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But Economics Is Not an Experimental Science

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  • Christopher A. Sims

Abstract

The fact is, economics is not an experimental science and cannot be. "Natural" experiments and "quasi" experiments are not in fact experiments. They are rhetorical devices that are often invoked to avoid having to confront real econometric difficulties. Natural, quasi-, and computational experiments, as well as regression discontinuity design, can all, when well applied, be useful, but none are panaceas. The essay by Angrist and Pischke, in its enthusiasm for some real accomplishments in certain subfields of economics, makes overbroad claims for its favored methodologies. What the essay says about macroeconomics is mainly nonsense. Consequently, I devote the central part of my comment to describing the main developments that have helped take some of the con out of macroeconomics. Recent enthusiasm for single-equation, linear, instrumental variables approaches in applied microeconomics has led many in these fields to avoid undertaking research that would require them to think formally and carefully about the central issues of nonexperimental inference -- what I see and many see as the core of econometrics. Providing empirically grounded policy advice necessarily involves confronting these difficult central issues.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.24.2.59
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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 24 (2010)
Issue (Month): 2 (Spring)
Pages: 59-68

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Handle: RePEc:aea:jecper:v:24:y:2010:i:2:p:59-68

Note: DOI: 10.1257/jep.24.2.59
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References

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  1. Frank Smets & Raf Wouters, 2002. "An estimated dynamic stochastic general equilibrium model of the euro area," Working Paper Research 35, National Bank of Belgium.
  2. Chamberlain, Gary, 1987. "Asymptotic efficiency in estimation with conditional moment restrictions," Journal of Econometrics, Elsevier, vol. 34(3), pages 305-334, March.
  3. Finn E. Kydland & Edward C. Prescott, 1994. "The computational experiment: an econometric tool," Working Paper 9420, Federal Reserve Bank of Cleveland.
  4. Milton Friedman & Anna J. Schwartz, 1963. "A Monetary History of the United States, 1867-1960," NBER Books, National Bureau of Economic Research, Inc, number frie63-1, May.
  5. Sims, Christopher A, 1980. "Comparison of Interwar and Postwar Business Cycles: Monetarism Reconsidered," American Economic Review, American Economic Association, vol. 70(2), pages 250-57, May.
  6. Leeper, Eric M., 1997. "Narrative and VAR approaches to monetary policy: Common identification problems," Journal of Monetary Economics, Elsevier, vol. 40(3), pages 641-657, December.
  7. Mehra, Yash P, 1978. "Is Money Exogenous in Money-Demand Equations," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 211-28, April.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Notes on books for Macroeconometrics
    by Gray in Pseudo-true News on 2013-04-08 15:49:43
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Cited by:
  1. Angus Deaton, 2010. "Instruments, randomization, and learning about development," Working Papers 1224, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  2. Dube, Arindrajit & Lester, T. William & Reich, Michael, 2011. "Do Frictions Matter in the Labor Market? Accessions, Separations, and Minimum Wage Effects," Institute for Research on Labor and Employment, Working Paper Series qt4t3342nd, Institute of Industrial Relations, UC Berkeley.
  3. Lahura, Erick, 2012. "Midiendo los efectos de la política monetaria a través de las expectativas de mercado," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 23, pages 39-52.
  4. James J. Heckman, 2010. "Building Bridges Between Structural and Program Evaluation Approaches to Evaluating Policy," NBER Working Papers 16110, National Bureau of Economic Research, Inc.
  5. Christopher T. Conlon & Julie Holland Mortimer, 2013. "An Experimental Approach to Merger Evaluation," NBER Working Papers 19703, National Bureau of Economic Research, Inc.
  6. Tomáš Otáhal, 2012. "Economic History: What Are the Contributions of Historical Example to Understanding of Economic Phenomena?," Politická ekonomie, University of Economics, Prague, vol. 2012(5), pages 679-693.
  7. Richard A. Ashley & Guo Li, 2013. "Re-Examining the Impact of Housing Wealth and Stock Wealth on Household Spending: Does Persistence in Wealth Changes Matter?," Working Papers e07-39, Virginia Polytechnic Institute and State University, Department of Economics.
  8. David I. Stern, 2011. "From Correlation to Granger Causality," Crawford School Research Papers 1113, Crawford School of Public Policy, The Australian National University.
  9. Niu, Yongzhi, 2010. "Taxpayers' Response to Warnings of a Possible Tax Audit: Do They Change Their Compliance Behavior?," MPRA Paper 25551, University Library of Munich, Germany.
  10. Sultan Mehmood, 2013. "Access to External Finance and Innovation: A Macroeconomic Perspective," CPB Discussion Paper 218, CPB Netherlands Bureau for Economic Policy Analysis.
  11. Mohanty, Madhu Sudan, 2012. "Effects of positive attitude and optimism on wage and employment: A double selection approach," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(3), pages 304-316.
  12. Facchini, Francois, 2014. "The determinants of public spending: a survey in a methodological perspective," MPRA Paper 53006, University Library of Munich, Germany.
  13. Bernd Hayo & Matthias Uhl, 2014. "Taxation and Consumption: Evidence from a Representative Survey of the German Population," MAGKS Papers on Economics 201420, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  14. Claude Hillinger & Bernd Süssmuth & Marco Sunder, 2012. "The Quantity Theory of Money and Friedmanian Monetary Policy: An Empirical Investigation," CESifo Working Paper Series 3754, CESifo Group Munich.
  15. Mehmood, Sultan, 2013. "Terrorism and the macroeconomy: Evidence from Pakistan," MPRA Paper 44546, University Library of Munich, Germany.
  16. Hans Haller & Hans Gersbach & Hideo Konishi, 2013. "Household Formation and Markets," Working Papers e07-37, Virginia Polytechnic Institute and State University, Department of Economics.

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