IDEAS home Printed from https://ideas.repec.org/a/zbw/ifweej/7596.html
   My bibliography  Save this article

The Pre-Eminence of Theory versus the European CVAR Perspective in Macroeconometric Modeling

Author

Listed:
  • Spanos, Aris

Abstract

The primary aim of the paper is to place current methodological discussions in macroeconometric modeling contrasting the 'theory first' versus the 'data first' perspectives in the context of a broader methodological framework with a view to constructively appraise them. In particular, the paper focuses on Colander's argument in his paper 'Economists, Incentives, Judgement, and the European CVAR Approach to Macroeconometrics' contrasting two different perspectives in Europe and the US that are currently dominating empirical macroeconometric modeling and delves deeper into their methodological/philosophical underpinnings. It is argued that the key to establishing a constructive dialogue between them is provided by a better understanding of the role of data in modern statistical inference, and how that relates to the centuries old issue of the realisticness of economic theories.

Suggested Citation

  • Spanos, Aris, 2009. "The Pre-Eminence of Theory versus the European CVAR Perspective in Macroeconometric Modeling," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-14.
    • Handle: RePEc:zbw:ifweej:7596
    DOI: 10.5018/economics-ejournal.ja.2009-10
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.5018/economics-ejournal.ja.2009-10
    Download Restriction: no
    File URL: https://www.econstor.eu/bitstream/10419/27530/1/economics_2009-10.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.5018/economics-ejournal.ja.2009-10?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Colander, David C., 2009. "Economists, incentives, judgment, and the European CVAR approach to macroeconometrics," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-21.
    2. Ireland, Peter N., 2004. "A method for taking models to the data," Journal of Economic Dynamics and Control, Elsevier, vol. 28(6), pages 1205-1226, March.
    3. Spanos, Aris, 1995. "On theory testing in econometrics : Modeling with nonexperimental data," Journal of Econometrics, Elsevier, vol. 67(1), pages 189-226, May.
    4. Aris Spanos, 2001. "Revisiting data mining: 'hunting' with or without a license," Journal of Economic Methodology, Taylor & Francis Journals, vol. 7(2), pages 231-264.
    5. Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x, April.
    6. Kevin D. Hoover & Soren Johansen & Katarina Juselius, 2008. "Allowing the Data to Speak Freely: The Macroeconometrics of the Cointegrated Vector Autoregression," American Economic Review, American Economic Association, vol. 98(2), pages 251-255, May.
    7. Spanos,Aris, 1986. "Statistical Foundations of Econometric Modelling," Cambridge Books, Cambridge University Press, number 9780521269124, October.
    8. Aris Spanos, 2006. "Revisiting the omitted variables argument: Substantive vs. statistical adequacy," Journal of Economic Methodology, Taylor & Francis Journals, vol. 13(2), pages 179-218.
    9. Lord Robbins, 1971. "Autobiography of an Economist," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-01164-3, December.
    10. Spanos, Aris, 1990. "The simultaneous-equations model revisited : Statistical adequacy and identification," Journal of Econometrics, Elsevier, vol. 44(1-2), pages 87-105.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Katarina Juselius, 2017. "Using a Theory-Consistent CVAR Scenario to Test an Exchange Rate Model Based on Imperfect Knowledge," Econometrics, MDPI, vol. 5(3), pages 1-20, July.
    2. Chatelain, Jean-Bernard & Ralf, Kirsten, 2018. "Publish and Perish: Creative Destruction and Macroeconomic Theory," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 46(2), pages 65-101.
    3. Katarina Juselius, 2022. "A Theory-Consistent CVAR Scenario for a Monetary Model with Forward-Looking Expectations," Econometrics, MDPI, vol. 10(2), pages 1-15, April.
    4. Katarina Juselius & Niels Framroze Møller & Finn Tarp, 2014. "The Long-Run Impact of Foreign Aid in 36 African Countries: Insights from Multivariate Time Series Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 76(2), pages 153-184, April.
    5. Juselius, Katarina & Dimelis, Sophia, 2019. "The Greek crisis: A story of self-reinforcing feedback mechanisms," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 13, pages 1-22.
    6. Julio López Gallardo & Luis Antonio Reyes Ortiz, 2014. "Effective Demand in the Recent Evolution of the US Economy [Demande Effective dans l'évolution récente de l'économie des Etats-Unis]," Post-Print halshs-01907268, HAL.
    7. Katarina Juselius, 2021. "Searching for a Theory That Fits the Data: A Personal Research Odyssey," Econometrics, MDPI, vol. 9(1), pages 1-27, February.
    8. Haile, Fiseha, 2017. "Global shocks and their impact on the Tanzanian economy," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 11, pages 1-38.
    9. Ordóñez, Javier & Jusélius, Katarina, 2009. "Balassa-Samuelson and Wage, Price and Unemployment Dynamics in the Spanish Transition to EMU Membership," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-30.
    10. Spanos, Aris, 2010. "Statistical adequacy and the trustworthiness of empirical evidence: Statistical vs. substantive information," Economic Modelling, Elsevier, vol. 27(6), pages 1436-1452, November.
    11. Katarina Juselius, 2011. "On the Role of Theory and Evidence in Macroeconomics," Chapters, in: John B. Davis & D. Wade Hands (ed.), The Elgar Companion to Recent Economic Methodology, chapter 17, Edward Elgar Publishing.
    12. Francesco Sergi, 2020. "The Standard Narrative about DSGE Models in Central Banks’ Technical Reports," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 27(2), pages 163-193, March.
