Lars P. Syll

Friedman’s response to Romer & Romer As yours truly wrote the other day, reading the different reactions, critiques and ‘analyses’ of Gerald Friedman’s calculations on the long term effects of implementing the Sanders’ program, thre whole issue seems to basically burn down to if the Verdoorn law is operative or not. In Friedman’s response to Romer & Romer today this is made even clearer than in the original Friedman analysis: The Romers … would acknowledge that following a negative...

Is 0.999 … = 1? (wonkish) What is 0.999 …, really? Is it 1? Or is it some number infinitesimally less than 1? The right answer is to unmask the question. What is 0.999 …, really? It appears to refer to a kind of sum: .9 + + 0.09 + 0.009 + 0.0009 + … But what does that mean? That pesky ellipsis is the real problem. There can be no controversy about what it means to add up two, or three, or a hundred numbers. But infinitely many? That’s a different story. In the real world, you can never...

Transitivity — just another questionable assumption My doctor once recommended I take niacin for the sake of my heart. Yours probably has too, unless you’re a teenager or a marathon runner or a member of some other metabolically privileged caste. Here’s the argument: Consumption of niacin is correlated with higher levels of HDL, or “good cholesterol,” and high HDL is correlated with lower risk of “cardiovascular events.” If you’re not a native speaker of medicalese, that means people with...

Statistics — a question of life and death In 1997, Christopher, the eleven-week-old child of a young lawyer named Sally Clark, died in his sleep: an apparent case of Sudden Infant Death Sybdrome (SIDS) … One year later, Sally’s second child, Harry, also died, aged just eight weeks. Sally was arrested and accused of killing the children. She was convicted of murdering them, and in 1999 was given a life sentence … Now … I want to show how a simple mistaken assumption led to incorrect...

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A guide to econometrics 1. Thou shalt use common sense and economic theory. 2. Thou shalt ask the right question. 3. Thou shalt know the context. 4. Thou shalt inspect the data. 5. Thou shalt not worship complexity. 6. Thou shalt look long and hard at thy results. 7. Thou shalt beware the costs of data mining. 8. Thou shalt be willing to compromise. 9. Thou shalt not confuse statistical significance with substance. 10. Thou shalt confess in the presence of sensitivity.

Bernie Sanders and the Verdoorn law Reading the different reactions, critiques and ‘analyses’ of Gerald Friedman’s calculations on the long term effects of implementing the Sanders’ program, it seem to me that what it basically burns down to is if the Verdoorn law is operative or not. Estimating the impact of Sanders’ program Friedman writes (p. 13): Higher demand for labor is also associated with an increase in labor productivity and this accounts for about half of the increase in...

Bayesianism — an unacceptable scientific reasoning A major, and notorious, problem with this approach, at least in the domain of science, concerns how to ascribe objective prior probabilities to hypotheses. What seems to be necessary is that we list all the possible hypotheses in some domain and distribute probabilities among them, perhaps ascribing the same probability to each employing the principal of indifference. But where is such a list to come from? It might well be thought that...

Making sense of data — categorical models [embedded content] Great lecture by one of my favourite lecturers — Scott Page.

Many mainstream macroeconomists  hold on to the hope that they will not be doomed forever to always ‘fight the last war,’ but instead, building on timeless microfoundational rules — Lucas ‘deep parameters’ — they will be able to predict upcoming problems before they happen. Adding some new little twist to the DSGE model will make all the difference … What these economists ‘forget,’ however, is that to produce these n:th variations of the basic DSGE model, they still have to make...