Methodological Mistakes and Econometric Consequences

Year 2012, Volume: 4 Issue: 2, 99 - 122, 01.09.2012

Asad Zaman

Abstract

Econometric Methodology is based on logical positivist principles. Since logical positivism has collapsed, it is necessary to re-think these foundations. We show that positivist methodology has led econometricians to a meaningless search for patterns in the data. An alternative methodology which relates observed patterns to real causal structures is proposed.

Keywords

Econometric Methodology, logical positivism, realism, causality, VAR models, Forecasting, surprise, goodness of fit.

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