The 'Pre-Eminence of Theory' versus the 'General-to-Specific' Cointegrated VAR Perspectives in Macro-Econometric Modeling

Aris Spanos

No 2008-25, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: The primary aim of the paper is to place current methodological discussions on empirical modeling contrasting the 'theory first' versus the 'data first' perspectives in the context of a broader methodological framework with a view to constructively appraise them. In particular, the paper focuses on Colander?s argument in his paper ?Economists, Incentives, Judgement and Empirical Work? relating to the two different perspectives in Europe and the US that are currently dominating empirical macro-econometric modeling and delves deeper into their methodological/philosophical foundations. It is argued that the key to establishing a constructive dialogue between them is provided by a better understanding of the role of data in modern statistical inference, and how that relates to the centuries old issue of the realisticness of economic theories.

Keywords: Econometric methodology; ?general-to-specific?; pre-eminence of theory; VAR; statistical adequacy; realisticness of theory; statistical model (search for similar items in EconPapers)
JEL-codes: B4 C1 C3 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-ecm, nep-ets, nep-hpe and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:7336

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