des années 1960

URL des Documents de travail : https://centredeconomiesorbonne.univ-paris1.fr/documents-de-travail-du-ces/Documents de travail du Centre d'Economie de la Sorbonne 2016.59 - ISSN : 1955-611XThis paper studies the construction of quantitative data for the French national trade between 1945 and the 1970s. Our purpose is to provide an account of the establishment of a statistical system specific to this economic sector. By statistical system we imply the apparatus and devices that were put together in order to produce statistical information, in particular political willpower, the professional and institutional actors involved, the accounting frameworks, and the tools and classifications used. In the first section we provide an overview of the transformations of French trade during the period studied, while in the second section We examine the production of statistical data for this sector. In the third section, we study the conditions of emergence of these data, examining the role that particular merchants and political regimes might have had to provoke biases, and questioning the possible political use of these statistics. We show that the construction of a statistical system is not exclusively an institutional or a technical matter, but also that political decisions and particular interests play an important role in the construction of such a system.Cet article examine l'élaboration de données quantitatives pour le commerce intérieur entre 1945 et les années 1970 en France. L'objectif est de documenter la mise en place d'un système statistique spécifique à ce secteur économique. Par système statistique, on désigne l'ensemble des dispositifs mobilisés afin de produire de l'information statistique, tel que la volonté politique, les acteurs professionnels et institutionnels impliqués, les cadres de comptage, les outils utilisés et la nomenclature retenue. La première partie de l'article propose un aperçu des transformations du commerce au cours de la période étudiée, et la seconde partie étudie la production de données statistiques pour le secteur. La troisième partie s'intéresse aux condition d'élaboration de ces statistiques ; elle examine le rôle de certains commerçants, interroge les biais des données en fonction du régime de production et s'intéresse à leur usage politique. Cet article illustre bien que la construction d'un système statistique n'est pas seulement une question technique et institutionnelle, mais que les décisions politiques et les intérêts particuliers y jouent un rôle très important

Econometrics as a Pluralistic Scientific Tool for Economic Planning: On Lawrence R. Klein's Econometrics

URL des Documents de travail : http://centredeconomiesorbonne.univ-paris1.fr/documents-de-travail/Documents de travail du Centre d'Economie de la Sorbonne 2014.80 - ISSN : 1955-611XLawrence R. Klein (1920-2013) played a major role in the construction and in the further dissemination of econometrics from the 1940s. Considered as one the main developers and practitioners of macroeconometrics, Klein's influence is reflected in his application of econometric modelling “to the analysis of economic fluctuations and economic policies” for which he was awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel in 1980. The purpose of this paper is to give an account of Klein's image of econometrics focusing on his early period as an econometrician (1944-1950), and more specifically on his period as a Cowlesman (1944-1947). Independently of how short this period might appear, it contains a set of fundamental publications and events, which were decisive for Klein's conception of econometrics, and which formed Klein's unique way of doing econometrics. At least four features are worth mentioning, which characterise this uniqueness. First, Klein was the only Cowlesman who carried on the macroeconometric programme beyond the 1940s, even if the Cowles had already abandoned it. Second, his pluralistic approach in terms of economic theory allowed him not only to use the Walrasian framework appraised by the Cowles Commission and especially by T.C. Koopmans, but also the Marxian and Keynesian frameworks, enriching the process of model specification and motivating economists of different stripes to make use of the nascent econometrics. Third, Klein differentiated himself from the rigid methodology praised at Cowles; while the latter promoted the use of highly sophisticated methods of estimation, Klein was convinced that institutional reality and economic intuition would contribute more to econometrics than the sophistication of these statistical techniques. Last but not least, Klein never gave up what he thought was the political objective of econometrics: economic planning and social reform

Friedman, Becker y Klein y las ilusiones estadísticas: desarrollando criterios para juzgar el desempeño de los modelos macro-econométricos de gran escala

En febrero de 1957, Milton Friedman y Gary Becker (1957) acusaron a los modelizadores keynesianos de caer en una ilusión estadística basada en la inadecuada utilización de la función de consumo en sus modelos y su inhabilidad de producir predicciones acertadas del nivel futuro de ingreso. Sin embargo, a pesar de sus críticas, Friedman y Becker (1957) inconscientemente terminaron contribuyendo de forma importante a la modelización macroeconométrica keynesiana, anticipando, por un lado, la diseminación de un método para la evaluación del desempeño de los modelos keynesianos y, por otro lado, el rol que la dinámica jugaría en la construcción de este tipo de modelos. El método anticipado fue la simulación completa de modelos, más tarde convertida en la rutinaria simulación dinámica computarizada. Este artículo cuenta la historia de las discusiones tempranas sobre la evaluación del desempeño de los modelos macroeconométricos keynesianos y la forma en que las ideas sobre la dinámica entraron en la discusión de la modelización macroeconométrica