Challenges in education; Econometrics

A new science called econometrics has been developed in recent years. It combines economics mathematics statistics and computer technology to project a model of a given problem. The kind of work they were doing would would be completely impossible without a computer and in fact without the sophisticated computers that we have now. I was even three or four years ago. The kind of work they were doing would have been much much more difficult than it is today. The questions that we're asking today economic questions are questions that just weren't being asked even a few years ago simply because there was no way to find the answers. The speaker is James Boulware a researcher working on a computer model of the American banking system. In a moment he talks about his work. Challenges in education presented by Duke University. Here with today's feature is Charles Prasad

predicting how the banking system in the United States affects the economy may be possible in the future by a kind of metric models. JAMES BELL working at the econometric systems simulation program at Duke talks about only one of many models that are being developed. The model that we've built is basically a model of the banking system in the United States and in particular the model is designed to find out exactly how policies made by the Federal Reserve worked their way through the banking system to affect such things as national income price stability. This sort of thing and we can ask the question for example if the Federal Reserve changes the discount rate which it does with some frequency a couple of times a year. We want to know exactly how this is going to affect the economy.

Mr. Boughton give us some indication of how one question might be answered in the model. So what we want to do that is to analyze over the past decade and a half years all the times that the discount rate has been changed and find out exactly what has happened to the economy. Taking this in the in a general context of of all the other economic changes that have occurred we try to relate all these wearables to all the others at the same time. And in doing that we can try to isolate the particular effect that was due to changes in the discount rate. Other models are being developed by economists all over the world. The thing that's unique about the work that we're doing here is that we concentrate on the banking system as the medium through which monetary policies are transmitted to the rest of the economy. And the model is specifically

designed to trace through. These these monetary policy actions to the rest of the economy also the inclusion of the mortgage market and here is a unique factor. How can these models benefit society again. Here is Mr. Boult. I think we're going to come to a stage through models such as this and through other fairly sophisticated techniques. We're going to come to a stage within the next few years where the Federal Reserve is going to know in advance what the effects of its policies are going to be with a pretty fine degree of tolerance. Other models are being developed at Duke including one of the tobacco industry and one on government taxation. Someday they will become a part of a model of the complete American economy. This is Charles Braswell with challenges in education from Duke University. This program was distributed by the national educational radio network.