Critical Realism and Econometrics : Constructive Dialogue with Post Keynesian Economics

The philosophy of science known as critical realism, as developed in economics, offers both a methodological critique of mainstream economics and a methodological foundation for alternative economic perspectives. Post Keynesian economics is a school of thought that has often been defined in terms of its opposition to the mainstream and has, to varying degrees, become allied to critical realism. Post Keynesians have not fully developed the detailed epistemological consequences of a commitment to critical realism. One such consequence is a possible tension over the use of econometric methods. This arises because, on the one hand, many of the epistemological pronouncements of critical realism imply the suspicion of econometric methods. On the other hand, many Post Keynesians regularly employ these methods in their desire to apply economic analysis. This paper examines these tensions and shows that drawing upon Post Keynesian economics a useful symbiosis of ideas is produced which has positive implications for the practice of critical-realist empirical work including econometrics