tag:blogger.com,1999:blog-582368152716771238.post5409408672636560339..comments2024-03-28T02:34:12.891-05:00Comments on The Grumpy Economist: Delong and LogarithmsJohn H. Cochranehttp://www.blogger.com/profile/04842601651429471525noreply@blogger.comBlogger30125tag:blogger.com,1999:blog-582368152716771238.post-83615870882232069782016-06-03T05:45:11.140-05:002016-06-03T05:45:11.140-05:00What I dislike about the salt water economists is ...What I dislike about the salt water economists is their answer to every problem is bigger and bigger government intervention into the market. As if the market is some sort of puppet that you can pull with a string. That's not real life.www.pointsandfigures.comhttps://www.blogger.com/profile/05266351192714997692noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-14676884217999711082016-05-09T17:50:11.506-05:002016-05-09T17:50:11.506-05:00It appears that his motives are political. He also...It appears that his motives are political. He also mixes in economic justification to strengthen the legitimacy of his position.<br /><br />That is the reason I believe he attacks the Chicago school, the WSJ and purposefully refers to Mankiw as Harvard. <br /><br /><br />John, if you are reading this comment. Please check the "favorite links" on the right side of your blog. It is still written "Booth School of Business Best business school, coincidentally my employer". Perhaps you should change it since you don't work in Chicago anymore.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-20208818619016050642016-05-09T13:27:25.945-05:002016-05-09T13:27:25.945-05:00Agree. Nothing is so unprofessional as not includi...Agree. Nothing is so unprofessional as not including a structural model, specification tests and robustness checks using different proxy variables in your 950-word op-ed in a newspaper.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-34897903726019958402016-05-09T12:15:51.268-05:002016-05-09T12:15:51.268-05:00What did you do to Delong? screw his wife or some...What did you do to Delong? screw his wife or something? Otherwise, I don't understand this level of vitriol. It's a news article, not an academic study, making a simple non-controversial point. People need to get a grip.<br /><br />Dannoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-10804153625826829442016-05-09T09:37:36.886-05:002016-05-09T09:37:36.886-05:00This is a perfect example of teaching students how...This is a perfect example of teaching students how to validate regression models (log linear versus polynomial). Alas none of the bloggers seems to have done it... A leave-one-out or k-fold cross validation should provide a statistical argument for the more "correct" model specification.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-85390930446419282842016-05-08T14:27:13.696-05:002016-05-08T14:27:13.696-05:00Take it up with the world bank, where I got the nu...Take it up with the world bank, where I got the numbers. But for this point it doesn't really matter. Did Chinese per capita income grow 400%, or 700%, or 1000%? A modicum of freer markets lifted them from abject poverty to middle income status in less than a generation. This is one of the greatest improvements in human welfare ever. Sure they have a long way to go, including environmental issues. But it is an amazing transformation. It was not stimulus spending or monetary policy. And if you did not have data on other countries in front of you, you would have tut-tutted that it was all impossible looking just at Chinese data before 1980. <br /><br />I don't get just how vitriolic this is. We know a lot of America is busted. We know how to fix it. We know that these things will improve growth, the only question being how much. Why is there so much attachment to the view that everything in American government policy is just perfect and you can't squeeze an ounce more growth out of it? John H. Cochranehttps://www.blogger.com/profile/04842601651429471525noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-42901270912057895042016-05-08T13:31:17.524-05:002016-05-08T13:31:17.524-05:00I left off DeLong objection #4.
