Lars P. Syll

Public debt should not be zero. Ever! Nation states borrow to provide public capital: For example, rail networks, road systems, airports and bridges. These are examples of large expenditure items that are more efficiently provided by government than by private companies. The benefits of public capital expenditures are enjoyed not only by the current generation of people, who must sacrifice consumption to pay for them, but also by future generations who will...

Slim by chocolate — a severe case of goofed p-hacking Frank randomly assigned the subjects to one of three diet groups. One group followed a low-carbohydrate diet. Another followed the same low-carb diet plus a daily 1.5 oz. bar of dark chocolate. And the rest, a control group, were instructed to make no changes to their current diet. They weighed themselves each morning for 21 days, and the study finished with a final round of questionnaires and blood...

Econometrics — science built on beliefs and untestable assumptions What is distinctive about structural models, in contrast to forecasting models, is that they are supposed to be – when successfully supported by observation – informative about the impact of interventions in the economy. As such, they carry causal content about the structure of the economy. Therefore, structural models do not model mere functional relations supported by correlations, their...

Follies and fallacies of Chicago economics Every dollar of increased government spending must correspond to one less dollar of private spending. Jobs created by stimulus spending are offset by jobs lost from the decline in private spending. We can build roads instead of factories, but fiscal stimulus can’t help us to build more of both. This form of “crowding out” is just accounting, and doesn’t rest on any perceptions or behavioral assumptions. John...

Top 10 critiques of econometrics •Achen, Christopher (1982). Interpreting and using regression. SAGE •Berk, Richard (2004). Regression Analysis: A Constructive Critique. SAGE •Freedman, David (1991). ‘Statistical Models and Shoe Leather’. Sociological Methodology •Kennedy, Peter (2002).  ‘Sinning in the Basement: What are the Rules? The Ten Commandments of Applied Econometrics’. Journal of Economic Surveys •Keynes, John Maynard (1939). ‘Professor...

Is Dani Rodrik really a pluralist? Unlearning economics has a well-written and interesting review of Dani Rodrik’s book Economics Rules up on Pieria. Although the reviewer thinks there is much in the book to like and appreciate, there are also things he strongly objects to. Such as Rodrik’s stance on the issue of pluralism: If Rodrik is at his strongest when discussing particular neoclassical models and their applications, he’s at his weakest when...

Econometric inferences — idiosyncratic, unstable and inconsistent The impossibility of proper specification is true generally in regression analyses across the social sciences, whether we are looking at the factors affecting occupational status, voting behavior, etc. The problem is that as implied by the three conditions for regression analyses to yield accurate, unbiased estimates, you need to investigate a phenomenon that has underlying mathematical...

Friedman enters this scene arguing that all we need to do is predict successfully, that this can be done even without realistic theories, and that unrealistic theories are to be preferred to realistic ones, essentially because they can usually be more parsimonious. The first thing to note about this response is that Friedman is attempting to turn inevitable failure into a virtue. In the context of economic modelling, the need to produce formulations in terms of systems of...

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Economics — an academic discipline gone badly wrong Three economics graduates have savaged the way the subject is taught at many universities. Joe Earle, Cahal Moran and Zach Ward-Perkins are all, they write in The Econocracy: The Perils of Leaving Economics to the Experts, “of the generation that came of age in the maelstrom of the 2008 global financial crisis” and embarked on economics degrees at the University of Manchester in 2011 precisely in order to...