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May 1973

The Usefulness of Applied Econometrics to the Policymaker

by Darryl R. Francis

Policymakers’ stabilization actions are reached through their judgment about the general course of economic activity and the effectiveness of various tools available. All policymakers have some view of how the economy operates and how their actions affect the economy. This process is usually based on years of experience and generally is not formulated as rigorously as an econometric model.