Methodological aspects of the encompassing principle

Abstract

The philosophy of science literature has played an increasing role in discussion of econometric methodology in recent years, and the Hendry methodology in particular has received much attention. Despite this, the encompassing principle has been overlooked in the methodological literature. This paper addresses this by examining the major methodological implications of the principle.

Keywords:

• the encompassing principle
• philosophy of science
• econometric methodology
• progressive modelling
• discovery-justification dichotomy
• verisimilitude