BibTeX
@MISC{Moneta_causalityand,
author = {Alessio Moneta},
title = {CAUSALITY AND ECONOMETRICS: SOME PHILOSOPHICAL UNDERPINNINGS},
year = {}
}
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Abstract
Causality issues are crucial in economics since economics was born. Indeed, Adam Smith titled his work, published in 1776, An Enquiry into the Nature and Causes of the Wealth of Nations. Even before Smith, David Hume (1752) writes about the causal problem of the relationship between money and prices (predating the quantitative theory of money), and after Smith, David Ricardo and John Stuart Mill are explicitly involved in causality issues. Economics, like any modern science, makes use of causality notions in the sense of what Aristotle called efficient cause (Physica, B 194b, 29-32). That means that a cause produces or brings about its effect. In economic policy, one often uses causal terms to denote the possibility of controlling one variable (e.g. interest rates), in order to influence another one (e.g. national income). Causality issues are also relevant in the study of economic agents decisions. In this area economists often involve notions of causes, which Aristotle called final causes (Physica, B 194b, 33-35): if, for instance, a choice is taken in order to maximize the profit, “the end (telos), that for the sake of which a thing is done, ” is the cause. The philosophical underpinnings of the approach to causal issues in economics are in the work of David
