A Note on the Statistical Testability of 'Explicit Causal Chains' Against the Class of 'Interdependent' Models

If two simultaneous equations economic models, each purporting to explain the same endogenous variable in terms of the same exogenous variable differ only in this respect, that one is in the form of an ‘interdependent’ representation and the other is an ‘explicit causal chain,’ then the question whether one is a more accurate representation of economic reality than the other cannot even in principle be settled by appeal to observations. The failure of proponents of ‘explicit causal chains’ to appreciate the significance of the foregoing theorem has led to the proposal of a remarkable interpretation of unfavorable outcomes of statistical tests of econometric hypotheses (which is mentioned in Section 3.2).