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The Formation of EconometricsA Historical Perspective$
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Duo Qin

Print publication date: 1997

Print ISBN-13: 9780198292876

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0198292872.001.0001

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(p.121) 5 Testing
The Formation of Econometrics

Qin Duo

Oxford University Press

Addresses the issue of testing, and reveals some intrinsic problems pertaining to hypothesis testing beneath the achievements of formalizing econometrics. Theory verification through applied studies forms one of the main motives for formalizing methods of model estimation and identification, and the statistical theory of hypothesis testing was accepted without much dispute quite early as the technical vehicle to fulfil this desire. However, during the adoption of the theory into econometrics in the 1940s and 1950s, the achievable domain of verification turned out to be considerably reduced, as testing in econometrics proper gradually dwindled into part of the modelling procedure and pertained to model evaluation using statistical testing tools; in the applied field, empirical modellers took on the task of discriminating between and verifying economic theories against the model results, and carried this out in an ad hoc and often non‐sequitur manner. Describes how the desire to test diverged into model evaluation in econometric theory on the one hand, and economic theory verification in practice on the other, as econometric testing theory took shape. The story begins with the early period prior to the formative movement in the first section of the chapter; the following section looks at the period in which the theme of hypothesis testing was introduced, and the first test emerged in econometrics; the last two sections report, respectively, on how model testing in applied econometrics and test design in theoretical econometrics developed and moved apart.

Keywords:   applied econometrics, econometric modelling, econometric models, econometric testing theory, econometric theory, econometrics, economic theory, formalization, history, hypothesis testing, model evaluation, statistical testing, test design, testing, verification

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