On Congruent Econometric Relations: A Comment.

The paper responds to the claimed criticisms in Faust and Whiteman (1997) of the ‘LSE’ approach to empirical macro-econometrics. Their bold attempt to inter-relate ‘alternative methodologies’ is undone by misconceptions which lead them to incorrect conclusions. To clarify the analysis, the notion of structure is reviewed to underpin sustainable econometric relations, then identification and exogeneity are reconsidered. The theory of reduction and modelling strategies are examined, as is the basis for policy. The results rebut their claims, and confirm the need for a progressive research strategy which combines the best of both theory and evidence.© 1997 Elsevier Science B.V. All rights reserved. NOTICE: this is the author’s version of a work that was accepted for publication in Carnegie-Rochester Conference Series on Public Policy. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Carnegie-Rochester Conference Series on Public Policy, 47, (December 1997) DOI#10.1016/S0167-2231(98)00008-