The theoretical foundations of economic models (ეკონომიკური მოდელების თეორიული საფუძვლები)
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Date
2022
Journal Title
Journal ISSN
Volume Title
Publisher
Ivane Javakhishvili Tbilisi State University Press
Abstract
Economics is about the distribution of limited resources among alternative uses. To explain this process,
economists develop simple economic models by abstracting from reality. These models have some
mathematical foundations and encompass only the necessary characteristics of the market. The study
discusses the theory behind the development of such models and the problems encountered in the process. As
no model describes reality perfectly, the question is to tell whether a model is good enough. Moreover, the
study discusses a new method of conducting empirical research by utilizing experimental data, where
economists try to find natural experiments and show causal relationships between variables.
Description
1. Card, David; Krueger, Alan B. (1995). Myth and Measurement: The New Economics of the Minimum
Wage. Princeton: Princeton University Press. ISBN 0-691-04823-1.
2. Angrist, Joshua D.; Krueger, Alan B. (1991). "Does Compulsory School Attendance Affect Schooling and
Earnings?". The Quarterly Journal of Economics. 106 (4): 979–
1014. doi:10.2307/2937954. JSTOR 2937954. S2CID 153718259
3. Wooldridge M. Jeffrey. (2009) Introductory Econometrics. A Modern Approach. Michigan State
University. Fourth Edition.
Keywords
economic model, causation, ceteris paribus, optimization, field experiment
Citation
VII International Scientific Conference: "Challenges of Globalization in Economics and Business", Tbilisi, 2022, pp. 627-633