Introduction

The present memorandum has been written rather hurriedly, and the text is therefore not as carefully polished as it ought to be in a manuscript ready for publication. It should, however, be clear enough to bring out my point of view.

The present memorandum does not discuss details of the various equations which Tinbergen has obtained and whose coefficients he has determined statistically. My main concern has been to discuss what equations of this type really mean, and to what extent they can be looked upon as ‘A Statistical Test of Business Cycle Theories’. (The title of one of the volumes which Tinbergen has presented for discussion.)

My conclusion is that the work which Tinbergen is now presenting is of paramount importance, perhaps the most important single step forward in Business Cycle Analysis of recent years. But I do not think that it can be looked upon as ‘A Test of Business Cycle Theories’. The question of what connection there is between the relations we work with in theory and those we get by fitting curves to actual statistical data is a very delicate one. I think it has never been exhaustively and satisfactorily discussed. Tinbergen in his work hardly mentions it. He more or less takes it for granted that the relations he has found are in their nature the same as those of theory.