tag:blogger.com,1999:blog-1740670447258719504.post4835717215020155654..comments2024-03-27T03:00:27.024-04:00Comments on Facts & other stubborn things: Karl Smith, Ryan Murphy, and Empirical EconomicsEvanhttp://www.blogger.com/profile/12259004160963531720noreply@blogger.comBlogger20125tag:blogger.com,1999:blog-1740670447258719504.post-24503907993445365832011-09-16T02:38:06.166-04:002011-09-16T02:38:06.166-04:00Daniel,
Your profession should have the economics...Daniel,<br /><br />Your profession should have the economics version of thunderdome - two economists enter, one economist leaves. ;)Gary Gunnelshttps://www.blogger.com/profile/14463810435943252898noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-8650664011901421932011-09-15T18:03:36.786-04:002011-09-15T18:03:36.786-04:00Robin Hanson went after Russ Roberts' for his ...Robin Hanson went after Russ Roberts' for his (incomplete) skepticism here:<br />http://www.overcomingbias.com/2007/10/if-not-data-wha.html<br />Later on they had a podcast where Roberts got on the couch and Hanson acted as his bias therapist.Wonks Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-31511292093923557492011-09-15T14:58:08.941-04:002011-09-15T14:58:08.941-04:00*But what I appreciate about Barro is that he unde...*But what I appreciate about Barro is that he understands the empirical task at hand and he understands how it ought to be dealt with a lot better than a lot of the punditry and bloggers out there. That's not to say I would uncritically repeat his estimates. *<br /><br />Antagonistic part of my reply: Barro is the punditry and bloggers, though. That paper basically seemed to be done to prove the back-of-the-envelope calculation he did for a (i think it was) WSJ op-ed. Like I said, he basically follows other time series analysis (Ramey and Shapiro, 1998) but then adds in WWII precisely to get the result he wants.<br /><br /><br />*My biggest concern with Barro is that what he produces is an estimate of the multiplier averaged across the business cycle. Big deal. What we need is a multiplier during a period of a recession.*<br /><br />Nerd part of my reply: I was actually gonna bring this up in regards to Romer and Romer I like that paper but it suffered from the problem all VAR have which is that impulse response functions are by definition the reaction of variables to exogenous shocks, which are essentially "timeless". (Ill be guilty of this too by the time my diss is done). <br /><br />Ive posted about this before but I really like the Auerbach and Gorodnichenkos (2011) paper which tries to estimate a VAR across the business cycle.<br /><br />http://elsa.berkeley.edu/~auerbach/measuringtheoutput.pdfAndrew Bossiehttps://www.blogger.com/profile/00353842153288646125noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-52295127675263326572011-09-15T14:47:13.222-04:002011-09-15T14:47:13.222-04:00re: "*hes got a co-author, right?"
Yes ...re: <i>"*hes got a co-author, right?"</i><br /><br />Yes - Charles Redlick. Unfortunately I doubt I'm the only person out there that fails to give him credit in casual references.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-90136627785502150422011-09-15T14:44:56.735-04:002011-09-15T14:44:56.735-04:00I'm not saying the paper presents a usable est...I'm not saying the paper presents a usable estimate of the multiplier - I'm saying it recognizes and addresses the endogeneity problem in a more convincing way than, for example, the interstate comparisons or the essentially pre-post stuff that John Taylor has been doing.<br /><br />My biggest concern with Barro is that what he produces is an estimate of the multiplier averaged across the business cycle. Big deal. What we need is a multiplier during a period of a recession.<br /><br />But what I appreciate about Barro is that he understands the empirical task at hand and he understands how it ought to be dealt with a lot better than a lot of the punditry and bloggers out there. That's not to say I would uncritically repeat his estimates.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-79731868962097780192011-09-15T14:37:55.029-04:002011-09-15T14:37:55.029-04:00blah that military spending paper is terrible!* T...blah that military spending paper is terrible!* The theory may be reasonable, but WWII dominates the results. Others who have used military dummies in time series to measure fiscal effects have avoided WWII because of the way price controls, rationing, and general government crowding out distort the result.<br /><br /><br /><br />*hes got a co-author, right?Andrew Bossiehttps://www.blogger.com/profile/00353842153288646125noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-18474169685144840162011-09-15T14:31:31.324-04:002011-09-15T14:31:31.324-04:00Sorry - I understood your meaning but I got caught...Sorry - I understood your meaning but I got caught up with Stravinsky. I'm thinking of the tax paper with her husband and the military spending paper of Barro's (I think out in QJE now???).Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-72458600585663784202011-09-15T14:28:36.116-04:002011-09-15T14:28:36.116-04:00Whoops my comment was left incomplete. what barro...Whoops my comment was left incomplete. what barro and romer papers are you talking about? You've mentioned them a couple of times but I've apparently come late to the party and im not 100% sure which ones you are talking about.Andrew Bossiehttps://www.blogger.com/profile/00353842153288646125noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-21726719666695132262011-09-15T14:13:24.098-04:002011-09-15T14:13:24.098-04:00Yes, we're all clear by now on your explanatio...Yes, we're all clear by now on your explanation. What we're still short on is evidence or a response to my evidence.<br /><br />Think of the last several Nobels - Pissarides, Mortensen, and Diamond; Ostrom and Williamson; Krugman. Each and every one of them has been given an award for generating a model that explains reality better than previous models which worked well for their time, but weren't perfect in explaining reality.<br /><br />Can you stop just repeating the claim and start giving reasons why you think this is how the discipline works? Because I've asked you several times now, and it's becoming increasingly obvious that you're just expressing a prejudice.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-75692762064213584182011-09-15T13:42:29.618-04:002011-09-15T13:42:29.618-04:00Most modeling that economists do that get publishe...Most modeling that economists do that get published in journals is never discussed, weighed against or incorporated into theory. So it's a waste of time and money. There's an oversupply. And economist choose which models to assess based on arbitrary and subjective judgements. It's a very inefficient process, and I cannot have much confidence in it. Which is not a strike against macro or econometrics per se, but I would need to believe in an economist before I believe in his theory. I don't need to trust Stephen Hawking to trust his theory of physics as long as I can trust physics generally.Stravinskynoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-22100542990014678902011-09-15T13:29:23.499-04:002011-09-15T13:29:23.499-04:00Macro - the eternal whipping boy - is especially g...Macro - the eternal whipping boy - is especially good at this.<br /><br />Pick up any good macro textbook from intermediate undergraduate on up. Any textbook where they start teaching models rather than just intro material. Look at how they assess models after they present the model. They <i>always</i> assess it on the basis of "this model was an advance in characterizing this observed phenomenon, but it could not account for this other observed phenomenon".Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-7093396211809560572011-09-15T13:27:06.745-04:002011-09-15T13:27:06.745-04:00re: ""Modeling" papers are very dif...re: <i>""Modeling" papers are very different from "This is how things work in the real world" papers"</i><br /><br />If you mean these don't always get done in the same twenty pages you're right. So? One needs context and empirical work to make those judgements. There were a lot of Keynesian models floating around. You got variations and tweaks. You got lots of data and tests together, you got general assessments of how well it fit the data and then you got a broad based critique like the Lucas critique. Then you had lots of different RBC and New Keynesian models and the same process - and you had the emergence of new modeling strategies like search theory to again - <i>match the models to the real world</i>. And now you've got other big-picture critiques, many of which are inspired by the current crisis.<br /><br />You seem to be disappointed that the entire scientific project isn't done immediately in a single twenty page paper.<br /><br />Do you know of <i>any</i> discipline that delivers that? Why would you want/need that?<br /><br />You've presented an interesting model here, but it doesn seem useful for explaining the real world.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-82780505919117570162011-09-15T13:19:07.824-04:002011-09-15T13:19:07.824-04:00"But they can usefully model aspects of the w..."But they can usefully model aspects of the way the world works."<br /><br />It's the "usefully" there that economist always assume but rarely seem interested in proving. Furthermore, it's less a matter of naivete so much as laziness, I would guess.<br /><br />The impression comes from reading through the archives of economic journals on JSTOR, the greatest institution known to man. "Modeling" papers are very different from "This is how things work in the real world" papers, with no attempt to bridge the gap between the two. Modelers and theorists in economics do not communicate.<br /><br />I don't speak very often to economists, so maybe they're aware of this problem. But they don't address it in the literature.<br /><br />I'd be happy to dredge up some examples if you're willing to pay me ~$100.Stravinskynoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-6919752864215217522011-09-15T13:12:11.056-04:002011-09-15T13:12:11.056-04:00re: "Physicists and biologists work their ass...re: <i>"Physicists and biologists work their asses off to demonstrate the relevance of their parallel universes to the one we inhabit. Economists seem less interested in such a practice."