By Hugo A. Keuzenkamp

Whilst John Maynard Keynes likened Jan Tinbergen's early paintings in econometrics to black magic and alchemy, he was once expressing a largely held view of a brand new self-discipline. despite the fact that, even after part a century of useful paintings and theorizing by means of one of the most comprehensive social scientists, Keynes' reviews are nonetheless repeated this present day. This booklet assesses the principles and improvement of econometrics and units out a foundation for the reconstruction of the principles of econometric inference via reading a number of the interpretations of likelihood idea that underlie econometrics.

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127) and Howson and Urbach (1989, pp. 42±4). 2. Cohen (1989, p. 96) attributes the straight rule to Hume. Jeffreys ([1939] 1961, p. 370) attributes it to De Moivre's Doctrine of Chances (the ®rst edition of this work appeared in 1718, when Hume was six years old). Jeffreys (p. 369) suggests that, more recently, Jerzy Neyman supports the straight rule, and criticizes Neyman. Neyman's (1952, pp. 10±12) reply shows that Jeffreys' suggestion is valid, but not all of his comments are. I Intermezzo: a formal scheme of reference In this intermezzo several basic concepts of probability are explained.

Fisher comes in. 3 R. A. Fisher's frequency theory Sir Ronald Aylmer Fisher was a contemporary of von Mises. Both developed a frequency theory of probability. Fisher was in¯uenced by Venn, Relative frequency and induction 41 the critic of `inverse probability'or Bayesian inference, and President of Gonville and Caius College whilst Fisher was an undergraduate student there (Edwards, [1972] 1992, p. 248). While von Mises was a positivist in the tradition of Mach, Fisher was an exponent of British empiricism, often associated with the names of Locke, Berkeley and Hume.

There are (at least) three alternative solutions to the problem if the principle of indifference is applied: (i) Given that one point of the chord is ®xed at position X on the circle. We are indifferent as to where on the circle the other end of the chord lies. If Y is located between 1/3 and 2/3 of the circumference away from X, then from the interval [0,1] the interval [1/3,2/3] provides the favourable outcomes. Hence the probability is 1/3. (ii) We are indifferent as to which point Z the chord crosses orthogonally the radius of the circle.

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