An Advanced Methodology for Heterodox Simulation Models Based on Critical Realism

In this paper we develop an advanced methodology that makes the results of simulation models in heterodox economics more reliable and acceptable. This methodology copes with the specific characteristics of simulation models in heterodox economics, in particular with inherent uncertainty. We base our advanced methodology on Critical Realism, because it deals with inherent uncertainty by categorizing empirical events into underlying structural driving forces. Data is centre-stage in our advanced methodology, because it is used to infer assumptions and implications. Eventually a combined use of theoretical and empirical analysis based on different data sets helps inferring statements about causal relationships and characteristics of a set of models, such as, e.g., the development of different industries in different countries.