Report

Stories about productivity

20 Mar 2007
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When asked about their methodological practices, most economists claim to practise some form of instrumentalist positivism, as advocated by Friedman or appeal to Popper’s notions of falsification, implemented by the hypothesis-testing procedures of classical inference. More philosophically sophisticated members of the profession might, following Blaug, refer to Lakatos’ methodology of scientific research programs. However in practice, and in debates over policy, economists rely heavily on a 'story-telling' approach. What matters in this approach is not the formulation of decisive tests of statistical significance, but the application of economic reasoning to the relevant 'stylised facts' to produce a convincing narrative account. This rhetorical approach to economics is clearly evident in debates concerning the determinants of productivity growth and economic performance in Australia

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2007
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