Answer to Question #173869 in Macroeconomics for innocent kampumba

Question

b. Briefly discuss the distinctions among mathematical economics, statistics and econometrics.

c. One of the most influential econometricians of the late 1920s and early 1930s was the  Norwegian economist Ragnar Frisch (1895-1973). Frisch’s primary work is found in his  book Statistical Confluence Analysis by Means of Complete Regression Systems (1934). 

Kindly explain his main arguments in his book as he worked together with his best friend,  Jan Tinbergen (1903-1994). d. Trygve Haavelmo (1911- ), a Norwegian economist who studied with Ragnar Frisch, has 

been credited with introducing the probabilistic approach to econometrics and to economic  theory. Briefly explain his arguments for probabilistic approach.

Answer 1

b. Mathematical economics, unlike econometrics, does not study the degree of validity of one or another type of corresponding dependence (for example, the fact that the amount of consumption is a linearly increasing function of income). Mathematical economics solves the problem of studying the question of the existence of model solutions, the conditions for their stationarity, not negativity or the presence of other properties. These actions, as in mathematics, are performed by deductively obtaining consequences (for example, a theorem) from a priori assumptions (axioms). Econometrics, in turn, offers a set of methods for analyzing the relationships of various economic indicators (factors), relying on real statistical data and using the apparatus of the theory of probability and mathematical statistics.

c.Frisch's works on the theory of production certainly include the characteristics of production functions through the use of isoquants or combinations of costs that bring an increase in output. In his writings, he strove for quantitative analysis and statistical testing of his hypotheses, so that these statistical methods of analysis were based on rigorous economic theory. Some of these ideas on the theory of production, he published in 1935 in the article "The principle of substitutability: an example of its application in the production of chocolate."

In his first important study on quantitative analysis, Correlation and Scatter of Statistical Variables (Correlation and Scatter of Statistical Variables, 1929), the execution of interdependent numbers, such as in the case of the problem of supply and demand for goods and services. Constantly emphasizes the importance of the factor of time and changes over time. As an innovator in the creation of dynamic models of analysis, he influenced subsequent work in this area, in particular the work of Paul Samuelson "Foundations of Economic Analysis" ("Foundations of Economic Analysis", 1947).