Romer was pushing a $1.8 trillion stimulus. I have to say, since I first became familiar with the name "Christina Romer", almost everything I've heard since then has improved my view of her. And it's not just "she wanted a huge stimulus". It's her work on economic history - the 1920-1921 depression particularly. She approached her multiplier estimate work with a labor economist's attention to identification concerns (contrary to some peoples' suspicions, my economics is evidence-based, not ideology-based). And then, of course, she's a W&M alum.
One thing I'll give Larry Summers is that he's probably right about the politics of a stimulus that size. There is a great deal of truth to the idea that none of this talk is worth a damn if we can't actually pass something. But I would not have erred on the side of political expediency on this one.
Thursday, February 16, 2012
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How do you feel about Romer's revised GDP estimates (particularly for the 1800s)?
ReplyDeleteK/K posted their old GNP series on output in the 1800s and onward back in the dinosaur age (I think). K/K series was used to prove that recessions were more severe and B.C more volatile back in the old days. Romer comes along in the 80s and says that when correcting for statistical deficiencies, the severity/volatility is actually the same (I think she uses the old method to calculate new output for the post WWII era, and uses the differences in output to form new output levels for GNP in the 1800s.
Balke and Gordon then come and use data collections (railroad, construction, and communications I think) and use these to add on to Romer/KK output, and find that post WWII is less severe and more volatile. Do you know if Romer ever tried to refute what Balke and Gordon said, and whose output statistics are the best? K-K seems to be widly used, even though Romer/Balke and Gordon try to make up for its statistical deficiencies.
I don't know the wider literature quite as well - I know her work on the early 20th century best. Does anyone else have thoughts on this?
ReplyDeleteMy thought with Balke and Gordon (again, I'm not all that familiar with them), is that we'd probably see important regime changes over the years in industries like railroads especially - and perhaps the other two. I would guess that may be more tenuous then what Romer did, but I'm not sure.