Probability Econometrics and Truth

When John Maynard Keynes likened Jan Tinbergen''s early work in econometrics to black magic and alchemy he was expressing a widely held view of a new discipline. However even after half a century of practical work and theorizing by some of the most accomplished social scientists Keynes'' comments are still repeated today. This book assesses the foundations and development of econometrics and sets out a basis for the reconstruction of the foundations of econometric inference by examining the various interpretations of probability theory which underlie econometrics. Keuzenkamp claims that the probabilistic foundations of econometrics are weak and although econometric inferences may yield interesting knowledge claims to be able to falsify or verify economic theories are unwarranted. Methodological falsificationism in econometrics is an illusion. Instead it is argued econometrics should locate itself in the tradition of positivism.