ABSTRACT
In 1959 and 1960, when the Committee on Economic Stability of the Social Science Research Council was planning a project for constructing an econometric model of the United States on a cooperative basis, Geoffrey Moore put forward some ideas that have proved to be unforgettable. The interrelationships of an econometric model are often specified according to abstract economic theory. Principles of optimization are used, together with market clearing, accounting balance, institutional restrictions, and the economic interpretation of the laws of science and technology. The variables of typical equations in econometric models fall into these categories: endogenous, exogenous, random errors. In the cyclical macroeconometric models there is rarely fine slicing of sectors. Distinctions between agriculture, energy, manufacturing, and various service sectors are frequently made, many of which are combined with macro sectors to generate factor income and final demand. In this way, high frequency monthly indicators are combined with low-frequency quarterly model magnitudes for combined use.
