![]() ![]() total physical capital), and second, there is no fundamental reason to expect that any flow bears a stable relationship to any other flow. income, savings, investment, government spending, interest rates, output, etc.) is that, first, econometrics overemphasizes flows (because that’s where the most variation happens) and underestimate stocks (e.g. ![]() dollar falling), but notes that the fundamental limitation of models that strive to uncover statistical links between different types of flows (e.g. explaining event A, such as stocks going up, with event B, such as U.S. While Meadows acknowledges that econometric models are more useful than what she calls “event-event analysis” (e.g. ![]() 89-90) contains a rather interesting critique of econometric models and their limitations in explaining and predicting what happens in the world. Donella Meadows’s book Thinking in Systems: A Primer (pp. ![]()
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