Can Econometric Models Fulfill the Role of an Economic Laboratory?
In the natural sciences, a laboratory experiment can isolate variables, various particles and their movements. Similarly, the employment of an econometric model is an attempt to produce an economic laboratory where controlled experiments could be conducted. The idea of having such a laboratory is very appealing to economists and politicians. Once the model is built and endorsed as a good replica of the economy, politicians can evaluate the outcomes of various policies by the model.