Along with Frisch and others Tinbergen developed the field of econometrics, the use of statistical tools to test economic hypotheses. Tinbergen was one of the first economists to create multiequation models of economies. He produced a twenty-seven-equation econometric model of the Dutch economy, and his 1939 book, Business Cycles in the United States, 1919–1932, includes a forty-eight-equation model of the American economy that explains investment activity and models American business cycles.
Another of Tinbergen’s major contributions was to show that a government with several economic targets—for both theunemployment rate and the inflation rate, for example—must have at least as many policy instruments, such as taxes andmonetary policy.
Separately but almost simultaneously with William Stanley Jevons and Carl Menger, French economist Leon Walras developed the idea of marginal utility and is
Jeffrey D. Sachs is the Director of The Earth Institute, Quetelet Professor of Sustainable Development, and Professor of Health Policy