Counterparties: R-squared regression analysis
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TheÂ fallout over the Reinhart and Rogoff errorsÂ continues. Yesterdayâ€™s debate circled around what this all means for austerity. Today, the debate widened, taking a few steps backwards in search of perspective. The economic profession as a whole â€“ along with that of the bloggers who popularize it â€“ ended up coming Â in for criticism and soul-searching.
The authors at the heart of the controversy did continue to argue about the substance of the criticisms. RR published their secondÂ response, conceding that the UMassÂ paper has indeed found a â€śsignificant mistakeâ€ť in their data on international debt-to-GDP ratios. They said that their overall argument, however, remains valid. Meanwhile, Robert Pollin and Michael Ash, two of the UMass researchers, kept pushing in anÂ FT op-ed this morning, saying that the time has come to â€śrethink austerity economicsâ€ť.
BothÂ Josh Barro andÂ Matt Yglesias took issue with one of the most common interpretations of RRâ€™s work Â â€“ the existence of a sort of economic tipping point for countries with debt-to-GDP ratios above 90% â€“ and argued that new evidence makes that thesis extremely weak. Other bloggers, however, moved on from the argument over minutiae in the data to ask what this mistake means for the field of economics.
Chris Dillow questions whether todayâ€™s economists value the right skills. He says that RRâ€™s errors â€śreflect a culture which prizesâ€ť the ability to produce brilliant, explanatory theories over the â€śdull pedantryâ€ť of meticulously examining data.Â Justin Fox likens the debate to â€śwatching the sausage of macroeconomics being made.â€ť Data is relatively scarce in the field, he says. As a result, we should â€śacknowledge that our knowledge is limited and proceed anyway on a mix of data, theory, and intuition.â€ť
Peter Frase uses the controversy to rail against non-academic econobloggers, or â€śwonksâ€ť, who parrot the findings of academics:
When Wonkblog presents the findings of Reinhart and Rogoff without comment, they are implicitly telling us, â€śtrust these peopleâ€”theyâ€™re famous academic economistsâ€ť. This is because they donâ€™t have the ability to do what people like Paul Krugman did, and actually assess the correctness of the famous economistsâ€™ claims.
Zach Beauchamp echoes Fraseâ€™s sentiment, wondering if â€śthe new spate of academic-study blogging might, far from informing the public, actually be lulling it into a false sense of intellectual securityâ€ť.
Paul Krugman, writing no less than three posts on the issue, just wishes policy-makers would stop using research which hasnâ€™t gone through peer review to validate their political views. After pointing out RRâ€™s clear errors, he concludes that â€śthe larger story is the evident urge of Very Serious People to find excuses for inflicting pain.â€ť â€“ Shane Ferro
On to todayâ€™s links:
Stuff We’re Not Linking To
The meatpacking district is “in the infancy stages of being gentrifiedâ€ť â€“ NYT
And, of course, there are many more links at Counterparties.