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The Structure of Models: Understanding Theory Reduction and Testing with a Production Example

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  • Davis, George C.

Abstract

The language of economics is the language of models. Understanding the structure of this language offers many benefits. Unfortunately, the structure is ubiquitous in implementation but absent in documentation. This paper documents the structure of models in the context of the theory reduction and testing process. The structure is used to explain why there are several legitimate ways to deal with nonspherical errors in econometric models and why the recent work on stochastic preferences and technologies is a progressive step forward for the discipline. A production modeling exercise is presented to help illuminate the concepts.

Suggested Citation

  • Davis, George C., 2004. "The Structure of Models: Understanding Theory Reduction and Testing with a Production Example," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(01), pages 1-14, April.
    • Handle: RePEc:ags:jlaare:31142
    DOI: 10.22004/ag.econ.31142
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    References listed on IDEAS

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    4. Davis, George C., 1997. "The Formal Logic Of Testing Structural Change In Meat Demand: A Methodological Analysis," Faculty Paper Series 23975, Texas A&M University, Department of Agricultural Economics.
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    6. Hausman,Daniel M., 1992. "The Inexact and Separate Science of Economics," Cambridge Books, Cambridge University Press, number 9780521415019, December.
    7. Arthur Lewbel, 2001. "Demand Systems with and without Errors," American Economic Review, American Economic Association, vol. 91(3), pages 611-618, June.
    8. George C. Davis, 1997. "The Logic of Testing Structural Change in Meat Demand: A Methodological Analysis and Appraisal," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1186-1192.
    9. V. Eldon Ball & Jean-Christophe Bureau & Richard Nehring & Agapi Somwaru, 1997. "Agricultural Productivity Revisited," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1045-1063.
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    1. Mészáros, Sándor & Szabó, Gábor, 2005. "A hazai agrárökonómiai kutatás a nemzetközi kihívások tükrében. Agrárgazdaság, vidékfejlesztés és agrárinformatika (AVA). Debreceni Egyetem Agrártudományi Centrum, Agrárgazdasági és Vidékfejlesztési Kar, Debrecen, 2005. április 8 [Hungarian agro-e," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 707-712.
    2. Meszaros, Sandor, 2008. "Theory testing (hypothesis testing) in agricultural economics," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 107, pages 1-13, March.

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