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Explaining and Understanding Economic Events by Contrasting Alternatives
Author(s) -
Parrinello Sergio
Publication year - 1999
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/1467-999x.00076
Subject(s) - reinterpretation , economics , argument (complex analysis) , positive economics , contrast (vision) , realism , critical realism (philosophy of perception) , neoclassical economics , state (computer science) , epistemology , philosophy , mathematics , biochemistry , chemistry , algorithm , artificial intelligence , computer science , aesthetics
The author argues that economic theorizing offers normal states of the economy to be used as a contrast for understanding economic events. Starting from a distinction between explanation and understanding and from Haavelmo's contribution, the argument runs through a critical assessment of the concept of tendency, which scientific realism advocates as a substitute for Humean law, and through a reinterpretation of the method used in Sraffa's price equations. It is emphasized that the role of contrasting alternative assigned to a normal state is not undermined by the lack of persistency of economic relations and of the ensuing poor predictive performance.