Template-Type: ReDIF-Article 1.0
Author-Name:  David Jay Green
Title:  The World Oil Market: An Examination Using Small-Scale Models
Classification-JEL: F0
Pages:  61-77
Volume:  Volume 9
Issue:  Number 3
Year:  1988
Abstract:  One must assume that people in one's models do not know what is going to happen, and know that they do not know what is going to happen. --J. R. Hicks, quoted in P. Davidson (1981) This article presents the results of a series of exercises in the use of small-scale models to explain the spot price of crude oil. Small scale modeling-the use of a limited number of equations-involves a number of disadvantages: many interesting questions will have to be ignored and often a sense of realism may be sacrificed. However, small-scale models are an essential part of economic research. Compared to large, multi-equation models, small-scale models are often transparent-causal relations are clearly visible. In addition, small-scale models can often be easily updated and reexamined in the light of new information or assumptions. This is particularly important in policy-making when time and clear communication are at a premium.
Handle: RePEc:aen:journl:1988v09-03-a02
File-URL: http://www.iaee.org/en/publications/ejarticle.aspx?id=1897
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