(L8) J. M. Keynes, Review of On a Method of Statistical Business-Cycle Research

Question 1

What is the primary methodology used in Tinbergen’s method?

Answer 1

Multiple correlation analysis.

Question 2

What are the three examples to which Tinbergen applies his method?

Answer 2

Fluctuations in Investment, Residential Building, and Investment in Railway Rolling-stock.

Question 3

What is a key critique regarding the statistical method used?

Answer 3

Logical issues in applying methods meant for different types of data to economic data.

Question 4

What is the aim of Tinbergen’s method in the context of business cycle theories?

Answer 4

To test different business cycle theories and determine the quantitative importance of known causal relationships.

Question 5

What are the conditions required for the application of Tinbergen’s method?

Answer 5

All significant factors must be measurable and known in advance.

Question 6

What issue does the paper raise about correlation analysis?

Answer 6

Concerns about linear correlation, ‘spurious correlation’, and independence of basic factors.

Question 7

What challenges are highlighted in measuring economic factors?

Answer 7

Difficulties in accurate and consistent measurement across different countries.

Question 8

How are time-lags and trends treated in the economic analysis?

Answer 8

The paper discusses the arbitrary nature of trend calculations and the importance of considering time-lags.

Question 9

Does Tinbergen’s method make inductive claims about the future?

Answer 9

The paper suggests the method is limited in its inductive capabilities and might be more of a historical description.

Question 10

What is the implication of the critique for business cycle theory?

Answer 10

Skepticism about the method’s application to complex problems like the Business Cycle and a need for more exploration of the issues involved.