The Regrettable Loss of Mathematical Molding in Econometrics

Mathematical molding disappeared in the changeover from methods to specify causal mechanisms of business cycles to methods to identify economic structures, that is, invariant relationships underlying the workings of an economy. Mathematical molding could fulfill its role in modeling business cycle mechanisms because of the assumed close connection between mathematical representations of the business-cycle phenomenon and those of the explanatory mechanism. When the econometric program shifted its focus from mechanisms explaining phenomena to uncovering structural relationships, direct feedback from the phenomenon to the mechanism was lost and the role of mathematical molding ceased to exist