Encompassing and rational expectations: how sequential corroboration can imply refutation

Neil Ericsson and David Hendry

No 354, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Even though pieces of empirical evidence individually may corroborate an economic theory, their joint existence may refute that same theory. We discuss examples concerning testing for omitted variables, simultaneity, and rational expectations in the context of general-to-simple versus simple-to-general modeling. The proposition in the first sentence strongly favors the building of empirical models which are consistent with all available evidence.

Keywords: Economics; Rational expectations (Economic theory) (search for similar items in EconPapers)
Date: 1989
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Citations: View citations in EconPapers (6)

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Journal Article: Encompassing and rational expectations: How sequential corroboration can imply refutation (1999)
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