Saturday, March 09, 2013

Theory Hides in Aggregates

"it sometimes proves difficult to trace... theoretical conflicts to assumptions which have been explicitly stated. This is partly because we habitually concentrate on making those assumptions explicit which specify the relationships between the variables actually appearing in the model. The immediately antecedent stage in model-construction, i.e., the selection of aggregates, is often the stage where implicit theorizing enters in.

"The behavioral assumptions underlying a particular mode of aggregation are, however, just as important as the behavioral relationships assumed to hold between the variables defined." -- Leijonhufvud, On Keynesian Economics and the Economics of Keynes, p. 38-39

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