The First Stage in Hendry’s Reduction Theory Revisited
AbstractThe reduction theory of David F. Hendry provides a comprehensive probabilistic framework for the analysis and classification of the reductions associated with empirical econometric models. However, it is unable to provide an analysis on the same underlying probability space of the first reduction - and hence the subsequent reductions - given a commonplace theory of social reality, namely the joint hypotheses that the course of history is indeterministic, that history does not repeat itsself, and that the future depends on the past. As a solution this essay proposes that the elements of the underlying outcome space in Hendry’s theory are interpreted as indeterministic worlds made up of historically inherited particulars.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Département des Sciences Economiques in its series Discussion Papers (ECON - Département des Sciences Economiques) with number 2006041.
Date of creation: 01 Sep 2006
Date of revision:
Theory of recution; DGP; Possible worlds; Measurement error; Probabilistic causality;
Other versions of this item:
- SUCARRAT, Genaro, 2006. "The first stage in Hendry’s reduction theory revisited," CORE Discussion Papers 2006082, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
- C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-13 (All new papers)
- NEP-ECM-2007-01-13 (Econometrics)
- NEP-HPE-2007-01-13 (History & Philosophy of Economics)
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