Monday , April 6 2020
Home / Lars P. Syll / Econometrics as a testing device

Econometrics as a testing device

Summary:
Econometrics as a testing device Debating econometrics and its short-comings yours truly often gets the response from econometricians that “ok, maybe econometrics isn’t perfect, but you have to admit that it is a great technique for empirical testing of economic hypotheses.” I usually respond by referring to the text below … Most econometricians today … believe that the main objective of applied econometrics is the confrontation of economic theories with observable phenomena. This involves theory testing, for example testing monetarism or rational consumer behaviour. The econometrician’s task would be to find out whether a particular economic theory is true or not, using economic data and statistical tools. Nobody would say that this is easy. But is it

Topics:
Lars Pålsson Syll considers the following as important:

This could be interesting, too:

Lars Pålsson Syll writes Economic growth and the size of the ‘private sector’

Lars Pålsson Syll writes Econometric modelling as junk science

Lars Pålsson Syll writes Econometrics — the signal-to-noise problem

Lars Pålsson Syll writes Econometric testing

Econometrics as a testing device

Debating econometrics and its short-comings yours truly often gets the response from econometricians that “ok, maybe econometrics isn’t perfect, but you have to admit that it is a great technique for empirical testing of economic hypotheses.” I usually respond by referring to the text below …

Econometrics as a testing deviceMost econometricians today … believe that the main objective of applied econometrics is the confrontation of economic theories with observable phenomena. This involves theory testing, for example testing monetarism or rational consumer behaviour. The econometrician’s task would be to find out whether a particular economic theory is true or not, using economic data and statistical tools. Nobody would say that this is easy. But is it possible? This question is discussed in Keuzenkamp and Magnus ?1995?. At the end of our paper we invited the readers to name a published paper that contains a test which, in their opinion, significantly changed the way economists think about some economic proposition. Such a paper, if it existed, would be an example of a successful theory test. The most convincing contribution, we promised, would be awarded with a one week visit to CentER for Economic Research, all expenses paid. What happened? One ?Dutch? colleague called me up and asked whether he could participate without having to accept the prize. I replied that he could, but he did not participate. Nobody else responded. Such is the state of current econometrics.

Jan Magnus

Lars Pålsson Syll
Professor at Malmö University. Primary research interest - the philosophy, history and methodology of economics.

Leave a Reply

Your email address will not be published. Required fields are marked *