By Duo Qin
Reformation of Econometrics is a sequel to The Formation of Econometrics: A ancient Perspective (1993, OUP) which strains the formation of econometric thought in the course of the interval 1930-1960. This e-book offers an account of the advances within the box of econometrics because the Seventies. in keeping with unique learn, it specializes in the reformists' move and faculties of proposal and practices that tried a paradigm shift in econometrics within the Nineteen Seventies and Eighties.
It describes the formation and consolidation of the Cowles fee (CC) paradigm and lines and analyses the 3 significant methodological makes an attempt to unravel difficulties inquisitive about version selection and specification of the CC paradigm. those makes an attempt have reoriented the point of interest of econometric examine from inner questions (how to optimally estimate a priori given structural parameters) to exterior questions (how to decide on, layout, and specify models). It additionally examines a number of modelling matters and difficulties via case stories - modelling the Phillips curve and company cycles. The 3rd a part of the ebook delves into the improvement of 3 key features of version specification intimately - structural parameters, blunders phrases, and version choice and layout strategies. the ultimate bankruptcy makes use of quotation analyses to review the influence of the CC paradigm over the span of 3 and part a long time (1970-2005). The quotation facts express that the influence has remained wide and comparatively robust despite sure weakening symptoms. It means that the reformative makes an attempt have fallen wanting inflicting a paradigm shift.
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Extra resources for A History of Econometrics: The Reformation from the 1970s
The mathematical model-building industry has grown into one of the most prestigious, possibly the most prestigious branch of economics. . Alongside the mounting pile of elaborate theoretical models we see a fast-growing stock of equally intricate statistical tools. These are intended to stretch to the limit the meagre supply of facts. . In no other ﬁeld of empirical inquiry has so massive and sophisticated a statistical machinery been used with such indifferent results. Nevertheless, theorists continue to turn out model after model and mathematical statisticians to devise complicated procedures one after another.
Leontief, 1971: 1–5). To a great extent, the criticisms of these eminent ﬁgures endorsed forcefully what Vining (1949) had objected to in the CC approach on behalf of the NBER approach twenty years earlier, as well as those subsequently and periodically voiced criticisms in relation to business cycle modelling research (see Chapter 6). The criticisms were soon echoed by a wave of condemnation of the formalist movement in economics, for example see Phelps Brown 22 Consolidation of the Cowles Commission Programme (1972); Worswick (1972).
One interesting example was a joint study by Chamberlain and Griliches (1975) on modelling the economic effect of education. Technically, their ‘novel’ contribution was the device of an ML estimation procedure for an SEM extended with the error-in-variable component, an extension aimed at representing the unobservable-variable phenomenon. However, they concluded, after all the effort spent on deriving the ML estimation procedure, that this new procedure ‘did not produce results which differed greatly from those based on simpler methods’ and that this ‘elaborate procedure, designed to detect possible sources of bias, yielded little evidence of such bias’ 11 The enduring effect of the consolidation in micro-econometrics is discernible from Heckman’s (2000) retrospection of the CC tradition.