On Rereading Haavelmo: A Retrospective View of Econometric Modeling

Abstract

The main aim of the paper is to reevaluate the methodological contributions of Tinbergen and Haavelmo in the context of the current discussions on econometric modeling and propose a reformulation of the Haavelmo methodology. The paper argues that the textbook methodology constitutes a less flexible version of Tinbergen's approach and apart from the probabilistic language, it has little in common with the methodology in Haavelmo's 1944 monograph, commonly acknowledged as having founded modern econometrics. The methodology in this monograph includes several important elements which have either been discarded or never fully integrated within the textbook approach. A re-synthesis of these elements gives rise to an alternative methodological framework. This framework can be used to meet most of the objections to the textbook methodology and provides a framework in the context of which the recent methodological controversies can be evaluated.