Econometrics in a Formal Science of Economics: Theory and the Measurement of Economic Relations

Econometricsisastudyofgoodandbadwaystomeasureeconomicrelations.Inthisbook,BerntStigumconsiderstherolethateconomictheoryoughttoplayinsuchmeasurementsandproposesaformalscienceofeconomicsthatprovidesthemeanstosolvethemeasurementproblemsfacedbyeconometricresearchers.Afterdescribingthesalientpartsofaformalscienceofeconomics,Stigumcomparesitsmethodswiththemethodsofcontemporaryappliedeconometrics.Hisgoalistodevelopabasisformeaningfuldiscussionofthebestwaytoincorporateeconomictheoryinempiricalanalysis.Stigumconceivestwoscenariosforresearchinappliedeconometrics:contemporaryeconometricsinthetraditionofTrygveHaavelmoandtheformaltheory-dataconfrontationenvisionedbyRagnarFrisch.Stigumpresentscasestudiesofeconomicphenomena,contrastingtheempiricalanalysisprescribedbycontemporaryappliedeconometricswiththeempiricalanalysisprescribedbyaformaltheory-dataconfrontation.Hefindssignificantandprovocativedifferences.Whicharewetobelievewhenthestatisticalanalysesofthesetwomethodologiesyieldverydifferentdescriptionsofthebehaviorcharacteristicsofdatavariablesandinferencesaboutsocialreality?Stigumpointstothreeaspectsofcontemporaryeconometricmethodologythatmaybenefitfromseriousdiscussions:theanalysisofpositivelyvaluedtimeseries,asuspectcharacteristicofqualitativeresponsemodels,andthesearchforlinearlycointegratedtimeseries.Thesethreeaspectsareofasmuchconcerntoformaleconometricsastheyaretocontemporaryeconometrics.,