The theoretical foundations of economic models (ეკონომიკური მოდელების თეორიული საფუძვლები)

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Ivane Javakhishvili Tbilisi State University Press
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.
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economic model, causation, ceteris paribus, optimization, field experiment
VII International Scientific Conference: "Challenges of Globalization in Economics and Business", Tbilisi, 2022, pp. 627-633