Edited by L. Randall Wray and Mathew Forstater
Chapter 16: Presenting ‘Demi-Regularities’ of Pricing Behaviour: The Need for Triangulation
Paul Downward and Andrew Mearman INTRODUCTION This chapter addresses one of the most contentious issues in post Keynesian economics and in heterodox economics more widely: the use of econometric methods. Econometrics is of course a major tool in orthodox economics; however, heterodox economists have long viewed it with caution. For instance, Keynes (1973) and Kalecki (1964) both wrote speciﬁcally about the necessary conditions for the use of econometrics. Authors informed by the increasingly important philosophy of Critical Realism are also skeptical (see Lawson, 1997). However, post Keynesianism is somewhat ambivalent about econometrics. While there is suspicion, there is also prominent use of econometrics in certain areas – for instance, on money supply endogeneity (Pollin, 1991) – and more generally, Mitchell (1991). Paul Davidson’s work exempliﬁes this ambivalence: his own work implies many objections to econometrics, yet as editor of the Journal of Post Keynesian Economics, he publishes many articles that use econometrics. Sheila Dow (2002) advances a methodological pluralism, which entails the possible use of econometrics. Elsewhere, Downward (1999) and Downward and Mearman (2002a; 2002b) have argued that the use of econometrics is compatible with post Keynesianism and Critical Realism. This chapter aims to build on the methodological arguments of that work, which argued that econometrics could play a role as part of a strategy of methodological triangulation. The chapter illustrates this argument by presenting empirical work on pricing. The structure of the chapter is as follows. First, econometrics is deﬁned. It is argued that econometrics inherently possesses descriptive...
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