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How to Distinguish Cause and Effect? (2011 Nobel Memorial Prize in Economics)
https://doi.org/10.32609/0042-8736-2012-1-4-20
Abstract
The paper discusses the contribution of 2011 Nobel laureates, Thomas Sargent and Christopher Sims, to economics. It is shown how these two economists proposed to analyze causal relationships in macroeconomics. The common idea of the two laureates is that one should not look for isolated empirical relationships; rather, one should seek theories, which are capable of explaining the observed regularities, and then subject the whole theories to empirical tests. However, the specific methods proposed by the two economists differ. Thus, Sargent proposed to test a specific model; Sims, on the other hand, introduced the method called structural autoregression, in which an econometric model is subjected to a minimal set of theoretical restrictions encompassing a large set of theoretical models. Then the paper discusses applications of this logic to different situations.
Keywords
macroeconomics,
economic policy,
inflation,
unemployment,
rational expectations,
Nobel Prize in economics
JEL: C01;E3;E4;E5
About the Authors
O. Zamulin
National Research University Higher School of Economics
Russian Federation
Russian Federation
K. Styrin
New Economic School
Russian Federation
Russian Federation
References
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Review
For citations:
Zamulin O., Styrin K. How to Distinguish Cause and Effect? (2011 Nobel Memorial Prize in Economics). Voprosy Ekonomiki. 2012;(1):4-20. (In Russ.) https://doi.org/10.32609/0042-8736-2012-1-4-20
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