Two of the functions of an economic model are to explain the behavior of economic variables and
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Two of the functions of an economic model are to explain the behavior of economic variables and to forecast their future behavior. Using the information contained in the box on Tobin’s q model, discuss how well each of the accelerator, neoclassical, and q models have explained or forecast the behavior of business spending on construction. What is the implication of this for the use of either rules-based policies or discretionary policy in efforts to stabilize the economy?
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The discussion in the box on Tobins q indicates that none of the models of investme...View the full answer
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