tag:blogger.com,1999:blog-6288862798546085706.post1672206199072996929..comments2019-09-15T13:05:14.188-04:00Comments on Econometrics By Simulation: Commodity Demand Estimation - Fish DemandFrancishttp://www.blogger.com/profile/16658586705916884436noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-6288862798546085706.post-56445426192070081032012-12-05T01:10:50.551-05:002012-12-05T01:10:50.551-05:00Good point. This raises the essential question, &...Good point. This raises the essential question, "How wed are we to economic theory?" If we are simply interested in a forecasting model then perhaps we don't really care that our model is disconnected from theory so long as we can predict reasonably well. <br /><br />However, there is a deeper question here as well. Do we restrict our predictive power because we do not have a theoretical model that fits the empirical model? It is easy to come up with examples for why empirical work is meaningless without a theoretical model. However, what happens when there is no reasonable available theoretical model and we are asked to answer a specific question?<br /><br />I don't don't have an answer for any of this. I am sure a theoretical economists would have an easy answer. But, it might not be the best or the right one though the one which is logically consistent. For instance, the demand function that is consistent with utility theory. But, what happens if utility theory is an untrue yet useful concept. <br /><br />Should we restrict our models to only those that fit within utility theory?Francis Smarthttps://www.blogger.com/profile/16658586705916884436noreply@blogger.comtag:blogger.com,1999:blog-6288862798546085706.post-72107277219962414642012-11-30T19:11:50.252-05:002012-11-30T19:11:50.252-05:00This comment has been removed by the author.Francis Smarthttps://www.blogger.com/profile/16658586705916884436noreply@blogger.comtag:blogger.com,1999:blog-6288862798546085706.post-50975692635805742212012-11-26T00:43:38.424-05:002012-11-26T00:43:38.424-05:00Francis - a (system of) demand function(s) needs t...Francis - a (system of) demand function(s) needs to be consistent with maximizing an underlying utility fucntiopn. Unfortunately, there is no sensible utility function which, when maximized, yields a log-log demand function.<br /><br />DGDave Gileshttps://www.blogger.com/profile/05389606956062019445noreply@blogger.com