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Evaluating Macroeconometric Modelling with Regard to Usefulness: a Survey

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  • Haakon O. Aa. Solheim
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    Abstract

    Macroeconometric models have during the last 40 years played an important role as a tool to guide decision making in public as well as private macroeconomic institutions. However, such models have not been much used in academic circles. We argue that macroeconometric models have problems both with regard to internal and external validity. Although the science of econometrics has partly answered the problem of internal validity, macroeconometric modelling is still dismissed by theorists as inappropriate for theoretical development. We find that the argument over how to evaluate macroeconometric modelling can be viewed as a result of the relationship between observed economic variables and economic theory.

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    File URL: http://www.nopecjournal.org/NOPEC_2005_a01.pdf
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    Bibliographic Info

    Article provided by Nordic Journal of Political Economy in its journal Nordic Journal of Political Economy.

    Volume (Year): 31 (2005)
    Issue (Month): ()
    Pages: 3-15

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    Handle: RePEc:noj:journl:v:31:y:2005:p:3-15

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    Web page: http://www.nopecjournal.org

    Related research

    Keywords: econometric models; theory of science;

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    1. Richard Clarida & Jordi Galí & Mark Gertler, 1997. "The science of monetary policy: A new Keynesian perspective," Economics Working Papers 356, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 1999.
    2. Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 1997. "Monetary policy shocks: what have we learned and to what end?," Working Paper Series, Macroeconomic Issues WP-97-18, Federal Reserve Bank of Chicago.
    3. J. Bradford De Long, 2000. "The Triumph of Monetarism?," Journal of Economic Perspectives, American Economic Association, vol. 14(1), pages 83-94, Winter.
    4. Haavelmo, Trygve, 1997. "Econometrics and the Welfare State," American Economic Review, American Economic Association, vol. 87(6), pages 13-15, December.
    5. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-70, November.
    6. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
    7. Lucas, Robert E, Jr, 1980. "Methods and Problems in Business Cycle Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 12(4), pages 696-715, November.
    8. Granger, Clive W. J. & Jeon, Yongil, 2004. "Thick modeling," Economic Modelling, Elsevier, vol. 21(2), pages 323-343, March.
    9. Summers, Lawrence H, 1991. " The Scientific Illusion in Empirical Macroeconomics," Scandinavian Journal of Economics, Wiley Blackwell, vol. 93(2), pages 129-48.
    10. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
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