The Methodology of Empirical Macroeconomics by Kevin D. Hoover

By Kevin D. Hoover

Monetary technique more often than not specializes in microeconomic conception. The technique of Empirical Macroeconomics breaks new floor by means of focusing in its place at the actual difficulties that come up for macroeconomists attempting to relate concept to info. It demonstrates that with cautious awareness to real macroeconomic perform, financial method and the philosophy of technology support to solve difficulties confronted by way of operating macroeconomists. a few concerns addressed are: the connection among theoretical versions and empirical observations; microfoundations for macroeconomics; the scope and nature of financial legislation, the function of idealizations, methodological individualism, and the matter of causality.

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Pissarides mentions that an implication of his analysis is that a plot of the unemployment and the vacancy rate should make 15 Anand and Kanbur (1995), p. 321. 42 Are There Macroeconomic Laws? 16 Furthermore, he states that such loops are observed. Let us look at this question using some primitive econometrics. S. data, I plotted a measure of help-wanted advertisements in newspapers against the unemployment rate for the United States, quarterly from 1951 (earliest available data) through 1986, retaining ten years of observations for checking stability.

The methodological question that it raises is this: what is the explanatory relationship between a macroeconomic model and empirical observations? a standard view It is much easier to make a persuasive case for a view if one has another plausible view that it can refute. Rhetorically, we credit the knight more for slaying the dragon than for his own special virtues. The usual dragon, the most 19 The Methodology of Empirical Macroeconomics common foil, in discussions of scientific explanation is the covering-law model of explanation.

Laws may be related hierarchically. 67 ¥ 10-11 newtons-m2/kg2 is the universal gravitational constant; and by initial conditions: M = Me, the mass of the earth R = Re, the distance between m and the center of the earth. Together these imply 22 Are There Macroeconomic Laws? a = GMe/Re ∫ g from which V = gt follows immediately. The power of deductive-nomological explanations is felt most keenly when the explanations unwind complexities. Consider a sheet of paper and a steel ball dropped from fifteen thousand meters.

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