Evaluate the following statement: "It is easier to build an economic model that accurately reflects events that have already occurred than to build an economic model to forecast future events." Do you think that this is true or not? Why? What does this imply about the difficulties of building good economic models?
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Modeling is very difficult without data. This is true for all fields of endeavor, not just economics. When building a model, you must include the relevant variables. It's very difficult to know what the relevant variables are without some data. Economic models often take the form of a regression equation. Multiple regression ...
This solution discusses economic modeling and forecasting future events.