4. It is not reas...I left off DeLong objection #4.<br /><br />4. It is not reasonable to believe that China's per capita income grew 700% between 2000 and 2014. DeLong asserts that economists do not in general believe the official Chinese GDP statistics. You have not answered his complaint that you use Chinese growth as a central example in your WSJ article. Ibnyaminhttps://www.blogger.com/profile/02200468798337178145noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-36990817177728911592016-05-08T13:26:59.035-05:002016-05-08T13:26:59.035-05:00It is even more laughable the fact that the inconv...It is even more laughable the fact that the inconvenient comments are deleted.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-57963342635591588612016-05-08T12:15:42.173-05:002016-05-08T12:15:42.173-05:00I am not Anonymous, but after reading Hall & J...I am not Anonymous, but after reading Hall & Jones and the update above I see nothing that suggests you have answered DeLong at all. Your conclusions go far beyond anything that Hall & Jones claim in their paper. It is true that they conclude that institutions matter a lot, but they do not quantify how much as you do - and DeLong does not disagree that institutions and ease of doing business matter. As I understand it, here are DeLong's objections:<br /><br />1. You do not test your model in sample to see if it is correctly specified. If you do, the in sample data reject your model speciation. (Notice that while Hall & Jones use a log linear model, log linearity is the only similarity. You use different models, different data, and your conclusions are much more specific and DeLong is not objecting to log linearity in general. He objects that in your specific case the in sample data reject the log linear model specification.)<br /><br />2. Your out of sample predictions depend critically on the log linear model to generate such stunning growth projections. DeLong objects to such projections as counterindicated by your own data and gives intellectual cover to an ideological position unjustified by science. <br /><br />3. You pull a bait and switch. You use the World Bank Ease of Doing Business data to construct your model, but then suggest that the reforms advocated by Paul Ryan would result in the spectacular growth your model predicts if we could improve US EDB to 110. You provide no rationale to justify the implicit claim that the World Bank's measure Ease of Doing Business is in any way improved by implementing the proposals of Paul Ryan.Ibnyaminhttps://www.blogger.com/profile/02200468798337178145noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-88306383609301517222016-05-07T15:10:23.478-05:002016-05-07T15:10:23.478-05:00The frontier does seem way out of the data Range, ...The frontier does seem way out of the data Range, and the log scale makes that fact a lot less visible. One IQR out in logs is 100% out in non log in this case. To state that a better score on EoB would double income per cap in one of the richest countries in the world ... Unlikely? Obviously, not a Country where it would not Help, but i'd expect diminishing returns. Or in stats: check stochastic frontier modelling.Willemhttps://www.blogger.com/profile/16010568860913305215noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-70920694836206552432016-05-07T13:18:15.652-05:002016-05-07T13:18:15.652-05:00Logarithms and growth go together, of course, but ...Logarithms and growth go together, of course, but what is plotted here is not growth, but GDP/capita, which has something to do with growth, but is not the same thing. And as you say, this graph is not proof, but illustration. Is it already well-established in the growth literature that GDP/capita has an exponential dependence upon "ease of doing business"? Is this to be found in Hail and Jones?David Lanteignehttps://www.blogger.com/profile/04974754167539349280noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-4207130216547827662016-05-07T10:26:30.108-05:002016-05-07T10:26:30.108-05:00Catch the update, read Hall and Jones and let me k...Catch the update, read Hall and Jones and let me know what there is that I should still reply to. John H. Cochranehttps://www.blogger.com/profile/04842601651429471525noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-74863694917364272132016-05-07T09:02:21.460-05:002016-05-07T09:02:21.460-05:00Good points. Brad Delong is so wrong about where J...Good points. Brad Delong is so wrong about where John Cochrane works these days.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-61182106691752290422016-05-07T04:48:14.754-05:002016-05-07T04:48:14.754-05:00What this debate really shows is that you can get ...What this debate really shows is that you can get a PhD in Economics without having a clue of what's going on in the growth literature.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-7846897391318818562016-05-06T23:11:43.611-05:002016-05-06T23:11:43.611-05:00Benjamin the real magic happens when we improve th...Benjamin the real magic happens when we improve the flow of investment through financial deregulation. Just think how much more growth we have already thanks to shadow banking.Anwerhttps://www.blogger.com/profile/08277173974258559733noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-33916743976418528662016-05-06T22:41:21.619-05:002016-05-06T22:41:21.619-05:00Note John's lack of replyNote John's lack of replyAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-40864134355203782812016-05-06T20:35:49.361-05:002016-05-06T20:35:49.361-05:00Wow, you've gotten destroyed on this one, and ...Wow, you've gotten destroyed on this one, and rightly so. RNnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-14717126968028325672016-05-06T19:23:50.673-05:002016-05-06T19:23:50.673-05:00Of course business should easy to conduct, as a ma...Of course business should easy to conduct, as a matter of human and commercial freedom and for practical reasons (like properity).