</i><br /><br />This is nothing like my experience. I'm not sure exactly what gives you this impression.<br /><br />I think modeling plays a somewhat different role in sciences like economics and biology than it does in physics. With such a complex subject of study what we're ultimately doing is trying to present mechanisms that may be operating and demonstrating that they are useful for describing what happens in the world. There's no presumption that they are anything other than an abstraction, or that they explain everything. At least from what I've read and who I've heard there's no such presumption. But they can usefully model aspects of the way the world works.<br /><br />Physicists, we think, have perhaps a somewhat better prospect of actually parameterizing laws rather than modeling mechanisms. So it is certainly true that economists and physicists approach modeling and theorizing differently, but I think economists and biologists approach these problems in much the same way, and my experience is that they aren't naive as you imply.<br /><br />Where did you get that impression?Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-50489489679728415862011-09-15T13:06:59.790-04:002011-09-15T13:06:59.790-04:00This is where Daniel Klein writes about it in Econ...This is where Daniel Klein writes about it in Econ Journal Watch: http://econjwatch.org/articles/model-building-versus-theorizing-the-paucity-of-theory-in-the-journal-of-economic-theory<br /><br />This is an excellent response by John Quiggin, which makes my point that these concerns are largely semantics: <br />http://econjwatch.org/articles/why-should-we-care-what-klein-and-romero-say-about-the-journal-of-economic-theoryDaniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-56795781811954480782011-09-15T12:50:58.460-04:002011-09-15T12:50:58.460-04:00What did Dan Klein say about it?
It's just a ...What did Dan Klein say about it?<br /><br />It's just a matter of personal observation based on my examination of the economic literature. Economists seem to think that constructing a model with words like "rationality" and "stochastic" thrown in constitutes saying something about reality. Models are a parallel universe. Physicists and biologists work their asses off to demonstrate the relevance of their parallel universes to the one we inhabit. Economists seem less interested in such a practice.Stravinskynoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-61755588503155768702011-09-15T12:44:39.027-04:002011-09-15T12:44:39.027-04:00Stravinsky -
Dan Klein makes a big deal of that di...Stravinsky -<br />Dan Klein makes a big deal of that distinction, but I don't really see that it matters all that much. The difference seems to be more a matter of degree and semantics than anything else, but I could be wrong. What are you concerned with here, exactly?Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-66009638605321462852011-09-15T12:42:15.636-04:002011-09-15T12:42:15.636-04:00The obvious problem is that a lot of economists se...The obvious problem is that a lot of economists seem to confuse modeling with theorizing.Stravinskynoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-73112703964126743952011-09-15T12:36:34.572-04:002011-09-15T12:36:34.572-04:00In non-parametrics and robust methods, the only wa...In non-parametrics and robust methods, the only way to get confidence intervals is bootstrapping, which is another way of saying you can't get real confidence intervals. Non-parametric methods theoretically give you a consistent estimate, but without confidence intervals, it is very questionable to what degree you are doing means anything. <br /><br />I also emphasize "theoretically," since most of the applied work uses semi-parametric methods because non-parametric methods are too hard. The people in economics who are actually doing any of this properly are generally associated with the Santa Fe Institute, and their crap looks weird, because if you do this properly, you will get weird results.<br /><br />I gave the rare times that I don't believe endogeneity is important. When we're not studying something like a natural experiment, our priors *should* be against the econometric technique being legitimate. This certainly applies the model Roberts was making fun of. Give me any nontrivial macro model, and I can give you a half dozen possible sources of endogeneity, and the only response to them will be "ignorability" or "we don't have data for that," neither of which are scientific explanations.Ryanhttps://www.blogger.com/profile/18341935691462262579noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-80602954266088295202011-09-15T10:43:32.109-04:002011-09-15T10:43:32.109-04:00What Barro and Romer papers are you referring to b...What Barro and Romer papers are you referring to btw? I came in a little <br /><br />also citing Donahue and Levitt kind of blows Smith's point out of the water.Andrew Bossiehttps://www.blogger.com/profile/00353842153288646125noreply@blogger.com