Modeling on the Basis of Models.

A large part of official economic data sets is produced with the help of assumed functional relations between variables. Constructing economic models on the basis of such model-generated data results in a 'modeling on the basis of the results of modeling.' This common procedure can lead to consequences that seriously endanger the quality of empirical analyses. After discussing some of these dangerous consequences, the authors explore the reasons behind this development. To avoid some of the most severe difficulties, a 'Charter for Compilation and Correct Handling of Economic Data' is proposed. Copyright 1997 by The International Association for Research in Income and Wealth.