Transforming Structural Econometrics
It will be suggested here that it is not too far-fetched to see Hollis and Nell’s (1975) Rational Economic Man as a scientific foundation for reconstructing structural econometrics, one might say, for ‘Rational Econometric Man’. To make this case, we shall have to take a detour, unfortunately, into the fundamentals of positivism, and then visit the secret laboratory containing the epistemological foundations of neoclassical economics. At the door of the laboratory there is a sign that reads: ‘No admittance unless you accept a twin allegiance: positivism and individualism’. On this visit, we do not intend simply to defend Hollis and Nell’s thesis, but we hope to give some support to the argument that their thesis provides foundations for econometrics. As mentioned earlier, Haavelmo (1958) has argued that weak theoretical neoclassical economic foundations rendered suspect the policy value of most econometric models. He devoted the end of his career tore-examining the neoclassical theory of investment (see Haavelmo, 1960).We start here with the following three observations.
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