<br /><br />My only quibble is that I wish the John Cochranes of the world would give full-throated and frequent roar to the idea of abolishing property zoning and decriminalizing push-cart vending.<br /><br />These are practical changes that could immediately increase real GDP and dramatically widen business opportunities for ordinary people.Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-54118441826592103942016-05-06T16:25:29.860-05:002016-05-06T16:25:29.860-05:00You are not charting growth. You are comparing in...You are not charting growth. You are comparing income in one year with "ease of doing business" in that one year. A semi-log chart has no business in that comparison. And, it is not at all clear that "ease of doing business" can sensibly be mapped to a meaningful scalar quantity. <br /><br />Back when I was studying physics (before law school) they always told us to step back from the formulas and ask ourselves if the numbers we were getting made any physical sense. You should have stepped back and asked yourself if the number you were projecting made any economic sense: pretty clearly it does not.<br /><br />Back when I was studying numerical analysis, they taught us about the dangers of extrapolating with any fitted curve. Extrapolating with a fitted exponential (which is what you are doing) is outside the bounds of any sort of sound or reliable practice. <br /><br />You may not like Brad Delong's choice of words but ignore the style and on substance I would agree with Brad. Absalonhttps://www.blogger.com/profile/09131268683451462949noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-60757592681488034982016-05-06T15:38:50.153-05:002016-05-06T15:38:50.153-05:00It's right there in the WSJ article DeLong is ...It's right there in the WSJ article DeLong is referencing.<br /><br />"Mr. Cochrane is a senior fellow at Stanford University’s Hoover Institution"Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-79253878997525731462016-05-06T15:25:17.387-05:002016-05-06T15:25:17.387-05:00Did you not write: "If America could improve ...Did you not write: "If America could improve on the best seen in other countries by 10%, a 110 score would generate $400,000 income per capita, a 650% improvement, or 15% additional growth for 20 years."<br />And: "And, following the fitted line in the chart, Frontier generates $163,000 of income per capita"<br /><br />Delong just undid the logs and got the same numbers. Your op ed was a model without logic. There is not much difference between a #1 ranking in #10, but a major difference between a 50th percentile and a bottom 10%.NFhttps://www.blogger.com/profile/11615655672413955125noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-14134700978127767872016-05-06T14:12:37.963-05:002016-05-06T14:12:37.963-05:00Really nicely done, John. Represents Hoover eel in...Really nicely done, John. Represents Hoover eel in substance and style.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-12500179267189546932016-05-06T13:57:27.580-05:002016-05-06T13:57:27.580-05:00delong's tone is annoying and impolite. But y...delong's tone is annoying and impolite. But your choice of fit really isn't reasonable. If you are not going to use a linear fit, then a sigmoid of some kind that starts tailing off as the index keeps increasing would have been more appropriate. Of course, in keeping with style of wsj op-eds, your choice presents a more dramatic picture than reality. Which is unfortunate, because all this does is provides ammunition to those who say that conservatives are fundamentally unserious and resort to fudging the numbers to prove their pointsAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-1344260409614593452016-05-06T13:23:01.030-05:002016-05-06T13:23:01.030-05:00I tend to be on the Keynesian side of debates but ...I tend to be on the Keynesian side of debates but that was a good response to be fair...Britonomisthttps://www.blogger.com/profile/12221647029208839668noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-66590037156098243542016-05-06T13:22:42.519-05:002016-05-06T13:22:42.519-05:00What's wrong with him?What's wrong with him?Meegshttps://www.blogger.com/profile/11539720852751865084noreply@blogger.com