The Brookings Model Volume: A Review Article
T HE volume under review is the result of the collective effort of twenty-five economists. It consists of a set of chapters each representing a building block for a large scale model of the United States economy, and an attempt at the end of the volume to put all these blocks together into one coherent and potentially useful structure. To review a volume which ranges so widely over almost all aspects of economics, the reviewer himself would have to be a committee. To review the final model adequately, one would need computer and programing resources which are beyond anything currently available to individuals. I shall, therefore, concentrate on reviewing the volume rather than the final model produced by the Brookings-SSRC group. This may be also desirable, since a final version of the model which the authors would stand by and take responsibility for may not yet exist.' One of the original ideas which led to this volume was that by parceling out different sectors and aspects of the economy to different one could integrate all of the best available theoretical and empirical knowledge into the model and thereby improve it greatly. To a great degree, therefore, the final quality of the model rests on the success with which the individual sectors were specified and estimated. Ideally, the job of a specialist would consist of first surveying the theoretical literature in a field (at the level of an AER or EJ review article), then surveying the associated quantitative-econometric knowledge and evidence, running a race between all the plausible econometric models which have not been eliminated on a priori grounds earlier, and submitting the winner to the final model. Taken seriously, this is a task of very great magnitude. By using the model builders implicitly assumed that much of this has already been accomplished by the specialists in the process of becoming specialists. This may have been a somewhat too optimistic assessment both of the processes of education in economics and the state of research in most of its subfields. Nevertheless, it must be assumed that each of the pieces would try to represent as well as possible the current state of quantitative economic knowledge about the various sectors of the economy. To be useful in constructing an econometric model of the whole economy, one would hope that each of the proffered relationships would be based as much as possible on existing (correct! ) economic theory (which derives the implications of purposive behavior of consumers, producers, and other economic actors from the interaction of their tastes and the constraints facing them) and will reflect those structural and institutional aspects of the economy which remain relatively stable from period to period and not the accidental confluence of different time series. It is in this light that I will examine below the sixteen individual chapters which constitute the bulk of the book.2
- DOI
- 10.2307/1926197
- Volume
- 50 (2)
- Pages
- 215
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