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Improving the Adequacy of Economic Models

Author

Listed:
  • Yury B. Melnikov

    (Ural State University of Economics)

  • Yelena A. Onokhina

    (Ural State University of Economics)

  • Sergey A. Shitikov

    (Ural State University of Economics)

Abstract

The research aims to identify all possible avenues for improving the adequacy of models, which is regarded as one of the indicators of the quality of a model. Methodologically, the research relies on the theory of adequacy, which is a part of the authors’ theory of modeling based on the formal construc? tive interpretation of the model. To solve the problem of improving the adequacy, the authors suggest considering the model of adequacy, which consists of pairs of a kind (the model being evaluated and the reference model). On this set, the authors determine the characteristics of adequacy, i.e. functions, the values of which allow assessing the quality of the model being evaluated by comparison with the refer? ence model. In the authors’ opinion, the model of adequacy must satisfy five postulates listed in the paper. On the basis of these postulates the authors deduced all possible ways of evolutionary improvement of the adequacy of models. To exemplify these recommendations, the authors applied them to improve the adequacy of a model for forecasting tax revenues, as well as some other economic models. The presented research is of theoretical nature, for this reason the examples are descriptive.

Suggested Citation

  • Yury B. Melnikov & Yelena A. Onokhina & Sergey A. Shitikov, 2018. "Improving the Adequacy of Economic Models," Journal of New Economy, Ural State University of Economics, vol. 19(1), pages 94-106, February.
    • Handle: RePEc:url:izvest:v:19:y:2018:i:1:p:94-106
    DOI: 10.29141/2073-1019-2018-19-1-8
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    References listed on IDEAS

    as
    1. Harrison, S. R., 1990. "Regression of a model on real-system output: An invalid test of model validity," Agricultural Systems, Elsevier, vol. 34(3), pages 183-190.
    2. Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production: I--Production Efficiency," American Economic Review, American Economic Association, vol. 61(1), pages 8-27, March.
    3. Trabandt, Mathias & Uhlig, Harald, 2011. "The Laffer curve revisited," Journal of Monetary Economics, Elsevier, vol. 58(4), pages 305-327.
    4. Diamond, Peter A & Mirrlees, James A, 1971. "Optimal Taxation and Public Production II: Tax Rules," American Economic Review, American Economic Association, vol. 61(3), pages 261-278, June.
    5. Samuelson, P. A., 1986. "Theory of optimal taxation," Journal of Public Economics, Elsevier, vol. 30(2), pages 137-143, July.
    6. Яковлев Андрей Александрович & Башина Александра Сергеевна & Демидова Ольга Анатольевна, 2013. "Анализ Эффективности Различных Способов Закупки Простого Однородного Товара (На Примере Сахарного Песка)," Higher School of Economics Economic Journal Экономический журнал Высшей школы экономики, CyberLeninka;Федеральное государственное автономное образовательное учреждение высшего образования «Национальный исследовательский университет «Высшая школа экономики», vol. 17(4), pages 617-645.
    7. Tedeschi, Luis Orlindo, 2006. "Assessment of the adequacy of mathematical models," Agricultural Systems, Elsevier, vol. 89(2-3), pages 225-247, September.
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    More about this item

    Keywords

    model; economic modeling; adequacy of economic model; improvement of adequacy; quality of economic models.;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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