Reconciling Keynes and Tinbergen? Klein and His View on Econometrics as a Practical Tool for Policy Formulation

Abstract

In 1944, just five years after the controversy between John Maynard Keynes and Jan Tinbergen, Lawrence R. Klein found himself in a unique position. As a leading expert on Keynesian economics in the United States, Klein was recruited at the Cowles Commission to rebuild Tinbergen’s macro-econometric model of the US economy. This paper explores Klein’s macro-econometric approach as a serious attempt to reconcile Tinbergen’s work with Keynes’s criticisms. For Klein, macro-econometric modeling was not merely a tool for generating insights about the economic world but also a practice that took seriously the inherent limitations of statistical and mathematical methods. Ultimately, it was this complex practice—rather than econometric techniques alone—that enabled macroeconomists to discover, understand, and articulate concrete observations about the economy.

Keywords

• keynes vs. tinbergen controversy
• history of econometrics
• history of macroeconomics