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Econometric model
Asko Korpela

Main page o Tajka vision

PolTajka. o ForTajka o Equations o Accounts o Trend o Tutoral o History o Variables

The econometric TAJKA macromodel of Finland is a second generation version of the AJKA model by Asko Korpela for the years 1974-1996, originally created at the University of Pennsylvania. The basic data for the model consists mainly of the renewed National Accounts since 1975. The basic character of the model is Keynesian short run forecasting and simulation. The model consists of two main sectors: the equilibrium of aggregate demand and supply on one hand, and labour market, interconnected by production and income formation, on the other.

PolTajka - anybody can use. PolTajka version of the model is based on a loss function. With this version the User can steer the national economy to the preset combined target values of four main goal variables. The loss function consists of the squared differences of the given target values and the calculated model values. The smaller the differences, the smaller the value of the loss function and the closer to the given target values the economoy approaches. If instruments are allowed to change freely, the economy can be steered exactly to the given target values. Also a more realistic variant can be chosen so that also instrument changes are included in the loss function. In that case the zero-value of the loss function cannot be reached, only approached. In any case the PolTajka version gives a good touch on the interdependence of the instruments and targets of economic policy. Inflation is best fought by negotiated wage rate, production advanced or retarded by taxes. The idea of PolTajka is rather sophisticated, but the use is very simple and does not require any basic knowledge of the economy, because just changing an instrument either increases or decreases the loss function value. The next move can be done accordingly.

ForTajka - only experts can succeed. ForTajka is the forecasting version of the Tajka model. Forecasts are prepared for the current and the next year. Expert knowledge and understanding are needed much more for the use of this version than for PolTajka. The user must understand and assess the rationality and probability of the forecast. The values of the target variables and other variables are dependent of each other and instrument values through the model. Forecasts deviate from each other depending on which economic theory is used: So Tajka model is not only one model, but the user can choose among several alternatives, for example, of consumption functions or of export functions. The consumption can be set to depend only of income or of current and previous income, and unemployment can be assumed to have a separate effect. In this way, as a matter of fact, there are 5x4x3x2x2x3=720 different more or less similar models available for the user.

Equations - get acquainted with the economic theory. On Equations tabsheet the equations of the model are shown one by one, graphics of definitions and behavioural equations, original time series, their logarithmic and percentage change variants, partial elasticities in the case of linear functions and partial derivatives at observation points in the case of logarithmic transformations. Graphics is produced on clipboard and all numeric output into the TmpFi.txt file simultaneously to the screen. On this tabsheet there is the possibility to study all the details of the Tajka model.

Accounts - source of the basic information. Tajka program outputs the relevant part of the National Accounts as it is delivered by the Statistical Office continued by two forecasting years. In addition to the basic alternative, any of the 720 combinations of the behavioural equations can be chosen. The forecasted values change accordingly. The output can be taken in euros, percentage changes or account structures.

Trend - time series in hand. On this tabsheet all more than 90 variables of Tajka model can be studied. The program calculates and draws a histogram or a line graph and shows Tajka forecast as well as long run 25 year and short run 10 year trends. Also a trend forecast, that is, two values continued from the last observation in the direction of the short run trend. All these values can be added and omitted at will by the user. There is still the possibility for the user to put in his own trends with any starting and ending points. The annual percentage changes are marked on the screen. Every output is readily on clipboard.

Tutorial. Tajka program contains also a tabsheet, on which the use of other tabsheets and basic features of Tajka model are instructed. On this tabsheet the user can also make own courses. Some codes are available to invoke any model equations and graphs.

History tabsheet presents the forecasting record for the years 1976-1996 of the Ajka model, precedessor of the present model. Forecast success is compared with that of the Ministry of Finance and Etla, The Research Institute of the Finnish Economy.

Variables. Tajka model contains four central target variables: gross domestic product, unemployment, inflation and current account. For the simulation of the economic policy making there are some ten economic policy instruments: direct and indirect taxes, negotiated wage rate, public consumption, public investments... For calcualtion of  policy alternatives also parametres of foreign trade - import and export prices and a forecast of the world economy growth - are available for the user. Also monetary policy instruments can be used, although the model does not include a monetary sector. The structure and the regression calculations output are readily available on a click on the TajkaModel button. Also at any moment some basic concepts can be studied, such as derivative, elasticities, trends, least squares regression. The information about these concepts can also be reached here (at present in Finnish only).

Tajka model o Tajka regression o Tajka variables o Tajka assumed values

Click here to download 2005 version TajkaSetup (3.6 MB).
Execute as system administrator.
Tell me, if you are interested in Delphi 10 code of Tajka.

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