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Computing, the bootstrap and economics

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  • Russell Davidson

Abstract

A major contention in this paper is that scientific models can be viewed as virtual realities, implemented, or rendered, by mathematical equations or by computer simulations. Their purpose is to help us understand the external reality that they model. In economics, particularly in econometrics, models make use of random elements, so as to provide quantitatively for phenomena that we cannot or do not wish to model explicitly. By varying the realizations of the random elements in a simulation, it is possible to study counterfactual outcomes, which are necessary for any discussion of causality. The bootstrap is virtual reality within an outer reality. The principle of the bootstrap is that, if its virtual reality mimics as closely as possible the reality that contains it, it can be used to study aspects of that outer reality. The idea of bootstrap iteration is explored, and a discrete model discussed that allows investigators to perform iteration to any desired level.

Suggested Citation

  • Russell Davidson, 2015. "Computing, the bootstrap and economics," Canadian Journal of Economics, Canadian Economics Association, vol. 48(4), pages 1195-1214, November.
    • Handle: RePEc:cje:issued:v:48:y:2015:i:4:p:1195-1214
    DOI: 10.1111/caje.12158
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    Cited by:

    1. Boldea, Otilia & Cornea-Madeira, Adriana & Hall, Alastair R., 2019. "Bootstrapping structural change tests," Journal of Econometrics, Elsevier, vol. 213(2), pages 359-397.
    2. Mouchart, Michel & Orsi, Renzo & Wunsch, Guillaume, 2020. "Causality in econometric modeling. From theory to structural causal modeling," LIDAM Discussion Papers ISBA 2020021, Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA).
    3. Russell Davidson & Victoria Zinde-Walsh, 2017. "Advances in specification testing," Canadian Journal of Economics, Canadian Economics Association, vol. 50(5), pages 1595-1631, December.
    4. Davidson, Russell & Trokić, Mirza, 2020. "The fast iterated bootstrap," Journal of Econometrics, Elsevier, vol. 218(2), pages 451-475.

    More about this item

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General

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