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The foundations of econometrics-are there any 

Authors: P. A. V. B. Swamy a;  Roger K. Conway b; P. Vor zur Muehlen a
Affiliations:   a Federal Reserve Board, Special Studies, Washington, DC
b Department of Commerce, Bureau of Economic Analysis, Washington, DC
DOI: 10.1080/07474938508800071
Publication Frequency: 6 issues per year
Published in: journal Econometric Reviews, Volume 4, Issue 1 1985 , pages 1 - 61
Formats available: PDF (English)
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Abstract

The conclusions of alogically consistent economic theory which strictly adheres to Aristotle's axioms of logic are factually true if its sufficient conditions are all factually true. Alternatively, if a conclusion of such a theory is false, then at- least one of its assumptions is false. Unfortunately, the factual truth of sufficient conditions cannot be established because the problem of induction i s impossible t o solve. It is algo true that the falsity of a conclusion cannot be established in the presence of uncertainty. While the philosophy of instrumentalism applied to sufficient and logically consistent explanations may provide useful solutions to immediate practical problems, the principles of simplicity, parsimony and profligacy--all of them requiring conditional deductive arguments--are useless as criteria for model choice.
Keywords: Foundations of Econometrics; The two-valued logic; The problem of induction; Instrumentalism; Local coherence; Many-valued logic; Evidential interpretation
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