Sections

Research

BPEA | 1982 No. 1

Policy Analysis with Econometric Models

Christopher A. Sims
CAS
Christopher A. Sims
Discussants: Jeffrey D. Sachs and
JDS
Jeffrey D. Sachs
Stephen M. Goldfeld
SMG
Stephen M. Goldfeld

1982, No. 1


RECENTLY the rational expectations school has mounted an attack on the conventional use of simultaneous equations models for policy analysis. One might go further and say that among academic macroeconomists the conventional methods have not just been attacked, they have been discredited. The practice of using econometric models to project the likely effects of different policy choices, then choosing the best from among the projected outcomes, is widely believed to be unjustifiable or even the primary source of recent problems of combined high inflation and low economic activity. Instead, it is claimed, policy analysis should be formulated as choice among rules of behavior for the policy authorities and estimates should be made of the stochastic properties of the economy under each proposed rule to choose the best.

The Brookings Institution is committed to quality, independence, and impact.
We are supported by a diverse array of funders. In line with our values and policies, each Brookings publication represents the sole views of its author(s).