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But Economics Is Not an Experimental Science

  • Christopher A. Sims

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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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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  1. Finn E. Kydland & Edward C. Prescott, 1994. "The computational experiment: an econometric tool," Staff Report 178, Federal Reserve Bank of Minneapolis.
  2. 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.
  3. Chamberlain, Gary, 1987. "Asymptotic efficiency in estimation with conditional moment restrictions," Journal of Econometrics, Elsevier, vol. 34(3), pages 305-334, March.
  4. Frank Smets & Raf Wouters, 2002. "An estimated dynamic stochastic general equilibrium model of the euro area," Working Paper Research 35, National Bank of Belgium.
  5. 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, June.
  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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