The in-principle inconclusiveness of causal evidence in macroeconomics

The paper analyzes the methods that macroeconomists can use to provide evidence in support of causal hypotheses: the instrumental variable (IV) method and econometric causality tests. It argues that the evidence that macroeconomists provide when using these methods is in principle too inconclusive t...

Full description

Saved in:
Bibliographic Details
Published in:European journal for philosophy of science 2018-10, Vol.8 (3), p.709-733
Main Author: Henschen, Tobias
Format: Article
Language:English
Subjects:
Econometrics
Economic analysis
Economic models
Education
Macroeconomics
Paper in the Philosophy of the Social Sciences and Humanities
Philosophy
Philosophy of Science
Test procedures
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:The paper analyzes the methods that macroeconomists can use to provide evidence in support of causal hypotheses: the instrumental variable (IV) method and econometric causality tests. It argues that the evidence that macroeconomists provide when using these methods is in principle too inconclusive to support the hypothesis that X directly type-level causes Y , where X and Y stand for macroeconomic aggregates like the real interest rate and aggregate demand. The evidence provided by the IV method is too inconclusive because it derives from conditions requiring that there be no confounders of I and X and X and Y (where I is an instrumental or intervention variable that typelevel causes X ), and because in macroeconomics, confounders that cannot be controlled for or measured are likely to be present. The evidence provided by econometric causality tests is too inconclusive because they can be shown to rely on the conditions of the IV method at least tacitly.
ISSN:1879-4912
1879-4920
DOI:10.1007/s13194-018-0207-7