{'fraction_non_alphanumeric': 0.013409961685823755, 'fraction_numerical': 0.0, 'mean_word_length': 5.53125, 'pattern_counts': {'":': 0, '<': 0, '<?xml version=': 0, '>': 0, 'https://': 0, 'lorem ipsum': 0, 'www.': 0, 'xml': 0}, 'pii_count': 0, 'substrings_counts': 0, 'word_list_counts': {'cursed_substrings.json': 0, 'profanity_word_list.json': 0, 'sexual_word_list.json': 0, 'zh_pornsignals.json': 0}}
A Critique of Instrumentalism : Why realism matters

Instrumentalism is the dominant methodological position amongst orthodox economists, which holds that realism of the theories is irrelevant. This paper challenges this view, arguing that the standard instrumentalist defence of abstract theories is inapplicable when the goal of the analysis is not prediction. Moreover, it demonstrates that the good empirical performance does not confer legitimacy on a theory to be used for other purposessuch as conducting a welfare analysis. This has wide ranging implications for the subject, suggesting that the current emphasis on using abstract macroeconomic models to derive policy recommendations on the basis of the welfare of the representative agent is invalid. More generally, it implies that the twin goals of predictive parsimony, and unifying macroeconomics with microfoundations and welfare economics are mutually incompatible. ∗The views expressed are those of the authors and do not necessarily represent the views of the Bank of Estonia.