Rational Econometric Man

Rational Econometric Man

Transforming Structural Econometrics

Edward J. Nell and Karim Errouaki

This challenging and original book takes a fresh, innovative look at econometrics, and re-examines the scientific standing of structural econometrics as developed by the founders (Frisch and Tinbergen) and extended by Haavelmo and the Cowles modellers (particularly Klein) during the period 1930–1960.

Introduction

Edward J. Nell and Karim Errouaki

Subjects: economics and finance, econometrics

Extract

This book should really be considered as epistemology, especially as we wish to construe that term broadly. It rests on ontology and takes aim at methodological foundations. The object is to re-examine the scientific standing of structural econometrics as developed by the founders of econometrics (Frisch and Tinbergen) and extended by Haavelmo and the Cowles modellers (particularly Klein) during the period 1930–60. The early econometricians tended to believe they could test economic theories and discover scientific laws analogous to the laws of physics and natural science. The writers who have examined the history of econometrics have tended to accept this project more or less uncritically. By contrast, we consider this misguided, and based on philosophical error. Certainly, in our view, econometrics can contribute empirical insights that will advance the development of economic theory, and it can specify and identify reliable projectible relationships, but, as we shall explain, these are not the same as the scientific laws of physics, and they are specific to particular periods of history. But they do exist.