ABSTRACT
In this chapter, I argue that economists use theoretical, axiomatic models to represent either possible or actual mechanisms and that the causal claims based on such evidence presuppose a version of the mechanistic view on causality. I distinguish between purely theoretical models that are not based on any empirical input and calibrated models that employ statistical data to amend axioms and choose the values of parameters. The former group of models represents possible mechanisms, while the latter group stands for actual mechanisms. I argue that the evidence required to establish the actuality of a possible mechanism is sufficient to produce a causal claim on its own (the problem of mechanist’s circle). Furthermore, I argue that if (1) economists use theoretical models to represent single mechanisms, and (2) many mechanisms operate at the same time in the economy, then the knowledge of one actual mechanism is insufficient for predicting the effects of an intervention. However, mechanistic evidence is required for institutional reforms that favor outcomes favorable for a policymaker.
