Application Dominance in Economics

Arhat Virdi|

There are four principal areas I am investigating in this project:

  1. Are the recommendations of economic policy advice based on, or substantially interlinked with, the principles of economic theory. To what degree does basic research in economics shape the concrete explanations and suggestions proffered in economic policy advice?

  2. If a substantial connection between overarching theory and policy recommendation does exist, what is the precise bearing or influence of the theory? Do they specify causal mechanisms or provide equilibrium explanations? Can such claims be honoured?

  3. If there is such a substantial connection between basic and applied research in economics, which drives which? Does progress in fundamental research in economics enhance the political capacity to intervene in the economy, controlling its effects and side-effects? Or, conversely, do the practical challenges of economic policy stimulate the production of fundamental insights into the economic process?

  4. By contrast, if economic theorizing merely lends credence to political rhetoric in the face of economic challenges (as opposed to empowering practitioners with the wherewithal to master them), then applied economics can be viewed as an autonomous discipline cut off from basic theories in economics. If so, what are the methodological standards of applied economics? Does it mostly consist of superficial, rough-and-ready approaches? 
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