Encompassing and rational expectations: how sequential corroboration can imply refutation

Even though pieces of empirical evidence individually may corroborate an economic theory, their joint existence may refute that same theory. We discuss examples concerning testing for omitted variables, simultaneity, and rational expectations in the context of general-to-simple versus simple-to-general modeling. The proposition in the first sentence strongly favors the building of empirical models which are consistent with all available evidence.

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Year of publication:	1989
Authors:	Ericsson, Neil R. ; Hendry, David F.
Institutions:	Federal Reserve Board (Board of Governors of the Federal Reserve System)
Subject:	Economics \| Rational expectations (Economic theory)

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Extent:	text/html application/pdf
Series:	International Finance Discussion Papers.
Type of publication:	Book / Working Paper
Notes:	Number 354
Source:	RePEc - Research Papers in Economics

Persistent link: https://ebvufind01.dmz1.zbw.eu/10005368372