years into the future, they have to include the anticipated future tax rates into their model's information base. So, they are supposed to make assumptions about possible changes in future income tax rates, the monetary policy that will be carried out by the central bank, and many other such «outside of the model» (or exogenous) variables in order to forecast all the «inside of the model» (or endogenous) variables. Being incomplete, econometric models sometimes are far from offering reliable predictions.
anticipate – предполагать, предвосхищать
calculations – расчеты
complete – полный, завершенный
course – курс
determine – определять
econometric – эконометрический
econometrician – эконометр
econometrics – эконометрика
endogenous – эндогенный (внутренний, присущий системе)
exogenous – экзогенный (внешний по отношению к системе)
forecast – прогноз; прогнозировать
gap – пробел, брешь
include – включать
incomplete – неполный
interact – взаимодействовать
predict – предсказывать
prediction – предсказание
reliable – надежный
variable – переменная
gross national product – совокупный национальный продукт
as a whole – (взятый) в целом
in details – в деталях
gross income – совокупный доход
net income – чистый доход после выплаты налогов
и иных обязательств
several years into the future – на несколько лет в будущее
information base – информационная база
Exercise 6
Answer the questions:
1. What do econometricians study?
2. What economic variables do they take into account while producing their models?
3. What is an economic model?
4. Why cannot some economic variables be predicted?
5. What economic variables are called exogenous and endogenous?
How Does Forecasting Work?
1
An economic forecaster was known to have an horseshoe prominently displayed above the doorframe of his office. Asked what it was for, he replied that it was a good luck charm that helped his forecasts. But do you believe in that superstition? he was asked, and he said, «Of course not!» But then why do you keep it? «Well,» he said, «it works whether you believe in it or not.»
2
An econometrician and an astrologer are arguing about their subjects. The astrologer says, «Astrology is more scientific. My predictions come out right half the time. Yours can't even reach that proportion.» The econometrician replies, «That's because of external shocks. Stars don't have those.»
3
An economist is a trained professional paid to guess wrong about the economy. An econometrician is a trained professional paid to use computers to guess wrong about the economy.
4
Economic statistics are like a bikini, what they reveal is important, what they conceal is vital.
5
Forecasting is like trying to drive a car blindfolded and following directions given by a person who is looking out of the back window.
argue – спорить, аргументировать
astrologer – астролог
astrology – астрология
bikini – бикини (тип дамского купального ансамбля)
blindfolded – с завязанными глазами
charm – очарование, чары
doorframe – дверная рама
external – внешний
guess – догадываться, строить догадки
horseshoe – лошадиная подкова
luck – успех, удача
prominently – на видном месте
proportion – пропорция
shock – удар, потрясение, шок
superstition – предрассудок
vital – жизненно необходимый
good luck charm – талисман, притягивающий удачу
come out right – «получаться», «выходить»
guess wrong – строить неверные предположения, догадки
Exercise 7
Answer the questions:
1. What did the forecaster have the horseshoe displayed for?
2. How often are the astrologer's forecasts correct?
3. Why can't econometrics reach that proportion of correctness?
4. How do econometricians use computers in their guesswork about economy?
5. What do bikini… Well, I never…
How to Use Mathematics in Economics. The Equation of Earnings
Engineers and scientists will never make as much money as business executives. Now a rigorous mathematical proof has been developed that explains why this is true:
Postulate