Lars P. Syll

Econometrics — a Keynesian perspective It will be remembered that the seventy translators of the Septuagint were shut up in seventy separate rooms with the Hebrew text and brought out with them, when they emerged, seventy identical translations. Would the same miracle be vouchsafed if seventy multiple correlators were shut up with the same statistical material? And anyhow, I suppose, if each had a different economist perched on his a priori, that would make a difference to the outcome. J M...

Economics — too much maths and too little history  [embedded content]

Solow and Damon Runyon’s law The eminently quotable Robert Solow — as always — says it all: To get right down to it, I suspect that the attempt to construct economics as an axiom-atically based hard science is doomed to fail. There are many partially overlapping reasons for believing this … A modern economy is a very complicated system. Since we cannot conduct controlled on its smaller parts, or even observe them in isolation, the classical hard- science devices for discriminating between...

NAIRU — a harmful fairy tale The NAIRU story has always had a very clear policy implication — attempts to promote full employment is doomed to fail, since governments and central banks can’t push unemployment below the critical NAIRU threshold without causing harmful runaway inflation. Althouigh a lot of mainstream economists and politicians have a touching faith in the NAIRU fairy tale, it doesn’t hold water when scrutinized. One of the main problems with NAIRU is that it is essentially a...

Panglossian trade theory facing reality I feel a little like Rip Van-Winkle. The consensus amongst economists in the 1980s was that trade is always and everywhere good for everyone. After attending a UCLA workshop on trade a couple of weeks ago, I learned that all that has changed. There is a new consensus, summarized in two papers, “The China Syndrome”, published in the American Economic Review, and “the China Shock”, a new working paper, by David Autor, David Dorn and Gordon Hanson...

Eternity and a day  [embedded content]

After work … (personal) After a hectic week in Prague and Vienna, yours truly, of course, couldn’t resist the temptation to make a stopover in Karlsbad (Karlovy Vary) for a couple of days. If you like to walk right into a novel by Jane Austen — and your wallet isn’t too thin — it’s a highly recommendable place …

Remember the old times? Here is a quote from ECB President Jean-Claude Trichet … on September 3rd, 2010: “We encourage all countries to be absolutely determined to go back to a sustainable mode for their fiscal policies,” Trichet said, speaking after the ECB rate decision on Thursday. “Our message is the same for all, and we trust that it is absolutely decisive not only for each country individually, but for prosperity of all.” “Not because it is an elementary recommendation to care for...

 [embedded content] If your German isn’t to rusty, this lecture by Hagen Krämer might give you some interesting reflections on the rather sad state of ‘modern’ macroeconomics.

Friedman on the limited value of econometrics Tinbergen’s results cannot be judged by ordinary tests of statistical significance. The reason is that the variables with which he winds up, the particular series measuring these variables, the leads and lags, and various other aspects of the equations besides the particular values of the parameters (which alone can be tested by the usual statistical technique) have been selected after an extensive process of trial and error because they yield...