Abstract

Different methodological approaches to empirical macroeconomics will be described and it will be explained that they represent different answers to the question from the title. Structural approaches require that macroeconometrical research should be explicitly founded on the (micro)economic theory in order to be able to measure the causal structure of the macroeconomic phenomena. Unstructural VAR approach suggest using econometric models to try to find out as much as possible about causal structure from the data, without prior restrictions from the theory. Problems with both are described