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Econometrics and equilibrium models

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  • Lawrence A. Boland

Abstract

In Rational Econometric Man, Edward Nell and Karim Errouaki present a welcome and timely case for the view that econometrics and econometric model-building may not be the magic tools to solve all empirical questions despite what many seem to have thought they were in the 1960s. Here I examine some possible problems with econometric models that have to do with their usually taking the form of equilibrium models. Some of these problems were recognized by Trygve Haavelmo decades ago. And as Aris Spanos has recently discussed, the problems are often the result of what we say in our textbooks. Some problems have to do with what we mean by econometric parameters and others with how we use probabilities.

Suggested Citation

  • Lawrence A. Boland, 2016. "Econometrics and equilibrium models," Review of Political Economy, Taylor & Francis Journals, vol. 28(3), pages 438-447, July.
    • Handle: RePEc:taf:revpoe:v:28:y:2016:i:3:p:438-447
    DOI: 10.1080/09538259.2016.1154757
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    References listed on IDEAS

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    1. Spanos, Aris, 1989. "On Rereading Haavelmo: A Retrospective View of Econometric Modeling," Econometric Theory, Cambridge University Press, vol. 5(3), pages 405-429, December.
    2. Paul Davidson, 1996. "Reality and Economic Theory," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 18(4), pages 479-508, July.
    3. J. M. Keynes, 1937. "The General Theory of Employment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 51(2), pages 209-223.
    4. Swamy, P A V B, 1970. "Efficient Inference in a Random Coefficient Regression Model," Econometrica, Econometric Society, vol. 38(2), pages 311-323, March.
    5. Armen A. Alchian, 1950. "Uncertainty, Evolution, and Economic Theory," Journal of Political Economy, University of Chicago Press, vol. 58, pages 211-211.
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