25 Traditional methods of macroeconometrics
Henning Bunzel
Early macroeconometric models at the Cowles Commission
Macroeconomic models are designed to describe the operations of the entire economy, such as growth in national production, unemployment, wage changes and inflation.
The macroeconometric approach was developed by the Cowles Commission, inspired by the debate between Keynes and Tinbergen about the use of estimated macroeconomic models. Tinbergen (1937) estimated the first macroeconometric model to explain the business cycle. The work used economic theory to design stochastic, behaviourally dynamic equations, which could be estimated and tested against the data. The work was assigned by the League of ...
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