Consumption, Rationing and Tobit Estimation Tobin as an Econometrician

Best known as a monetary and macroeconomic theorist, described by Willem Buiter (2003, F585) as “the greatest macroeconomist of his generation” (see also Purvis 1982, 1991, Myhrman 1982), James Tobin was also actively engaged in empirical economics from his second published paper and his dissertation onward (Tobin 1942, 1947) to such later empirical studies as Tobin and Brainard (1977, 1992). His dissertation and several of his early articles investigated savings decisions, both theoretically and empirically, rather than a monetary topic, and he made notable contributions to the study of demand for food and for consumer durables. A pioneer in pooling time-series data with cross-section budget studies, Tobin contributed to the development of new econometric techniques in the 1950s, notably the extension of probit analysis of limited dependent variables that Goldberger (1964, 253-255) named the “Tobit model” (Tobin 1955b, 1958b). A critic of some of the large “Keynesian” macroeconometric models of the 1960s (Brainard and Tobin 1968), he later championed an approach to empirical macroeconomic modeling, based on his “general equilibrium approach to monetary theory,” that contrasted sharply with New Classical models that interpreted general equilibrium quite differently (Backus, Brainard, Smith, and Tobin 1980).