Causal Relations via Econometrics
International Econometric Review, Vol 2, No. 1, p 36-56, April 2010
31 Pages Posted: 7 Apr 2009 Last revised: 3 Sep 2012
Date Written: April 7, 2009
Applied econometric work takes a superficial approach to causality. Understanding economic affairs, making good policy decisions, and progress in the economic discipline depend on our ability to infer causal relations from data. We review the dominant approaches to causality in econometrics, and suggest why they fail to give good results. We feel the problem cannot be solved by traditional tools, and requires some out-of-the-box thinking. Potentially promising approaches to solutions are discussed.
Keywords: causality, regression, exogeneity, Hendry methodology, natural experiments
JEL Classification: C5, C59
Suggested Citation: Suggested Citation