Post hoc ergo propter once more an evaluation of 'does monetary policy matter?' in the spirit of James Tobin
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1994-01-01
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Christina and David Romer's paper 'Does Monetary Policy Matter?' advocates the so-called 'narrative' approach to causal inference. We demonstrate that this method will not sustain causal inference. First, it is impossible to distinguish monetary shocks from oil shocks as causes of recessions. Second, a world in which the Fed only announces intentions to act cannot be distinguished from one in which it in fact acts. Third, the techniques of dynamic simulation used in the Romers' study are inappropriate and quantitatively misleading. And, finally, their approach provides no basis for establishing causal asymmetry. © 1994.
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Hoover, KD, and SJ Perez (1994). Post hoc ergo propter once more an evaluation of 'does monetary policy matter?' in the spirit of James Tobin. Journal of Monetary Economics, 34(1). pp. 47–74. 10.1016/0304-3932(94)01149-4 Retrieved from https://hdl.handle.net/10161/1981.
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Kevin Douglas Hoover
Professor Hoover's research interests include macroeconomics, monetary economics, the history of economics, and the philosophy and methodology of empirical economics. His recent work in economics has focused on the application of causal search methodologies for structural vector autoregression, the history of microfoundational programs in macroeconomics, and Roy Harrod's early work on dynamic macroeconomics. In philosophy, he has concentrated on issues related to causality, especially in economics, and on reductionism -- the philosophical counterpart to microfoundations. Recent publications include:
- "Trygve Haavelmo's Experimental Methodology and Scenario Analysis in a Cointegrated Vector Autoregression" (Econometric Theory, 2015),
- "Reductionism in Economics: Intentionality and Eschatological Justification in the Microfoundations of Macroeconomics" (Philosophy of Science 2015),
- "Mathematical Economics Comes to America: Charles S. Peirce’s Engagement with Cournot’s Recherches sur les Principes Mathematiques de la Théorie des Richesses" (Journal of the History of Economic Thought, 2015),
- "The Genesis of Samuelson and Solow’s Price-Inflation Phillips Curve" (History of Economics Review, 2015),
- "Solow's Harrod: Transforming Cyclical Dynamics into a Model of Long-run Growth" (European Journal of the History of Economic Thought 2015),
- "In the Kingdom of Solovia: The Rise of Growth Economics at MIT, 1956-1970" (History of Political Economy 2014),
- “Still Puzzling: Evaluating the Price Puzzle in an Empirically Identified Structural Vector Autoregression” (Empirical Economics, 2014),
- "On the Reception of Haavelmo's Econometric Thought" (Journal of the History of Economic Thought, 2014) – winner of the History of Economics Society Best Paper Award in 2015.
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