The subject of this report is the macroeconomic methodological approach of the Danish Ministry of Fi-nance. The Ministry of Finance has devised some economic principles in order to evaluate the economic effect which emerges from different kinds of enacted policies and policy proposals. The scientific criteria and the economic assumptions which lay behind these economic principles are therefore examined. The report lays out a macroeconomic methodological reflection about the nature of economic modelling and describes a critical realistic view on how macroeconomic methodology can be divided into two research positions; realism and idealism. Afterwards it is explored how the Ministry of Finance uses the ADAM-model (Annual Danish Aggregate Model) which is a macroeconometric model developed by Statistics Denmark. The report clarifies and critically discusses the assumptions that the Ministry of Finance makes use of when the ministry estimates the effect of economic policies through the ADAM-model. This kind of approach should lead to a broader macroeconomic methodological understanding of how the Ministry of Finance reasons when they evaluate different policies with regard to the economic system. First the report shows that the Ministry of Finance makes some exogenous changes to the ADAM-model when using the model for medium and long-term purposes. These changes cause the model to converge to a theoretical equilibrium more rapidly. Hence the model has moved from being a macroeconometric model to have some of the same features as a theoretical equilibrium model as the DSGE-models (Dynamic Stochastic General Equilibrium). Secondly the report will shed light on the reasoning behind the changes with regard to the ADAM-model. The changes are mainly done in order to make the ADAM-model more convergent with contemporary macroeconomic theory and empirical studies. The puzzling factor is that this reasoning is influenced by a supply-side economic framework which may underestimate other vital causal factors which can be observed in the macroeconomic sphere. In the final part it is discussed whether the assumptions are persuasive and whether they are consistent with the contemporary macroeconomic reality of the Danish economy. The economic principles of the Ministry of Finance are highly problematic if they use theoretical assumptions without falsifying the models sphere of application.
|Uddannelser||Forvaltning, (Bachelor/kandidatuddannelse) Kandidat|
|Udgivelsesdato||2 aug. 2014|
- Økonomiske modeller