    13. Haile, Fiseha, 2016. "Global shocks and their impact on the Tanzanian Economy," Economics Discussion Papers 2016-47, Kiel Institute for the World Economy (IfW Kiel).
    14. Katarina Juselius, 2017. "A CVAR scenario for a standard monetary model using theory-consistent expectations," Discussion Papers 17-08, University of Copenhagen. Department of Economics.
    15. Katarina Juselius, 2009. "Time to reject the privileging of economic theory over empirical evidence? A Reply to Lawson (2009)," Discussion Papers 09-16, University of Copenhagen. Department of Economics.
    16. Niraj Poudyal & Aris Spanos, 2022. "Model Validation and DSGE Modeling," Econometrics, MDPI, vol. 10(2), pages 1-25, April.
    17. Boris Salazar, 2016. "Mandelbrot, Fama and the emergence of econophysics," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 35(69), pages 637-662, April.
    18. Julio Lopez-Gallardo & Luis Reyes-Ortiz, 2011. "Effective Demand in the Recent Evolution of the US Economy," Economics Working Paper Archive wp_673, Levy Economics Institute.
    19. Colander, David C., 2009. "Economists, incentives, judgment, and the European CVAR approach to macroeconometrics," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-21.
    20. Katarina Juselius & Niels Framroze Møller & Finn Tarp, 2014. "The Long-Run Impact of Foreign Aid in 36 African Countries: Insights from Multivariate Time Series Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 76(2), pages 153-184, April.
    21. Jusélius, Katarina, 2009. "Special Issue on Using Econometrics for Assessing Economic Models: An Introduction," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-20.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Spanos, Aris, 2008. "The 'Pre-Eminence of Theory' versus the 'General-to-Specific' Cointegrated VAR Perspectives in Macro-Econometric Modeling," Economics Discussion Papers 2008-25, Kiel Institute for the World Economy (IfW Kiel).
    2. Spanos, Aris, 2010. "Akaike-type criteria and the reliability of inference: Model selection versus statistical model specification," Journal of Econometrics, Elsevier, vol. 158(2), pages 204-220, October.
    3. Spanos, Aris, 2010. "Statistical adequacy and the trustworthiness of empirical evidence: Statistical vs. substantive information," Economic Modelling, Elsevier, vol. 27(6), pages 1436-1452, November.
    4. Aris Spanos, 2016. "Transforming structural econometrics: substantive vs. statistical premises of inference," Review of Political Economy, Taylor & Francis Journals, vol. 28(3), pages 426-437, July.
    5. Katarina Juselius, 2009. "Time to reject the privileging of economic theory over empirical evidence? A Reply to Lawson (2009)," Discussion Papers 09-16, University of Copenhagen. Department of Economics.
    6. Aris Spanos & Niki Papadopoulou, 2013. "A Small Macroeconometric Model for the Cyprus Economy," Working Papers 2013-2, Central Bank of Cyprus.
    7. Aris Spanos, 2009. "Statistical Misspecification and the Reliability of Inference: The Simple T-Test in the Presence of Markov Dependence," Korean Economic Review, Korean Economic Association, vol. 25, pages 165-213.
    8. Aris Spanos, 2018. "Mis†Specification Testing In Retrospect," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 541-577, April.
    9. Anya McGuirk & Aris Spanos, 2009. "Revisiting Error‐Autocorrelation Correction: Common Factor Restrictions and Granger Non‐Causality," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(2), pages 273-294, April.
    10. Aris Spanos, 2006. "Revisiting the omitted variables argument: Substantive vs. statistical adequacy," Journal of Economic Methodology, Taylor & Francis Journals, vol. 13(2), pages 179-218.
    11. Aris Spanos, 2022. "Frequentist Model-based Statistical Induction and the Replication Crisis," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 20(1), pages 133-159, September.
    12. Raffaella Giacomini, 2013. "The relationship between DSGE and VAR models," CeMMAP working papers CWP21/13, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    13. Chatelain, Jean-Bernard & Ralf, Kirsten, 2018. "Publish and Perish: Creative Destruction and Macroeconomic Theory," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 46(2), pages 65-101.
    14. McGuirk, Anya M. & Spanos, Aris, 2004. "Revisiting Error Autocorrelation Correction: Common Factor Restrictions And Granger Causality," 2004 Annual meeting, August 1-4, Denver, CO 20176, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. Aris Spanos & Niki Papadopoulou, 2013. "A Small Macroeconometric Model for the Cyprus Economy," Working Papers 2013-02, Central Bank of Cyprus.
    16. Paccagnini, Alessia, 2017. "Dealing with Misspecification in DSGE Models: A Survey," MPRA Paper 82914, University Library of Munich, Germany.
    17. Katarina Juselius, 2011. "On the Role of Theory and Evidence in Macroeconomics," Chapters, in: John B. Davis & D. Wade Hands (ed.), The Elgar Companion to Recent Economic Methodology, chapter 17, Edward Elgar Publishing.
    18. Katarina Juselius, 2017. "A CVAR scenario for a standard monetary model using theory-consistent expectations," Discussion Papers 17-08, University of Copenhagen. Department of Economics.
    19. Niraj Poudyal & Aris Spanos, 2022. "Model Validation and DSGE Modeling," Econometrics, MDPI, vol. 10(2), pages 1-25, April.
    20. Buck, Andrew J. & Lady, George M., 2005. "Falsifying economic models," Economic Modelling, Elsevier, vol. 22(5), pages 777-810, September.

    More about this item

    Keywords

    Econometric methodology; 'general-to-specific'; pre-eminence of theory; cointegrated VAR; statistical adequacy; realisticness of a theory;
    All these keywords.

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:ifweej:7596. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/iwkiede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.