Lars P. Syll

Econometrics and the dangers of calling your pet cat a dog The assumption of additivity and linearity means that the outcome variable is, in reality, linearly related to any predictors … and that if you have several predictors then their combined effect is best described by adding their effects together … This assumption is the most important because if it is not true then even if all other assumptions are met, your model is invalid because you have described it incorrectly. It’s a bit...

Econometric beasts of bias In an article posted earlier on this blog — What are the key assumptions of linear regression models? — yours truly tried to argue that since econometrics doesn’t content itself with only making “optimal” predictions,” but also aspires to explain things in terms of causes and effects, econometricians need loads of assumptions — and that most important of these are additivity and linearity. Let me take the opportunity to elaborate a little more on why I find these...

Economics journals — publishing lazy non-scientific work In a new paper, Andrew Chang, an economist at the Federal Reserve and Phillip Li, an economist with the Office of the Comptroller of the Currency, describe their attempt to replicate 67 papers from 13 well-regarded economics journals … Their results? Just under half, 29 out of the remaining 59, of the papers could be qualitatively replicated (that is to say, their general findings held up, even if the authors did not arrive at the...

Why non-existence of uncertainty is such a monstrously absurd assumption All these pretty, polite techniques, made for a well-panelled Board Room and a nicely regulated market, are liable to collapse. At all times the vague panic fears and equally vague and unreasoned hopes are not really lulled, and lie but a little way below the surface. Perhaps the reader feels that this general, philosophical disquisition on the behavior of mankind is somewhat remote from the economic theory under...

Question the monetary system and you’re academically dead!  [embedded content]Bernard Lietaer is a former professor of international finance and president at the Central Bank of Belgium.

Did Keynes ‘accept’ the IS-LM model? Lord Keynes has some interesting references and links for those wanting to dwell upon the question if Keynes really “accepted” Hicks’s IS-LM model. My own view is that  IS-LM doesn’t adequately reflect the width and depth of Keynes’s insights on the workings of modern market economies: 1  Almost nothing in the post-General Theory writings of Keynes suggests him considering Hicks’s IS-LM anywhere near a faithful rendering of his thought. In Keynes’s...

Lauritz Weibull och den källkritiska Lundamyten “Kritiska undersökningar i Weibull-mytens historia” … är på en gång en stridsskrift, en detetektivbragd och ett stycke – föga uppbygglig – lärdomshistoria. Arvidssons-Aarsleffs teori om weibullianismens härstamning är långt mer plausibel än L W:s egen redogörelse, och den är oändligt mycket mer plausibel än den självmotsägande advokatyr hans väpnare presterat. Arvidsson och Aarsleff argumenterar elegant och stringent för sin tes, men...

Bayesianism — a scientific cul-de-sac One of my favourite “problem situating lecture arguments” against Bayesianism goes something like this: Assume you’re a Bayesian turkey and hold a nonzero probability belief in the hypothesis H that “people are nice vegetarians that do not eat turkeys and that every day I see the sun rise confirms my belief.” For every day you survive, you update your belief according to Bayes’ Rule P(H|e) = [P(e|H)P(H)]/P(e), where evidence e stands for “not being...

‘Le pied dans le plat’  [embedded content] Old love dies hard …

We few, we happy few  [embedded content] Saint Crispin’s Day falls on 25 October and is the feast day of Saint Crispin. It is a day most famous for the Battle of Agincourt, that occurred on it in 1415.