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making general statements about a group or population’ of items on the basis of imperfect information about that group. For example, we may be interested in trying to know in advance who will win the next General Election. By taking a random sample of voters we may obtain information on voting intentions, but this information is imperfect since it does not describe with certainty what all the voters will in fact do. Nevertheless, it is possible to generalize about the population on the basis of the sample. The techniques of statistical inference are primarily concerned with the question of the degree of confidence which can be placed on the generalizations and the margins of error which may be involved. In this they rely heavily on methods of probability theory. It is rarely possible, especially in economics, to obtain perfect information about the group of things under study; since it is however desirable to examine relationships, test hypotheses and make measurements for the group as a whole, techniques of statistical inference have become extremely important.

Steady-state growth. A state in which the rates of growth of the variables in an economic system remain constant over time. Take for example an economy consisting simply of firms and households (no government, no foreign trade), where firms receive consumers’ expenditure in return for goods and pay this back to households in return for productive services: households spend part of what firms pay them on consumption expenditure and save the rest, while firms spend on new investment exactly the same amount as households save. If national income, consumption expenditures, saving and investment expenditures were all now growing at, say, 5 per cent per annum, every year without change, then we would say that the economy was in steady-state growth. It need not be the case that the growth rates of the variables are all equal (although theory tells us that in this simple example they would be), but the growth rate of each variable must be constant through time for steady-state growth to exist. The steady-state solution is generally the starting-point in the analysis of most models of economic growth. It therefore fulfils much the same role as the concept of equilibrium in static theory: as a useful theoretical abstraction which may hardly ever be realized in practice.

Central America Map Travel

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