Keynes, Uncertainty and the Global Economy

Keynes, Uncertainty and the Global Economy

Beyond Keynes, Volume Two

Edited by Shelia C. Dow

The revival of interest in Keynesian economics since the late 1980s reinstates the importance of Keynes’s contribution to economic theory and policy. This is the second of two volumes in which authoritative contributions are presented by an outstanding group of international experts to celebrate Keynesian economics, and to review and further the developments of post Keynesian economics of recent years.

Chapter 10: Realism, econometrics and Post Keynesian economics

Paul Downward

Subjects: economics and finance, post-keynesian economics

Extract

Paul Downward I INTRODUCTION This chapter explores the role of econometrics as a research tool for economists. In a related manner the purpose of economic theory is also discussed. In discussing such methodological issues the econometric literature on pricing is used as a reference point. In some respects this limits the generality of the discussion. On the other hand, too often methodological discussion is confined to highly abstract discourse. Those impatient to ‘get on with things’ often ignore the full (potentially weak) basis of their knowledge claims.1 In this respect there is much to be gained by integrating methodological discussion with applied work. This is, of course, of paramount importance to economic approaches outside the mainstream,2 particularly in attempting to develop convincing alternative analyses of economic phenomena based on realism, which is an aspiration of Post Keynesian economics.3 Concern for the adequacy of knowledge claims as well as the provisions of concrete results go hand in hand in moving towards this objective. The general problems associated with econometric evidence are of more concern for neoclassicals who have tended exclusively to cite or invoke this type of analysis. The main argument of this chapter is that econometric work cannot be decisive in distinguishing between Post Keynesian theories of pricing, though some distinction from neoclassical pricing theory is possible. Nonetheless, as part of a broader, realist, empirical research agenda, econometric evidence may have a constructive role to play for Post Keynesians. The chapter proceeds as follows. Section II presents a...

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