Econometric models and economic - administrative decisions: the history of empirical research in the pre - war period

Abstract

Research attempts dating back to the mid-19th century, with the work of A. Cournot, Von
Thunen and E. Engel, as well as other economists, in particular A. Marshall and L. Walras, led
to the first econometric application in 1907, when R. Benini tried to estimate the elasticity of demand
for coffee in Italy.
Since 1910, econometric studies have moved in four different directions: (i) the forecasting
of the economic conjuncture by using economic barometers; (ii) the estimation of demand functions;
(iii) the estimation of marginal propensity to consume, which would lead to the construction
and estimation of simple macroeconomic models, and (iv) the econometric analysis of production.
The decade before World War II is therefore seen as a turning point for econometrics, as a
substantial body of literature was produced and a large number of econometric.
As a result of development and progress in this area, quantitative methods have been
applicated and were published established as the most robust and reliable approach to economic
and administrative decision-making in the post-war period, while econometrics is considered to
be, according to L. Klein, the front line of economics.