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Methodological Mistakes and Econometric Consequences

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  • Asad Zaman

    (International Institute of Islamic Economic, International Islamic University of Islamabad, Pakistan.)

Abstract

Econometric Methodology is based on logical positivist principles. Since logical positivism has collapsed, it is necessary to re-think these foundations. We show that positivist methodology has led econometricians to a meaningless search for patterns in the data. An alternative methodology which relates observed patterns to real causal structures is proposed.

Suggested Citation

  • Asad Zaman, 2012. "Methodological Mistakes and Econometric Consequences," International Econometric Review (IER), Econometric Research Association, vol. 4(2), pages 99-122, September.
    • Handle: RePEc:erh:journl:v:4:y:2012:i:2:p:99-122
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    References listed on IDEAS

    as
    1. Atiq-ur-Rehman, 2011. "Impact of Model Specification Decisions on Unit Root Tests," International Econometric Review (IER), Econometric Research Association, vol. 3(2), pages 22-33, September.
    2. Asad Zaman, 2012. "Methodological Mistakes and Econometric Consequences," International Econometric Review (IER), Econometric Research Association, vol. 4(2), pages 99-122, September.
    3. Leamer, Edward E, 1983. "Let's Take the Con Out of Econometrics," American Economic Review, American Economic Association, vol. 73(1), pages 31-43, March.
    4. Asad Zaman, 2010. "Causal Relations via Econometrics," International Econometric Review (IER), Econometric Research Association, vol. 2(1), pages 36-56, April.
    5. Zaman, Asad, 2010. "Normative foundations of scarcity," MPRA Paper 21817, University Library of Munich, Germany.
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    Cited by:

    1. Asad Zaman, 2012. "Methodological Mistakes and Econometric Consequences," International Econometric Review (IER), Econometric Research Association, vol. 4(2), pages 99-122, September.
    2. Asad Zaman, 2017. "Lessons in Econometric Methodology: The Axiom of Correct Specification," International Econometric Review (IER), Econometric Research Association, vol. 9(2), pages 50-68, September.
    3. Hussain, Anwar & Rahman, Muhammad & Memon, Junaid Alam, 2016. "Forecasting electricity consumption in Pakistan: the way forward," Energy Policy, Elsevier, vol. 90(C), pages 73-80.
    4. Sidika Basci & Nadia Hassan, 2020. "Using Numbers to Persuade: Hidden Rhetoric of Statistics," International Econometric Review (IER), Econometric Research Association, vol. 12(1), pages 75-97, April.
    5. Sultan Mehmood, 2014. "Terrorism and the macroeconomy: Evidence from Pakistan," Defence and Peace Economics, Taylor & Francis Journals, vol. 25(5), pages 509-534, October.
    6. Asad Zaman, 2014. "An Islamic Approach to Humanities مقاربة إسلامية للعلوم الإنسانية," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 27(2), pages 3-28, July.
    7. Hasan, Zubair, 2018. "Methodology of Islamic economics: Is the subject worth discussing?," MPRA Paper 85824, University Library of Munich, Germany.
    8. Hasan, Zubair, 2018. "Alarming rise in predatory publishing and its consequences for Islamic economics and finance education," MPRA Paper 86146, University Library of Munich, Germany, revised 16 Oct 2018.
    9. Asad Zaman & Taseer Salahuddin, 2020. "Models and Reality: How Did Models Divorced from Reality Become Epistemologically Acceptable?," International Econometric Review (IER), Econometric Research Association, vol. 12(1), pages 50-74, April.

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    More about this item

    Keywords

    Econometric Methodology; logical positivism; realism; causality; VAR models; Forecasting; surprise; goodness of fit.;
    All these keywords.

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General

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