Building Economic Models Corresponding to the Real World

Ray Huffaker

Applied Economic Perspectives and Policy, 2015, vol. 37, issue 4, 537-552

Abstract: Increasingly, there are calls to audit models used in public policy for how accurately they portray the reality facing policy makers. Although models cannot be logically verified as accurate representations of reality, past work concludes that modelers can reasonably demonstrate the degree of correspondence. How to establish real-world correspondence remains an open question. This paper outlines a framework of pre-modeling data diagnostics to provide evidence of correspondence. The scheme—based on Nonlinear Time Series Analysis—provides a rigorous benchmark for specification and testing of policy models that reduces the likelihood that a misspecified model is discredited by an unanticipated crisis.

Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1093/aepp/ppv021 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:apecpp:v:37:y:2015:i:4:p:537-552.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Applied Economic Perspectives and Policy is currently edited by Timothy Park, Tomislav Vukina and Ian Sheldon

More articles in Applied Economic Perspectives and Policy from Agricultural and Applied Economics Association Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().