Authors
Tobias Henschen
University of Freiburg
Abstract
The paper analyzes the methods that macroeconomists can use to provide evidence in support of causal hypotheses: the instrumental variable method and econometric causality tests. It argues that the evidence that macroeconomists provide when using these methods is in principle too inconclusive to support the hypothesis that X directly type-level causes Y, where X and Y stand for macroeconomic aggregates like the real interest rate and aggregate demand. The evidence provided by the IV method is too inconclusive because it derives from conditions requiring that there be no confounders of I and X and X and Y, and because in macroeconomics, confounders that cannot be controlled for or measured are likely to be present. The evidence provided by econometric causality tests is too inconclusive because they can be shown to rely on the conditions of the IV method at least tacitly.
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DOI 10.1007/s13194-018-0207-7
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References found in this work BETA

Causality in Macroeconomics.Kevin D. Hoover - 2001 - Cambridge University Press.
What is Macroeconomic Causality?Tobias Henschen - 2018 - Journal of Economic Methodology 25 (1):1-20.
Stochastic Independence, Causal Independence, and Shieldability.Wolfgang Spohn - 1980 - Journal of Philosophical Logic 9 (1):73 - 99.

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Citations of this work BETA

Big Data and Prediction: Four Case Studies.Robert Northcott - 2020 - Studies in History and Philosophy of Science Part A 81:96-104.
Response to Henschen: Causal Pluralism in Macroeconomics.Mariusz Maziarz & Robert Mróz - 2019 - Journal of Economic Methodology 27 (2):164-178.
A Rejoinder to Henschen: The Issue of VAR and DSGE Models.Mariusz Maziarz & Robert Mróz - 2020 - Journal of Economic Methodology 27 (3):266-268.

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