Empirical economics has been transformed by the “credibility revolution”, which centers on the principle that credible causal claims require well-designed strategies for constructing valid counterfactuals. This chapter explores how counterfactual thinking and quasi-experimental methods have transformed applied microeconomics, macroeconomics, economic history, and the broader social sciences. It examines the toolkit of modern causal inference, including randomized controlled trials, difference-in-differences, and synthetic control methods, and discusses their strengths and limitations. The chapter concludes by addressing key challenges, such as model dependence and external validity.

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