Sign in with Facebook
Fischer Black’s Followers (7)
Fischer Black
More books by Fischer Black…
“Estimation' suggests a Bayesian approach to data, while 'testing' suggests a classical approach. I prefer estimation, since I think researchers who want to test often choose models that are more specific than the economics require. They talk of adding restrictions for no reason other than making their models easier to reject.”
― Exploring General Equilibrium
― Exploring General Equilibrium
“I think it's better to 'estimate' a model than to test it. I take 'calibration' to be a form of estimation, so I'm sympathetic with it, so long as we don't take seriously the structure of a model we calibrate. Best of all, though, is to 'explore' a model. This means creating many specific examples of a general model, where each one explains a single stylized fact or perhaps a few features of the world. It means using some of these examples to elucidate microeconomic evidence.”
― Exploring General Equilibrium
― Exploring General Equilibrium
“Many of the models in the literature are not general equilibrium models in my sense. Of those that are, most are intermediate in scope: broader than examples, but much narrower than the full general equilibrium model. They are narrower, not for carefully spelled out economic reasons, but for reasons of convenience. I don't know what to do with models like that, especially when the designer says he imposed restrictions to simplify the model or to make it more likely that conventional data will lead us to reject it. The full general equilibrium model is about as simple as a model can be: we need only a few equations to describe it, and each is easy to understand. The restrictions usually strike me as extreme. When we reject a restricted version of the general equilibrium model, we are not rejecting the general equilibrium model itself. So why bother "testing" the restricted version? If we reject it, we will just create another version.”
― Exploring General Equilibrium
― Exploring General Equilibrium
Is this you? Let us know. If not, help out and invite Fischer to Goodreads.
