The Logic of Scientific Discovery in Macroeconomics

Abstract

There have been a number of findings in macroeconomics that appear to be worthy of the title of scientific discovery. A striking fact about these discoveries is that they refer to causal relations, i.e. to relations that permit policy manipulations of one aggregate quantity to influence another. And the problem with causal relations in macroeconomics is that empirical corroboration of specific causal relations is impossible. The present chapter takes this problem to imply that scientific discovery in macroeconomics has been following a Kuhnian logic and not, as many theorists believe, a Lakatosian logic: that scientific discovery in macroeconomics has been driven by ideology and not empirical corroboration. The paper argues further that in macroeconomics, the Kuhnian logic of scientific discovery comes with a high social cost of failed policies, output declines, high inflation and so on, and that the Kuhnian logic can and should be replaced with a macroeconomic variant of Popper’s situational logic.