<Ul> <Li> Aggregate models . Macroeconomics needs to deal with aggregate quantities such as output, the price level, the interest rate and so on . Now real output is actually a vector of goods and services, such as cars, passenger airplanes, computers, food items, secretarial services, home repair services etc . Similarly price is the vector of individual prices of goods and services . Models in which the vector nature of the quantities is maintained are used in practice, for example Leontief input - output models are of this kind . However, for the most part, these models are computationally much harder to deal with and harder to use as tools for qualitative analysis . For this reason, macroeconomic models usually lump together different variables into a single quantity such as output or price . Moreover, quantitative relationships between these aggregate variables are often parts of important macroeconomic theories . This process of aggregation and functional dependency between various aggregates usually is interpreted statistically and validated by econometrics . For instance, one ingredient of the Keynesian model is a functional relationship between consumption and national income: C = C (Y). This relationship plays an important role in Keynesian analysis . </Li> </Ul> <Li> Aggregate models . Macroeconomics needs to deal with aggregate quantities such as output, the price level, the interest rate and so on . Now real output is actually a vector of goods and services, such as cars, passenger airplanes, computers, food items, secretarial services, home repair services etc . Similarly price is the vector of individual prices of goods and services . Models in which the vector nature of the quantities is maintained are used in practice, for example Leontief input - output models are of this kind . However, for the most part, these models are computationally much harder to deal with and harder to use as tools for qualitative analysis . For this reason, macroeconomic models usually lump together different variables into a single quantity such as output or price . Moreover, quantitative relationships between these aggregate variables are often parts of important macroeconomic theories . This process of aggregation and functional dependency between various aggregates usually is interpreted statistically and validated by econometrics . For instance, one ingredient of the Keynesian model is a functional relationship between consumption and national income: C = C (Y). This relationship plays an important role in Keynesian analysis . </Li> <P> Most economic models rest on a number of assumptions that are not entirely realistic . For example, agents are often assumed to have perfect information, and markets are often assumed to clear without friction . Or, the model may omit issues that are important to the question being considered, such as externalities . Any analysis of the results of an economic model must therefore consider the extent to which these results may be compromised by inaccuracies in these assumptions, and a large literature has grown up discussing problems with economic models, or at least asserting that their results are unreliable . </P> <P> One of the major problems addressed by economic models has been understanding economic growth . An early attempt to provide a technique to approach this came from the French physiocratic school in the Eighteenth century . Among these economists, François Quesnay should be noted, particularly for his development and use of tables he called Tableaux économiques . These tables have in fact been interpreted in more modern terminology as a Leontiev model, see the Phillips reference below . </P>

What are some benefits of developing economic models