Economics and Econometrics

The blunt truth about the politics of climate change is that no country will want to sacrifice its economy in order to meet this challenge.

The possibility of a stable economic life with full utilization of our resources is still not sufficiently assured, and it is extremely important that it should be so assured, and that the whole world should accept this as a fact. The work that is being done in econometrics is massive, and undaunted by mathematical difficulties, but it appears, at any rate as viewed from outside, to be unclear as to its aim.

Though he died in 1946, Keynes still dominated economics at Cambridge in the mid-1960s. It wasn't just that all the leading figures among the faculty, Richard Kahn, Joan Robinson, Brian Reddaway, David Champernowne, Nicholas Kaldor, and James Meade, had been his pupils and/or collaborators. It was the tone of the place. The study of economics, theoretical or empirical, was driven by the desire to improve the conduct of economic policy. This did not mean that pure theory was neglected. Indeed, in those years Robinson was fighting a stirring battle in the realms of high theory with Paul Samuelson and Robert Solow from the Massachusetts Institute of Technology. Nor was Cambridge innocent of the cutting edge of econometric technique. Richard Stone, who, following Keynes's suggestions, had created the first modern national income accounts, was still director of the Department of Applied Economics where much of modern econometrics was pioneered. Nonetheless, we were taught that theory and technique should serve the higher cause of rational economic policies, and to use our newly learned econometric expertise to write essays on unemployment, or inflation, or the balance of trade, or some other topic at the top of the current political agenda.