Errors of Econometric Methodology in the Study of Economics Theories

Document Type : Original Article

Authors

1 Ph.D. in Economics

2 Asistant Professor in Mangemanet, Kashan University

3 Associate Professor in Economics, USB

Abstract

Scientific theories are a way of knowing man. The main difference between this method and other methods is the testability of its claims. Testability helps to correct scientific knowledge of error. In economics, this knowledge is created by using econometric methods and models. Assumptions Econometric models are called auxiliary assumptions. Two fundamental problems in econometrics that challenge testability; ignoring auxiliary assumptions and statistically significant. The Duhem (1904) stated that if the auxiliary assumptions are inconsistent with the reality falsity method will be questioned. In the present study, the Duhem problem in the EMH and financial data structure has been investigated. In another section, the use and interpretation of statistical significance is studied, which is usually evaluated with an index called p < /em>-value. While the p < /em>-value can be a good statistical metric, it is often misused and misinterpreted. As a result, some reputable scientific journals have banned the use of p < /em>-values. To make good use of this criterion in the econometric methodology, the recommendations of the American Statistical Association in this field have been discussed. In order to deal with the role of auxiliary assumptions, it is necessary to specify tests and pay attention to the data structure.

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