Lars P. Syll

There have been over four decades of econometric research on business cycles … The formalization has undeniably improved the scientific strength of business cycle measures … But the significance of the formalization becomes more difficult to identify when it is assessed from the applied perspective, especially when the success rate in ex-ante forecasts of recessions is used as a key criterion. The fact that the onset of the 2008 financial-crisis-triggered recession was...

O Magnum Mysterium (personal)  [embedded content] Breathtaking and absolutely magnificent!

The pretence of knowledge — ‘New Keynesian’ DSGE models The centre-piece of Paul Romer’s scathing attack on these models is on the ‘pretence of knowledge’ (Romer 2016) … He is critical of the incredible identifying assumptions and ‘pretence of knowledge’ in both Bayesian estimation and the calibration of parameters in DSGE models … A milder critique by Olivier Blanchard (2016) points to a number of failings of DSGE models and recommends greater openness to...

[embedded content] David Bowie, Leonard Cohen, Umberto Eco, Alan Rickman, Gene Wilder, Andrzej Wajda. RIP

Keynes’ critique of econometrics — the nodal point In my judgment, the practical usefulness of those modes of inference, here termed Universal and Statistical Induction, on the validity of which the boasted knowledge of modern science depends, can only exist—and I do not now pause to inquire again whether such an argument must be circular—if the universe of phenomena does in fact present those peculiar characteristics of atomism and limited variety which...

Mathematical economics — a contraption of empty formalism My impression [is] that nothing emerges at the end which has not been introduced expressly or tacitly at the beginning is quite wrong … It seems to me essential in an article of this sort to put in the fullest and most explicit manner at the beginning the assumptions which are made and the methods by which the price indexes are derived; and then to state at the end what substantially novel...

The non-existence of Paul Krugman’s ‘Keynes/Hicks macroeconomic theory’ Paul Krugman has in numerous posts on his blog tried to defend “the whole enterprise of Keynes/Hicks macroeconomic theory” and especially his own somewhat idiosyncratic version of IS-LM. The main problem is simpliciter that there is no such thing as a Keynes-Hicks macroeconomic theory! So, let us get some things straight. There is nothing in the post-General Theory writings of Keynes...

Bayesianism — a dangerous superficiality The bias toward the superficial and the response to extraneous influences on research are both examples of real harm done in contemporary social science by a roughly Bayesian paradigm of statistical inference as the epitome of empirical argument. For instance the dominant attitude toward the sources of black-white differential in United States unemployment rates (routinely the rates are in a two to one ratio) is...

What inferential leverage do statistical models provide? Experimental (and non-experimental) data are often analyzed using a regression model of the form Yi =a+bZi +Wiβ+εi, where Wi is a vector of control variables for subject i, while a, b, and β are parameters (if Wi is 1×p, then β is p×1). The effect of treatment is measured by b. The disturbances εi would be assumed independent across subjects, with expectation 0 and constant variance. The Zi and Wi...

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