Macroeconomic and climate forecasts are largely based on unrealistic assumptions. This fact as such, however, does not explain forecast failure as the counterexamples of Larry Laudan’s pessimistic meta-induction show. Once this is established, this chapter develops a more sophisticated explanation of forecast failure involving unrealistic assumptions by a critical discussion of the molecular kinetic deduction of the ideal gas law and its improvement. But, finally, this type of explanation cannot be applied in economics.
KeywordsForecast Error Scientific Realism Unrealistic Assumption Rational Expectation Hypothesis Good Scientific Theory
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