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Hi Daniel: Engin Yilmaz forwarded this post to me; I find it very clear and coherent. (And the whole blog is very interesting.)

I wrote what ended up being a kind of lengthy reply, and I though I'd share it with you here. Thanks and cheers.

Very useful and short understanding of macro-model frameworks, how to impart them clearly and coherently.

Basically, what's your economic model's "story" of how the economy works, and how does that story look, precisely, in sources and uses T accounts? Is it accounting-coherent?

How does your story divide the economy into "sectors" (or often, "functional categories" of actors/institutions, which are often orthogonal to any national-accounts sectors). And what sectors are absent?

What objects (assets) are included (and not) within the T-account cells? Do they model transfers of M2, bonds, real (long-lived) goods, etc.?

What are the relationships between the sectors, and the measures therein, as played out in the T accounts? When actors in sector X do Y, what changes are caused, in what other sectors?

The T accounts give precise form to the narrative description of the story, and let others see in condensed form what's included, what's missing, and how the included items relate.

Focusing a bit on those "functional categories" used in many models: As an inveterate "Show-Me-The-Numbers" guy from Missouri, I mostly find these "functional" categories less than useful, because I can't go look at the time-series for them in national accounts.

Researchers/model-builders are forced to effectively build their own national-accounts "sectors," and assemble time series for them from disparate sources. These series:

1. Are often/mostly not published with the model, at least in tractable form.

2. Are often missing precise, accounting-coherent descriptions of their derivations and mutual identities.

3. Are generally somewhat idiosyncratic (and not-infrequently, erroneous). It takes some serious work to unpack that down to the level of time series.

More generally: they don't provide a good basis for the larger macro-modeling conversation, based on published, carefully defined and documented series that in toto are accounting-identity coherent. With very few exceptions, those sets of mutually-coherent time series are and almost must be issued by national accountants. 

PSZ tables are one good counter-example to these objections. There are certainly others. But understanding their relationships to national accounts tables requires some seriously lengthy and rather excruciating yeoman's work. I'm here to tell ya. ;-)

So I would suggest that modelers should think long and hard before building models, T accounts, and their associated stories that are not tightly linked to generally-available and broadly "legible" national-accounts sectoral series. 

This is basically suggesting a fundamentally empirical limit on modelers' imaginations. In general, try to build models in which the time series do not have to be heavily massaged, and a whole novel "sector" assembled — with all the opaqueness and at least potential error that inevitably result.

FWIW...

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