Uncertainty and Macroeconomic Methodology

Citation

Dow S (2023) Uncertainty and Macroeconomic Methodology. In: Jespersen J, Chick V & Tieben B (eds.) Handbook of Macroeconomic Methodology. London: Routledge, pp. 85-99. https://doi.org/10.4324/9781315745992

Abstract
The purpose of this chapter is to explore how uncertainty is understood and analysed within macroeconomics, and to show how it is inextricably bound up in macroeconomic methodology. It is argued that understanding of uncertainty is foundational to methodological approach, which then determines how uncertainty is treated in macroeconomic theory. The analysis focuses on three main approaches: the traditional mainstream conflation of uncertainty with quantifiable risk, the more recent mainstream literature on ambiguity and learning, and the fundamental uncertainty of Post-Keynesian economics which dates from Keynes’s (1921) Treatise on Probability.