Econometric fundamentalism

15 January, 2017 at 09:23 | Posted in Statistics & Econometrics | 2 Comments

The wide conviction of the superiority of the methods of the science has converted the econometric community largely to a group of fundamentalist guards of mathematical rigour. It is often the case that mathemical rigour is held as the dominant goal and the criterion for research topic choice as well as research evaluation, so much so that the relevance of the research to business cycles is reduced to empirical illustrations. To that extent, probabilistic formalization has trapped econometric business cycle research in the pursuit of means at the expense of ends.

Economic_cycle.svg

Once the formalization attempts have gone significantly astray from what is needed for analysing and forecasting the multi-faceted characteristics of business cycles, the research community should hopefully make appropriate ‘error corrections’ of its overestimation of the power of a priori postulated models as well as its underestimation of the importance of the historical approach, or the ‘art’ dimension of business cycle research.

Duo Qin A History of Econometrics (OUP 2013)

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2 Comments

  1. Its not a sinusoidal oscillation as suggested by the diagram. The recession is almost non-existent and very sudden compared to the rest.

  2. As a mathematician, economists’ applications seem the very opposite of rigour. That is, they ignore the most appropriate mathematics and mis-apply what they do use, ignoring critical caveats.

    What seems to be going on – not just in economics – is that practitioners are under pressure to apply mathematical models, and they follow the example of others, without actually studying the underlying mathematics, or even scientific methodology. This had led to ‘pseudo-mathematical rigour’, which is a very different thing from the real thing. This seems most serious in applications of probability theory.


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