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This is a volume of readings for graduate students, especially those taking courses in applied econometrics, who need to learn how to evaluate the validity of the theories and techniques they are taught. The aim is to help them in the difficult task of actually constructing models. A variety of alternative strategies is discussed: the collection includes 17 papers by the leading authorities in the field, 3 of them previously unpublished, and is prefaced with an introduction to the controversies of econometric methodology by the editor. The papers vary in the degree of technical sophistication used but anyone reading the book should gain a sound knowledge of the practical difficulties in model specification, evaluation and interpretation, as well as advice on tackling these difficulties.